Wednesday, August 14, 2013

Gold To $1,600 By Year's End

At least according to Adrian Day of Adrian Day Asset Management. He states at Bloomberg....

Gold will rebound to $1,600 an ounce by the end of this year as governments maintain efforts to boost economic growth for the next few years, according to Adrian Day, president of Adrian Day Asset Management.

Investors have “grossly overreacted” to speculation that the Federal Reserve will begin trimming its monthly bond purchases, Day said an in an interview yesterday. Bullion is down 21 percent this year as Fed policy makers debated the pace of asset purchases.

“All the Federal Reserve is talking about is cutting back on the additional stimulus put in place,” Day said. “No one is talking of tightening or reducing the Fed’s balance sheet.”

Without knowing or have ever followed Mr. Day, the article clearly suggests that the manager has a vested interest in the welling up bullish sentiment for gold, as his firm has teamed with Euro Pacific to launch a gold fund. That said, IO remain bullish on the yellow metal and the related equities. Not only in the long-term, but in the short-term. The recent price action on the Gold Spider ETF (ticker GLD) and the Market Vectors Gold Miner Index ETF (ticker GDX) are confirming higher prices in the short term, as volume accelerates with the price increase. Here are the charts of the GDX and GLD, respectively.

I believe the setup in both suggest that the price of the GLD will rise into the range between$135 to $138 while the GDX trades into a range between $30 and $32.

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