Gold price to double to $2000: David MorganDr. Allen Alper
We recently had a chance to interview David Morgan of the Silver-Investor.com -- home of The Morgan Report a financial newsletter focusing on Money, Metals, and Mining.
DavidMorgan is one of the leaders in forecasting growth and value in silver,gold, rare earth elements and other resource opportunities. He offeredhis thoughts on everything from the future of the U.S. dollar to thecurrent silver and gold price cycle.
The Beginning of the Current Cycle
"Wehave been in the formative stages of a major bull market," said Mr.Morgan. In fact, gold has gone as low as $252 an ounce in the beginningof the cycle but now we over the $1100 mark in late 2009.
Silver hit a low of around $4.50 in the same time frame and has been as high as $21 dollars an ounce in 2008.
"We've been through stage one and I believe we've seen the easy money being made,'' says Morgan.
From2002 to 2006 resource investments proved easy to acquire. Financing waseasy to get and many of the mining stocks did well even those ofquestionable merit. However, those days are gone.
The Intermediate Phase
What’shappening now is that the market is experiencing an intermediate phase.Morgan says, "This is where we'll get more serious investors and moreserious money into the sector." Investors will likely be more selectiveon who they'll invest with. Morgan sees this phase lasting a couple ofmore years.
The Blow Off
Morgan predictsthat later in the cycle the market will experience a "blow off or panicstage as I refer to it." In this stage, the institutional investorswill come in stronger. If they come in strong it's likely that thepublic will be "coming in droves" as Morgan says. This may cause hugeswings in silver and gold and mining company share prices.
The Near Term Prospects
From a long term perspective, Morgan sees gold doubling to $2000 per ounce at a minimum.
Andwhile it's impossible to predict the market for any term, short orlong, Morgan notes some indicators suggest that gold may be peaking inthe very near term. What concerns him about this is that silver and theunderlying main equities do not appear to be confirming this move.
Also,having diligently studied the commodities side and seeing thepositioning between the professional and amateur investor, Morgan feelsthere may be a pull back in gold over the next few weeks.
Whilecautioning again that no one knows if this pull back will materialize,Morgan says, "I think we're getting a little ahead of ourselves in thegold market right now."
A Strategy for the Modest Investor
Fora new or beginning investor who's interested in the gold and silvermarket, Morgan suggests that it's always the right time to buy physicalmetals. While interconnected, they move on a different dynamic than thefutures or mining company shares.
"Physical metal was actuallyvery difficult to obtain last summer. You'd buy gold and silver coinsat a huge premium," recalls Morgan. That has since improved but Morganfeels it's a possible precursor of what will be seen in the next fewyears. However, this might work to the benefit of the small investor.
Itcould be hard to put large money in the physical gold and silver sectorso those investors will go to the next step. This means the miningcompanies and futures markets will be sought by investors.
This is…"Very, very bullish longer term," says Morgan.
Silver/Gold Bullion versus Gold Coins
"Thecoin market is the best for almost all individual investors," saysMorgan. The reason for this is that coins provide the smallest unit ofentry. For example, an investor can own 100 ounces of one ounce silvercoins or a 100 ounce silver bar. When the time comes to sell, it's mucheasier to move a one ounce coin in different amounts rather than ahundred ounce bar. The entire bar would have to be sold, and theinvestor may not want to do that.
The idea of buying the smallest unit remains a sound strategy for most private investors.
Storing Metals
Theissue of storing metals is something that has to be determined investorby investor. Some people are comfortable with gold coins in theirhomes. If purchasers travel a lot or have security concerns, they mightconsider other options for maintaining their investments. Some of theseinclude:
· Bullion Management Group in Canada
· Central Fund of Canada
· Gold and Silver Trusts
· ETF's (Exchange Traded Funds)
The premium costs of these firms and the tax implications (especially with ETF's) have to be carefully considered.
"It's better to have an ETF than not have any exposure in metals," says Morgan.
When Will Gold Hit $2000 per Ounce?
"WhenI first started publishing on the Internet about 10 years ago I said Ithought 2010 could be the last year of this bull market in the preciousmetals. Right now I think I'm wrong about that, it seems the preciousmetals bull market has several more years to run, "states Morgan.
Accordingto the work of noted investor, Jimmy Rogers, these cycles last about 17years. If an average of 15 years is used and this cycle began in 2000,it would end about 2015.
Taking into account the two year oldcredit crisis, Morgan thinks the spike in the silver and gold priceswill occur between 2012 and 2014.
The Silver Acceleration
Morganthinks silver, the smaller market, will accelerate even more than gold."When investors see they missed the move in gold, they'll go to thesilver market," he says.
He also predicts the ratio of silverto gold will narrow from 65 ounces of gold buying one ounce of silverto 20, 15 or even 10 to one.
The U.S. Dollar
Morgansees a time when the U.S. dollar will cease to be the reserve currencyof the world. A world currency of some kind will take its place.