Gold Guru
Predicts
$400 Gold By Mid-2003
By Ken Coleman, editor
The Investment Tracker
John
Embry, Vice President of Canadian equities at RBC Global Investment
Management, Inc., manages a precious metals fund. For the year
ending October 31, 2002, his fund posted returns of 80.8%. Embry
is the author of the now famous confidential bullish report on
gold, written in June, and intended for the eyes of only a select
few at the Royal Bank of Canada.
All hell broke loose
in the media when the leaked report revealed his views that the
price of gold had been manipulated by the central banks under
the direction of the Federal Reserve in order to protect the
value of the dollar. This battle, Embry claims, is one, which
the Fed is losing and will result in huge losses for many central
banks.
Given the massive spending
increase on defense (an estimated $200 billion for Iraq alone)
the cost of homeland security, a looming war, which could lead
to retaliatory consequences on U.S. soil, and an ever-increasing
debt which builds by $1.25 billion per day, the dollar is losing
its luster with investors.
Embry notes that, "if
the dollar is seen as a less attractive currency, not all the
money will move into the Euro or the yen. At the margin, some
of it will move into hard assets, such as gold."
Embry warns investors
to be cautious. "Due to the hedging practices of many Blue
Chip players such as Barrick Gold and Placer Dome, they have
limited their upside potential. By forward selling their production,
these companies have protected themselves from falling gold prices,
but in doing so, they cannot maximize their profits when gold
prices go up."
In conclusion, Embry
states, "the first leg of the current bull market ended
last May and has since gone on a corrective phase and is now
poised to start the second leg."
Embry believes the
second leg will start this coming January. He sees gold moving
to $400 an once by mid 2003, perhaps even reaching $500 by year's
end if the negative conditions currently dominating our economy
continue to proliferate. Embry feels the second leg of gold's
bull market could last several years.
I agree with Embry
that the corrective leg of the bull gold market is ending. The
move above $330 should signal the start of the second leg of
gold's bull market. The first leg saw gold's price increase by
about $70. The second leg should propel gold's price to at least
double that or at minimum $470 by the end of 2003.
Embry chose $500 by
the end 2003. His take on gold is very similar to mine, but with
one exception. For the longer-term, I don't see money fleeing
from the dollar or the Euro and pushing the price of gold to
its ultimate level. The current bull market for gold will be
long and its ultimate price will be much higher than conventional
speculation.
Editor's Note: Ken
Coleman is editor of Ken Coleman's Investment Tracker,
4805 Courageous Lane, Carlsbad, CA 92008, 1 year, 12 issues,
$139. Visit the web site at www.theinvestmenttracker.com.
