Wednesday, May 26, 2010

Frothy Prediction From South African Gold Exchange

A target price of $1,500 is quite optimistic, but those who've stuck their necks out in that way have been one-upped by the executive chair of the SA Gold Exchange, Alan Denby.
GOLD might have been hitting all-time highs in terms of dollars and rands, but it is still at only half the peak set in 1980 after adjusting for inflation, the SA Gold Coin Exchange said yesterday.

“Then, prices rose to 850 an ounce, equal to 2266 today,” said its executive chairperson, Alan Demby.

This phenomenon alone justified a doubling of the gold price from current levels in the next couple of years, he said....

A double in two years is pretty wild. In order to do so, gold would have to go up more than 41% this year and next. I don't think I'll brook much controversy by saying that a 41% rate of return is unrealistic.

Nevertheless, the call was made. As gold continues up, there'll be even wilder predictions - especially if the fellow proves to be right. If so, then we're in all-out bubble territory.


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