Be a little more patient, as it will likely be soon before the market tells us if it wants to bottom...
Gold’s Future Is Still Bright
12/06/2011 3:00 pm EST
Bullish seasonal patterns, jewelry demand, and safe-haven buying on a global scale can drive gold to $2000 and beyond, says John Person, who is targeting a popular gold mining ETF.
Are there still opportunities left in gold? Let’s ask John Person.
John, we rallied, we came down, we settled, and are kind of consolidating right now. What do you see gold doing?
I think gold still has a very shiny outlook going into the first quarter of 2012. Normally we see from our research, seasonally speaking, gold tends to rally towards year end and into the first part of the first quarter.
Any particular reason behind it?
Absolutely. You get jewelry demand, number one. And right now, gold has just so many different facets of central bank buying. It has, for example, flight to quality. People are nervous of what’s happening with sovereign debt issues in Europe.
We have flight-to-quality issues (in the US); people are worried about where they’re going to get not just a return on their money, but a return of their money. So we see investor demand, we see jewelry demand, and it’s not just domestic, but it’s on a global scale.
Gold really has come into its own. I’m thinking long term, $2000 to $2400 in the next 12 to 18 months is not improbable.
We’ve had a hard time making new highs on the year. I think that any type of a substantial pullback into the $1600 area will present some decent buying opportunities, but whether the market goes from $1600, $1700, and $1800—in that $200 range, let’s say—one thing that’s for sure is that gold miners are still going to see a substantial profit.
So I think at this aspect, if someone is not invested in gold right now, instead of picking out a gold-mining stock, look at the Market Vectors Gold Mining ETF (GDX), and I think investors can play that through December 2011 and into January 2012.
Do you like that index better than the SPDR Gold Trust (GLD) or even some of the other mining stocks?
Yeah. You know, there are some mining stocks that I like. Ivanhoe Mines (IVN) for one, but buying GLD, the ETF that holds gold, I think if the market does rally, it might not rally a whole lot. I think right now there is a better play in GDX than in GLD.
And certainly not the bullion or coins or anything like that?
You know, I don’t say not to buy bullion, and I don’t say not to buy numismatic gold, but I think for me personally, the numismatic aspect, where gold is right now and everyone’s in it, it’s hard to enter into that space right now.
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