-- Posted Sunday, 26 June 2011 | | Disqus

Two of the investment leaders of the current precious metals boom sharply disagree over the direction that gold and silver prices will take over the next three months. Dr Marc Faber says they will go down. Gold superbug Jim Sinclair says they will go up. Somebody is going to be proven wrong.

The warning posted on Mr Sinclair’s website is very clear:

Be prepared for a reversal of the decision to curtail QE at the end of June.

Be prepared for a snap back at a greater percentage of QE with a different name.

Be prepared for covert QE between July 1st and late August when stimulation goes wild.

Be prepared for gold to take out $1,650 on the upside as magnets at $12,544 come into play.

Be prepared for the Inflationary Depression of all time. Stand firm on your gold positions.

Dr Faber, on the other hand, remains committed to gold and silver but says ‘they will go down over the next three months or so’. He warns: ‘Not to own gold is to trust central banks and that you do not want to do!’ 

His reasoning is apparent from this video from Bloomberg, and he predicted the two-month correction in stock markets correctly. Now he is seeing a three-month continuation of this sell-off including gold and silver.

ArabianMoney does not have a crystal ball, although last December we did say to buy silver because there would be a $50 spike early in 2011 (click here) and we maintain that silver will be the best performing major asset class over the whole of 2011 (click here). Silver should close the year substantially up on that $50 spike.

QE3?

Marc Faber thinks Ben Bernanke will wait until later in the year before starting to print money again and that will push precious metal prices back up again. This fits with the recent ArabianMoney column suggesting that a sell-off in stock markets will last until a climactic sell-off in late October (click here).

Last week US stocks closed slightly lower again and the yield on treasuries hit a new low. That pushed up the value of the US dollar and pulled precious metal prices down. Silver fell to $34 and gold dipped below $1,500 an ounce.

If this trend is extrapolated for the next three months then the S&P 500 could well be down 20 per cent or more. But we doubt whether gold will go much below $1,450 and silver $30 an ounce as the investment demand remains from those positioning for renewed dollar weakness when the Fed resumes its money printing as it must for an election year.

-- Posted Sunday, 26 June 2011 | Digg This Article

About Peter Cooper:
Oxford University educated financial journalist Peter Cooper found himself made redundant by Emap plc in London in the mid-1990s and decided to rebuild his career in Dubai as launch editor of the pioneering magazine Gulf Business. He returned briefly to London in 1999 to complete his first book, a history of the Bovis construction group.

Then in 2000 he went back to Dubai to become an Internet entrepreneur, just as the dot-com market crashed. But he stumbled across the opportunity to become a partner in www.ameinfo.com, which later became the Middle East's leading English language business news website.

Over the course of the next seven years he had a ringside seat as editor-in-chief writing about the remarkable transformation of Dubai into a global business and financial hub city. At the same time www.ameinfo.com prospered and was sold in 2006 to Emap plc for $27 million, completing the career circle back to where it began a decade earlier.

He remains a lively commentator and columnist as a freelance journalist based in Dubai and travels extensively each summer with his wife Svetlana. His financial blog www.arabianmoney.net is attracting increasing attention with its focus on investment in gold and silver as a means of prospering during a time of great consumer price inflation and asset price deflation.

Order my book online from this link

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