Another Cautious Bull, And One Less Cautious

Daryl Mongomery, in a Seeking Alpha article, reiterates the inflationist case but expresses caution in the near term:

Despite a barrage of press coverage during the last several weeks, the threat of inflation hasn't diminished, nor are the world's governments likely to return to fiscal and monetary responsibility for many years into the future. Gold will continue its long-term rally until that happens...

In the short-term, gold is not out of the woods just yet. Investors should watch the $105.00 level on GLD. Any significant break of this would indicate that GLD will drop to its 200-day moving average, which is around $100.00 and that spot gold would test the $1000 level. Silver would also break down from its trading range, roughly between the $16 to $19 an ounce level for spot (slightly lower for SLV). Seasonals are generally strong for both gold and silver in February, but weak in late spring...

He's right about February. Gold topped out both in February 2008 and 2009; both tops were around $1,000, then a record or near-record. This behavior was anomalous given the sell-in-May rule, but that anomaly's been in place for the last two years.


A much shorter piece by J.D. Steinhoilber is more explicitly bullish:

...Driven by demand from both private investors and emerging market central banks seeking diversification from paper currencies, we expect gold to reach $1500 at a minimum over the next two to three years, and it could potentially trade much higher if speculative dynamics really take hold. The downside risk in gold should be limited to $1000 to $1050.

Note that both of them believe that gold, at worst, will fall to $1,000. Not to be a downer, but there's a lot of potential fall if gold should drop to three digits and not bounce back.