Friday Charts: The Boldest Gold Prediction Ever
It’s Friday in the Wall Street Daily Nation. That means I’m ditching our regular routine of commentary-based articles. Instead, I’ll use charts to present some important investment and economic insights.
This week I’m addressing the unthinkable little rebound in residential real estate prices, silver’s slump and the boldest prediction for gold prices I’ve ever seen.
So let’s get to it…
Break Out the Hammers and Nails
On Wednesday, the Census Bureau reported that housing starts in June advanced to a seasonally adjusted rate of 760,000 units. That’s a 6.9% increase month-over-month and a 23.6% increase year-over-year.
May and April housing starts data were revised upwards, too.
The end result? Housing starts are up 59% from the bottom hit during the depths of the downturn. And that, my friend, is a clear indication that the real estate market is indeed rebounding.
And I’m not the only one who thinks so.
The latest National Association of Homebuilders (NAHB) sentiment index came in at 35, the highest level since March 2007. Economists were only expecting a reading of 30.
Although we’re still below the long-term average of 47, “clearly something positive is going on in the housing market right now, and yet it still has a long way to go,” as Bespoke Investment Group says.
It’s true that it could still take years for the housing sector to return to “normal,” as IHS Global Insight economist, Patrick Newport, told MarketWatch. But one thing’s clear: The bottom is in!
Believe it – or be sorry.
Next Stop for Silver?
The latest price chart for silver shows the “other” precious metal is hitting a series of lower highs – but keeps finding support around $26 per ounce.
If silver tests this support level once again and stays above it, we could be in store for a sharp rally back to $35 (or higher). However, if prices fall through the support, look out below!
The takeaway? If you’re planning on buying silver at these levels, perhaps via the iShares Silver Trust (NYSE: SLV), use a tight trailing stop.
Gold At $8,300?
We’re all familiar with the Pareto principle. We just know it by a different name: the 80/20 rule.
Well, Austrian investment bank, Erste Group, recently applied this idea to the gold market to predict where prices are headed next. It used its findings from the gold bull market between 1970 and 1980. That’s when 80% of the metal’s price performance occurred in the last 20% of the trend.
The result? Gold at $8,300 by the spring of 2015, according to analyst, Ronald-Peter Stöferle.
Talk about a bold prediction! That’s 422.7% above current prices. And you people say that I’m out of touch with my predictions about the U.S. real estate market and Japanese stocks? At least my bold calls have a basis in reality. Just saying.
That’s it for today. Before you sign off, do us a favor. Let us know what you think about this weekly column – or any of our recent work at Wall Street Daily – by sending an email to feedback@wallstreetdaily.com, leaving a comment on our website, or catching us on Facebook, or Google+.
Ahead of the tape,
Louis Basenese
Related Topics: Commodities, Market Analysis, Think Contrarian
Thank you so much. I dearly appreciate all of this informative info. I am an aspiring investing guru. I am attending community college this fall to commence my master of science degree in finance.
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It would be interesting to see that gold chart adjusted for inflation. Also, what’s the thought on silver? Will it rise proportionately to gold, revert back to the historical ratio or plateau somewhere along the line?
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Common purchases on 100 ounces of silver as a minimum have not been at the $27.50 price you quoted since I think November 2010. Ever since then it has been above the $30 range and rising. Presently as of Friday Nov. 3o it closed at $34.40/ounce. If you have a place to buy 100 ounces at $27.50/ounce I sure would like to know where that is.
Thanks,
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What people do not realise is the Gold might possibly rise to $8,000 per ounce, but
that is of little use when it will only then buy what cost say $800 only two years before !
Uncontrolled Inflation inflation affects the allegedly poor and the allegedly rich to the same extent. It is a pity that there are virtually no survivoirs still living of the 1920-1923 Weimar Republic inflation experienced in Germany. Those who were young adults at that time would have been born around 1890 to 1900 ! They could tell you where the crazed policies of the past 30 years are leading the U.S.A. But no one would be listening in Washington DC.
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