Home » gold » Gold Prices Prediction to $1,750 end of 2011

Monday, July 18, 2011

Gold Prices Prediction to $1,750 end of 2011

Gold Prices Prediction to $1,750 end of 2011 : Gold rose to a record high Monday amidst worries of a debt contagion in Europe and uncertainty over how lawmakers plan to resolve deficit negotiations in the U.S. , Gold for August delivery settled $12.30 higher at $1,602.40 an ounce at the Comex division of the New York Mercantile Exchange. The yellow bullion reached as high as $1,607.90 an ounce and $1,591.40 on the lower end. Meanwhile, the spot gold price climbed by $9.90, according to Kitco's gold index. New highs for gold this week follow a record $1594.90 per ounce high from last week's trading.

highlight the two big rallies of the past year that saw surges of about $275. The July to December 2010 move was after record highs that touched $1,265 in June of last year and then quickly fell back to $1,156. From that low, a new high was reached at $1,431 in less than five months.

Then correcting back to $1308 through December, another 20% rally occurred from January to May of this year before $1,575 became the new high-water mark. I would add the $222 rally that occurred prior to these two when, after hitting new highs just above $1,225 in November 2009, gold dropped to $1,044 and then marched to the June 2010 zenith of $1,265.

In short, it's been a strong bullish zig zag higher where the dollar amounts seem enormous, yet the actual corrections and volatility -- when measured in percentage terms -- have been far tamer than your average stock. Assuming history will repeat itself (it clearly likes to), the DailyFX gang thinks this current rally will get us to $1,750, probably this year. And from the looks of the move in the past two weeks, they might be on to something.

The three names below have all recently benefited from upward analyst estimate revisions, the strongest leading indicator of earnings momentum.

Barrick Gold (ABX - Analyst Report) has been the big name that has gone nowhere this year despite gold's advance. Long considered the huge miner with lots of old hedging obligations (via forward contract sales) much below the current market price, Barrick fights to get above it's 200-day moving average and is trading near where it was in December 2009.

In April, because Barrick and two other big miners comprised 35% of the Market Vectors Gold Miners ETF (GDX), I did a pairs trade where I bought gold through the SPDR Gold Trust ETF (GLD) and sold calls on the GDX. I wrote about this last month in "Mining for Top Gold and Silver Stocks." Though ABX has some earnings growth now and has recently seen upward estimate revisions to give it a strong Zacks Rank, that growth is currently still in the single digits. Thus the Zacks Recommendation is Neutral.

Gold Fields Limited (GFI - Snapshot Report) appears to be the standout here with strong double-digit earnings growth and an attractive P/E multiple. It is also one of the world's largest unhedged gold producers with operating mines in South Africa, Ghana, and Australia. For the latest updates PRESS CTR + D or visit Stock Market news Today

Related Post:

Posted by at
Labels:

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)