While my crystal ball is in the shop, and I am unable to tell you exactly what will happen in the co...
The Universal Currency
05/10/2010 12:15 pm EST
David Morgan, founder of Silver-Investor.com, evaluates the recent rally in gold and makes the case for gold as the universal currency.
MoneyShow.com: We see gold just really moving higher; is there some underlying fundamental reason for it?
David Morgan: I think it is mostly safe haven. It is the uncertainty. I mean, the most certain asset class you can have, believe or not, is precious metals. Let us face it. Gold and silver have been money for 5000 years and there are no trust issues involved in it. If you own the physical metal, it is what it is. It has a market price daily worldwide. It is a global market. So you are seeing more and more uncertainty in the financial markets. You are seeing more and more of that uncertainty pouring into the gold market.
What I like about the gold market right now is it is making new highs in almost every currency, and that is really a very bullish sign because you got it breaking out in the euro. You got it breaking out in the US dollar as of today. There is nothing more bullish in any market than a new high.
Q: Trading above $1200, where do see an upside target for gold?
A: Well, after that last statement, I would love to just give a big punch and say it is going to just press on. It could, but all the factors I follow and the emotion and sentiment, I think we are about done here right now for a while. Longer term, I mean, I wrote an article in 2003 and I projected at least $2500 an ounce. I said that on CNBC a couple months ago; I still believe that. All markets go up and down, gold being no exception, so I think we may be overdone here for a while. I think as much panic money you might want to call it that is moving into gold these last few days or last week or so is probably about done. It is going to have to back and fill and build another base and go higher.
Q: As global consumers get back on their feet, will that offer a little bit of support also for gold?
A: Right, I think you are right, Karen. I think that you know in these older cultures like the Asian cultures, India and even China, gold is accepted as money and a way to save and has been for quite some time. What is interesting about India is that it has developed so rapidly in the last decade or two that you have a lot more investment possibilities. Whereas going back 20 years, really, if you had any wealth to save, it was only the precious metals. Now they have got everything that we have, but still there is that underlying idea that gold is real wealth, and that is pervasive throughout the whole, you know, the whole culture.
Q: Based on price action, where you do see solid support in the price of gold?
A: I think $1000. I have a lot of peers that are more technically oriented than I am and I do not know what they are saying currently, although I keep up with all the stuff, as you know, I do not see gold going under $1000 US. I just do not. Could it happen? Sure. Will it happen? I really doubt it.
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