Barron's Roundtable members Felix Zulauf of Zulauf Asset Management and Fred Hickey of The High-Tech Strategist were bullish on gold in 2012, and both are recommending it for the coming year:
Zulauf: "We are living in a world of money-printing. Almost 40 countries are pursuing a policy of zero or negative real interest rates to spur more economic growth. We have never seen anything like this in modern history. The people will try to protect themselves against this monetary baloney. It is accelerating the debasement of paper currencies around the world. That is why I have to recommend gold again. Gold's fundamentals are strong; although some technical indicators of sentiment and momentum turned down in the summer of 2011, gold is at the very end of a cyclical correction and the gold price will be up and running again soon. Once gold surpasses $1,800 an ounce, it will run to the low- to mid-$2,000s."
Hickey: "It has been great for 12 years, but it doesn't always go up. In the last great gold bull market, gold rose from $100 an ounce in 1970 to $800 in 1980. But it fell 46% in 1975-76. Anyone who left the market then missed the best part of the rally -- a subsequent rise of 600%. In the latest 12-year period, there have been five corrections in the gold price, ranging between 15% and 30%. The latest correction was 19%, and gold has bounced off its recent lows already.
"You have to be in gold. You have to be in real estate. Semiconductor sales have been poor, yet semiconductor stocks are rising. That is a result of money-printing. That is why the performance of stocks isn't related to the performance of the economy. Stocks could go up again this year. All assets could go up in price. But you'd better protect yourself. At some point, stocks will underperform and inflation will run higher. That is the history of all monetary inflations.
"Stocks will hold some but not all of their value. If you were an investor in Weimar Germany, your stocks lost 90% of their value. The best places to be were in other currencies and gold. But this time around, there is no alternative currency to the dollar."
Zulauf: "We are living in a world of money-printing. Almost 40 countries are pursuing a policy of zero or negative real interest rates to spur more economic growth. We have never seen anything like this in modern history. The people will try to protect themselves against this monetary baloney. It is accelerating the debasement of paper currencies around the world. That is why I have to recommend gold again. Gold's fundamentals are strong; although some technical indicators of sentiment and momentum turned down in the summer of 2011, gold is at the very end of a cyclical correction and the gold price will be up and running again soon. Once gold surpasses $1,800 an ounce, it will run to the low- to mid-$2,000s."
Hickey: "It has been great for 12 years, but it doesn't always go up. In the last great gold bull market, gold rose from $100 an ounce in 1970 to $800 in 1980. But it fell 46% in 1975-76. Anyone who left the market then missed the best part of the rally -- a subsequent rise of 600%. In the latest 12-year period, there have been five corrections in the gold price, ranging between 15% and 30%. The latest correction was 19%, and gold has bounced off its recent lows already.
"You have to be in gold. You have to be in real estate. Semiconductor sales have been poor, yet semiconductor stocks are rising. That is a result of money-printing. That is why the performance of stocks isn't related to the performance of the economy. Stocks could go up again this year. All assets could go up in price. But you'd better protect yourself. At some point, stocks will underperform and inflation will run higher. That is the history of all monetary inflations.
"Stocks will hold some but not all of their value. If you were an investor in Weimar Germany, your stocks lost 90% of their value. The best places to be were in other currencies and gold. But this time around, there is no alternative currency to the dollar."
More information can be found online at http://www.goldbullionadvisors.com
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