The precious metal is in the midst of a long-term bull market that will take prices to $2,500 an ounce and beyond, says Pamela Aden, co-editor of The Aden Forecast.
Pamela, you do see a long-term bull market in gold. Tell us about that.
Yes, I do. We do. Even though it’s 12 years old…as of this month, in fact, it turned 12 years old, the bull market.
We still feel it has a long way to go on the upside, simply because of the way the environment is today. We’re in uncharted territory. We’re in a historical moment for many reasons, financially, geopolitical, the world is changing, and we think gold is one of the main beneficiaries of all this.
Do you have any price targets?
Well, for now if you just take the $850 high back in 1980 and take it into real terms, like real dollar terms today, that would put you at $2,500. At $1,700 today, that’s not that far away from where we are today; but that’s a reasonable first target. We think eventually it can go higher, much higher than that.
Now, how will Federal Reserve actions affect the price of gold?
Oh, it already has. It already has, and it will continue. A lot of it is perception. If a QE3 is coming up or any more liquidation in one form or another, it will definitely push the gold price up.
Is there anything in particular people should watch out for if they buy? Should they be looking for times to sell, for example?
Sell gold, you mean? Well, it depends. If you’re a long-term investor, I would just buy and hold. Look at weakness as buying opportunities.
If you’re a trader, intermediate trader…I don’t even like to call that a trader. It’s an intermediate move, if you want to take advantage of an intermediate high such as we had last September.
There’s nothing wrong with taking some profits along the way. I would never be out of the market completely until the bull market is clearly over.
Now, one of the things I know you’ve talked about has been the role of emerging markets in affecting gold prices. Say something about that.
Oh, clearly, clearly. They have been a big impact. That’s where a lot of the demand has come in.
Of course, there’s been a lot more demand in the developed world. But in the developing world, there is so much demand and affluence now that there wasn’t before. You’re talking about billions of people that want things that they never did before in the international marketplace. That’s where the commodities boost up in that sense. Yes, they want demand.
China, for example, makes it easy for their citizens and encourages their citizens to buy gold. They have them in the ATMs. In the ATMs, you can buy gold there. They encourage their people and they have been buying. That’s a great source of demand. India, as well.