Why Gold Will Jump From $1000 to $2000 in Short Order

Why Gold Will Jump From $1000 to $2000 in Short Order By Greg McCoach | Tuesday, April 29th, 2008

I don't like the way the US markets are looking. And I'm increasingly fearful about what we're seeing.

When you consider liquidity problems in the market, derivatives, the adjustable rate mortgage dilemma on the heels of all of this subprime mess...just to name a few...it's clear that we've got some major problems to deal with. And the outlook for gold is stronger than ever.

We have the US dollar hitting a all-time lows against many other currencies. At last look the US Dollar Index was just over 72. And we're getting to that critical 70 benchmark, which, once broken, I believe gold will start having $100 up days instead of $20 up days.

Outlook for Gold and Junior Mining Stocks

Needless to say, I'm very bullish on gold. In fact, I think gold prices may move from $1000 to $2000 an ounce in a matter of six to eight months, depending on how the issues with the dollar pan out from here. So be prepared.

However, junior mining stocks are in a real funk. There's no denying it. And I think that we're going to stay in that funk until we get past the capital gains taxpaying season. After that I think higher precious metal prices are going to start pulling junior mining stocks out of the trough and moving them much higher.

There are three or four big hedge funds in New York that have gone long gold with all the majors, but have shorted all the juniors. But as gold an PM prices keep going higher, the juniors are going to move higher, and these guys are going to have to run to cover their short positions. And that should launch our junior market up to new highs. So, my outlook is to stick with it. Advertisement

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Gold and silver Are Now Money

They're also commodities, and when paper markets and governments are performing well, precious metals like gold and silver go back to their status as commodities. What we're seeing now, however, because of the lower dollar and investor flows because of safe haven type of purchasing, everyone is looking to the precious metals, and they're moving into the precious metals to protect their hard-earned savings. And so gold is becoming money again.

Silver is also becoming money again, and it moves from its status as a commodity to the status as money when these times hit.

All commodities are doing well, not just the precious metals market. Grains and other commodities are doing very well, consquently helping to drive up food cost. Almost everyday I hear someone saying that they just dropped $250 or $300 at the grocery store.

Food prices are rising in part because we have 3 billion people in the emerging nations of the world who are embracing capitalism at 100 miles an hour. As I travel through the world, it's so apparent to me the growth that is occurring, not just in China and India that we hear about, but in all of Southeast Asia, Indonesia, Argentina, Brazil, etc.. An amazing growth in infrastructure building is occurring in these countries.

And that takes a lot of base metals, such as copper, nickel, and zinc to build refrigerators, houses and cars, etc.

As opposed to some people who are very negative about base metals, I am actually very bullish on them. Some say that if United States goes into recession, then that's it for the base metals and the commodities. Absolutely not. And that's because the world is no longer centered around the United States.

This is an unprecedented moment in history...an infrastructure-building boom of this magnitude where you're talking about 3 billion people.

The only thing you can compare it to is what happened after World War II in the United States. It was the greatest infrastructure-building boom the world had ever seen. In my opinion that's bullish for all of the commodities for many years to come, not just a couple of years.

I predict the metals market will be in a bull market for at least 10 to 15 years. The outlook for gold, other metals, and commodidties as a whole are still very strong. Don't drop out yet. Stay long on gold and precious metals.

Good Investing,

Greg McCoach www.GoldWorld.com

P.S. About a year ago, I began telling reader about a special situation taking place in Northern China. A North American gold company landed a find so massive that investors could pick up an ounce for just $57. At that time, the stock was trading for $1.17 a share. Today the company sells for $2.48 - already turning every $10,000 into more than $21,197. But this thing is just getting started. Check this out....