PLP Advisors, LLC

Financial Advisor Asks: Will Gold Break $7,000?

Dennis Tubbergen talks about the possible future of gold.

 

Grand Rapids, MI -- (ReleaseWire) -- 07/10/2013 -- We all know it is difficult to stay abreast of everything that is happening financially in the United States today. Dennis Tubbergen, a financial advisor, author, radio show host and CEO of PLP Advisors, LLC can be counted on to give a hand when it comes to understanding the latest events in U.S. and world economics.

Whether people enjoy his monthly newsletter at http://www.moving-markets.com or his blog at http://www.dennistubbergen.com, Tubbergen is dedicated to sharing his viewpoints and opinions. On July 8, 2013 his blog was titled $7,000 Gold?

"James Rickards was quoted in a Business Insider article predicting that gold would reach $7,000 per ounce," began Tubbergen.

Below he quotes from the June 29, 2013 article.

Emotion is overshadowing fundamentals in gold right now and several factors point to a long-term bullish move in the metal, two gold bulls told "Squawk on the Street" Thursday.

"It all depends on Fed policy," said James Rickards, managing director at Tangent Capital, who expects deflation fears to outweigh the Fed's desire to taper. Right now, he said, the fact that real rates are above inflation is a bearish signal for gold, and expectations of continued policy tightening is also pushing down prices.

"The case for buying gold is that the Fed is going to back off," he said. "They're not going to taper later this year. They're actually going to increase asset purchases because deflation is winning the tug of war between deflation and inflation. Deflation is the Fed's worst nightmare."

"In the next two months, the Fed is going to make it clear that they will not taper," he predicts. "That's very bullish for gold."

Aside from Fed policy, Rickards expects China to start buying gold at these low levels, up to perhaps 4,000 tons. "People will say 'Why is China buying gold if it's so worthless?'" he said.

Tom McClellan, editor of the McClellan Market Report newsletter, is also bullish on gold, comparing the technical level of the commodity to the 2009 bottom in the stock market.

"It's the same emotional play that's going on, people falling out of love with stocks back then, people falling out of love with gold now," McClellan said. "We're reaching the climax point equivalent for the March 2009 low for the stock market."

"It's a hugely bullish condition for gold and I'm expecting a really large rebound," he said.

Rickards said that the destination for gold is $7,000 per ounce, although tightening of Fed policy could drive it down to $1,000 on the way there.

McClellan's target is between $2,800 and $4,400, based on his own technical analysis, although he did not dismiss the $7,000 level. He said that we haven't yet seen a "blow up moment" in the gold market yet.

"The moment that we see a major gold producer announcing that it's curtailing production or it's going out of business, that'll be the moment that we mark the low in gold. I expect to have one of those announcements any minute."

"We're getting down to the production price of gold right now and they won't continue producing gold at that level for very long," McClellan said.

"While I wouldn’t go out on a limb and forecast the ultimate price of gold, I do agree with both Rickards’ and McClellan’s assessments of the gold market," notes Tubbergen. "Central Banks around the world have two options as I see it: One, let deflation set in and let the debt excesses that exist in the financial systems be purged. Two, attempt to stave off deflation by printing money."

Tubbergen goes on to say that while the latter won’t work to solve the problem as Japan’s policies of the last 20 years have taught us, he believes that there will be too much political pressure to take action to combat deflation. Faced with taking action, the Fed has just one tool to use: the printing press. And they will probably use it.

"In a winter economic environment, gold typically does well while stocks perform poorly," concludes Tubbergen. "While that has not been the case recently, I expect that trend to continue long term."

To read the blog in its entirety go to http://www.dennistubbergen.com and select his July 8, 2013 entry.

Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.

About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at http://www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to http://www.moving-markets.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.