Sustained bull markets in Gold are extremely rare. Looking at the NY spot Gold price from 1800 to 2007 it seems there have only been two bull markets lasting five years or more. If we look the advances in this bull market compared to last gold bull it would seem that gold has room to increase a lot more. The yearly gains in gold during this bull market have been rather modest from a historical perspective. Largest one year gains in Gold, 1800-2007: (1) 1979: 136% (2) 1973: 75% (3) 1974: 70% (4) 1933: 56% (5) 1972: 48% (6) 1864: 47% (7) 1978: 36% (8) 1862: 33% (9) 2007: 30% (10) 2002: 24% I should also add that one of the most successful gold speculators during the last major bull market, Jim Sinclair, has a price target of $1650 at least. It's difficult placing price or time targets on a strong bull market, but it is very clear the price of gold has a lot higher to go. I wouldn't be surprised to see Gold at $2000-$3000 at a minimum before the bull market ends. Also I would expect to see a few more 30%+ years before the Gold bull ends.
It really comes down to fundamentals. Heres my reasoning: - Demand for oil is going higher = inflationary = gold+ - Global Financials in continued distress = inflationary = gold+ - Unwavering Central Bank resolve to avert global recession through money printing = inflationary = gold+ - Inflation adjusted gold at multi-decade lows = more upside potential - Central Banks suppress gold price to put lipstick on a pig, or encourage traditional investment in Gov bonds, equities etc.
Just wondering - if Bear Sterns will say that gold will be at $5000 - will people be wasting their time reading it? Is CitiGroup any better? Is Goldman? Or may be Dennis Gartman knows when to short commodities? They know nothing, MOST of them - if they knew - they would not be trying to make money "selling sure thing"
The game is to make a controversial call that will get you noticed. Similarly very clever intellectual arguments that have nothing to do with making money also work as most of the money managers are closet indexers who would starve if they had to make money on absolute performance rather than fees and relative to index performance. Clever intellectual arguments help them to sound good at their morning meetings where after lengthy intellectual discussions they decide to hug the index.