Gold Price Per Ounce 2010
Talk to an Expert: Christian M. Jeffrey makes the case of gold and silver
In 2006, the magazine Barron's revised best Christian Jeffrey Commodities increase sales of books with the phrase: "One of the brightest and irrespective of the analysts." Jeffrey founded and is the Managing Director of CPM Group, which publishes notices, annual publications on gold, silver and precious metals, and resourceINTELLIGENCE recommended for any serious investor. Jeffrey and CPM Group are also advisers many central banks and metals industry.
Appeal Intelligence: Last summer we talk about stimulus packages worldwide and the impact they were having on the world economy in crisis. Do you have an update for us?
Jeffrey Christian: The incentive program has done much to try to pull U.S. and global economies out of recession. People are calling the recession "large", which is a pretty good name for what we have experienced I think. In the United States in late 2009, only 30% of the stimulus money had been allocated. China passed the stimulus bill in February and immediately began to spend and as a result is probably China's GDP will grow about 8% on a real basis for the year 2009. I think the incentive really has done much to help stabilize the financial market and to keep the recession evolving into something much more serious.
RI: What happens once the stimulus spending lever is removed?
JC: First of all you have to understand there is no fiscal stimulus and monetary stimulus. They can be removed at different times and in different ways. Frankly, I would pay much more attention to monetary stimulus. I think it's in place. I do not think that the U.S. will add to its monetary stimulus. At some time should be seeing a strong U.S. economy to apply some upward pressure on interest rates and inflation. The Fed will probably start to sell bonds and when it does interest rates likely to rise further. Our expectation is that it could see a small increase in half this year, but probably most of the interest rate increase will not occur until 2011.
RI: Is there any possibility of a W-shaped recession?
JC: There is a real possibility of a second dip into a new recession and I think the risk of occurrence are perhaps greater than any time since 1981, which is the last Once we had a double-dip recession. In some ways the situation is very similar. I think if we avoid political crisis, and political crises, and I mean is neutral in the U.S. government or the Middle East crisis, perhaps precipitated by the U.S. confrontation with Iran, I think we will avoid a recession in the second bathroom.
RI: 2009 was a bit of a Wild West show in the markets. Is that an omen of 2010 and the decade?
JC: That's up dramatically from that commodities and the markets you are viewing. I think the stock market will be more volatile in the coming years, what has been. The oil market shall be final. One of the things people do not realize, and once again see this on the comments in Washington, the volatility of oil prices over the increase to the point of which reached 147, the volatility of oil prices actually deteriorated to very low levels between 2003 and early 2008. Oil prices rose but rose in a pattern very consistent and the people in the oil industry continued to look at this and saying what is going on here that the price of oil is increasing day to record high prices the day after in a way not very volatile. However, volatility has returned and I think the volatility of a series of commodity markets, such as platinum, palladium and some base metals, possibly even gold and silver will certainly be higher than it was in last decade.
RI: What are the main source of commodities and demand factor that is passed in 2010? JC: Step by metals precious, I think that silver, platinum and palladium will likely increase. We can see the silver as high as $ 20 – $ 22 in the first four months of this year. After of this can be off a little, but we think it will be very high. I think our projected 2010 average price is around $ 17 – $ 18 an ounce, so about current prices, but with the possibility of a higher peak. Platinum and palladium are used in the automotive industry. Markets are very liquid. We now have the ETFs that listed for platinum and palladium, which have a physical backup. We believe that the prices of platinum and palladium will be very strong all year. Will increase in the first of the year along with silver and gold, but then we will continue to grow in the second half of the year as the automotive industry worldwide, especially China, India and the United States continues to improve and recover. And then the gold is the most nuanced. Our expectation is that gold prices will be strong for the first four months this year. We are not surprised to see prices move to a new record. The current record is about $ 1,228, which was established in early December 2009. I could go back there, could go to $ 1,300 or even $ 1,400 in a spike. But if we are right about the economy and the global economy continues to improve the course of 2010, and if the U.S. economy continues to improve in the course of 2010 and investors catch on that we are not going to double-dip recession, but in fact we are entering an economic recovery could see the gold price peaking in the first four months of this year, cyclically. I think the price of gold at the end of 2010 will be around $ 1,100, maybe $ 1,150. Basically where we are today, but I'm not surprised to see prices record so far.
RI: Are ETFs a good place for a sophisticated investor to invest in precious metals?
JC: I think they are. I think you offer several things. There are tax disadvantages for the future if you are shorter or more people-oriented trade. But if you are a beginner or less precious metals sophisticated, it is a great place to go in. You buy it, leverage is basically one by one, because you're going to buy one ounce of gold. It's actually a little less-it is 1.99 take advantage because it is the cost of the ETF, which we know reduce the cost of the celebration each year. But it is basically a very simple. You do not have to worry about by the contract expiring, you will not have to worry about the return, you do not have to worry about leverage, you do not have to worry about margin calls, so I think from that point of view of the ETFs are very good.
RI: In this market environment, we have literally thousands of people who are investing very high in juniors, producers, developers in the resource sector. Given the scenario that is painted, which would you stage companies that are going to give the explosion largest at this time?
JC: Well, obviously the youngest. exploration and development companies will give you the biggest bang, but are also the most risky. Personally, I have some AngloGold Ashanti and I have some Goldcorp. Those are the two very large, well-established companies I think they are relatively well managed, but also have a number of small exploration and development of populations. It is a difficult place because you have to be very careful in selecting companies that have a higher probability of success in relation to the likelihood of failure or stagnation. But definitely the most potential capital earnings come from the young.
RI: Let's talk about South Africa. It is the largest producer of platinum and are having trouble just keeping lights on at night. What is your word on what is happening in South Africa?
JC: I have already mentioned that we think the price of platinum and palladium will continue to rise throughout the year, almost regardless of what happens to gold and silver and what happens in the economy. There are three reasons for that. One is the demand for automobiles for platinum, palladium and rhodium is expected to be strong. Second, investment demand is expected to be strong and with the advent of ETFs that listed which makes it easier for people to invest in the physical metal. The third reason we expect the platinum and palladium prices to rise is that the supply is limited. South Africa has a lot of problems, but frankly, South Africa is one of the busiest jurisdictions in which mines platinum and palladium in the world right now. You have a situation where you have problems with electricity and, unfortunately, the South African government has chosen a path that is more dangerous than we would have liked. The South African industry is facing a number of problems. Electricity could be the worst part. But then, if you step back and say, well where else be mined?
RI: What are you looking for in a potential mining when evaluating credit risk?
JC: Personally, I get the greatest responsibility management. I really want a good management and good governance I mean the experience, background, and I'm not looking for people just getting. If we look at the gold sector some of the best companies in the gold mining operation today were created and developed by non-mining. What we really want is a company with a certain level of financial sophistication. I see a chief financial officer and treasurer who really understand things. I see a very well developed financial plan and an overall business plan. Management is the first thing I look. The second thing is to look at the properties. Quite frankly, if you have a good management can go out and search for better properties they have in their portfolio. If you have a bad property management can have a very large and is probably not going to go ahead.
RI: Do you think investors must be fully invested in the markets?
JC: Right now I'm still heavily invested in cash and cash equivalents. I think that most of my clients are still in that position too. Investors should be prepared to increase the percentage of your portfolio in stocks and corporate bonds.
About the Author
John Stephenson – “Gold at $2000 per ounce”
