A bearish forecast

Marc Faber's conditional forecast of US$800-900 gold seems to have gone viral. Marketwatch has reported that a U.K. shop, Capital Economics, has forecast that gold will shoot down to below $1000 by the end of the year, and as low as $800 in 2010.

It wasn't that long ago that forecasts of $1200 gold were considered pie-in-the-sky. It was only a year ago that a forecast for $800 gold would have been bullish! Now, gold's just $30-40 below the 1200 point and a forecast of 800 is very bearish Even below 1000 is quite bearish.

This kind of flip-flop is characteristic of an incipient bubble. If Capital Economics proves to be right, the bubble's likely been euchred out. By my reading of the gold chart, the CapEc guys are gold bears. Should their forecast pan out, they'll probably follow up with an even lower target once gold recovers.

However, I don't think they'll be correct. If gold laughs off all such bearish forecasts, particularly short-term bearish forecasts by long-term gold bulls, then the stage will be set for a real gold bubble.


Update, and h/t: "Tyler Durden" of Zero Hedge has posted a Scribd copy of the forecast. It actually says below $1000 by the end of the year, and as low as $800 in 2010. I've changed the original link to Zero Hedge's psot.