Gold Price Direction - Gold Prices Forecast 2009

Gold Price Direction - Gold Prices Forecast 2009 - 2010

We thought we take a shot at the current gold price direction and gold prices forecast for 2009 - 2010 ... And why not? If every jerk on Wall Street can why can't we? And, of course, the price direction we forecast won't be different from many pundits, analysts and gold bugs - it is UP: yes, we believe that gold prices will reach $1150 per ounce in 2009 and exceed $1300 in early 2010. You may find this forecast quite conservative in comparison to what you've been told lately - $2000, $5000 and even $12000 per ounce gold prices were suggested by different thinkers and believers.

What differ our forecast on the near term gold price direction is the explanation of Why it will go UP and not down. It's quite simple, really... it's the Expectations, dummy. All financial markets are mainly driven by the expectations of the events that may take place in the future, not by events themselves. Such expectations now, as of September 2009, are building up to uncontrollable levels. They started last year as some wild or seemingly incomprehensive ideas and have been growing since into something more factual and believable or just fears. And the more of related facts is being unravelled the more gold price direction is being reaffirmed for the upside. All these expectations we're talking about are either negative to the US$ Dollar (which is consequently positive for gold) or outright positive for Gold, and the number of different expectations is growing weekly and is about to get overwhelmingly high.

Here are some of the most spread expectations:
1. High inflation is expected soon as Feds print money by truck loads.
2. The US$ Dollar status as world currency is expected to be in jeopardy as China and Russia, some American riches (like Soros) and even UN's IMF (International Monetary Fund) are pushing for new global currency.
3. China is expected to ever continue (if not increase) their gold purchases as China has been buying on dips, and thus provide support for higher gold prices (as the prices refuse to go down).
4. China is expected to continue their push for yuan as dollar replacement as the world currency.
5. US and UK banks are expected to fail in masses, and FDIC (bank accounts insurer) will follow.
6. UAE, Saudi Arabia and other arab banks are expected to fail, and they are stuffed with US debt.
7. US is expected to have a double-dip recovery, which means another run from stocks and into gold soon.
8. Expectation of war(s) in the Middle East is growing (and it's not only potential Israel vs. Iran war, it's also a potential revolt against Saudis regime).
9. Oil prices are expected to go higher as the US economy and the world economies are recovering (means US$ will go lower).
10. The Chinese citizens are expected to start buying gold and silver in droves as their government gives it a green light and 'pushes' for it.
11. The COMEX (New York) gold exchange is expected to get in trouble as European countries demand return/delivery of their physical gold in masses.

As you can see some of these expectations contradict each other, still they're all positive for gold. How many will come true is your guess vs. mine ... but as long as they are out there the gold price direction will remain up.

Why we forecast the upcoming move in gold prices as a very powerful one?
Because it is not just one or two but so many different expectations are in existence right now ... that they satisfy many more people than the usual 'buy on inflation worries' crowd. How all this reflected on the price of gold? You can see it on this chart ... gold price has narrowed its daily fluctuations to around $1000 per ounce, the lows have been higher and higher. To sum it all up ... a much bigger economic crisis is expected to cause a much bigger negative impact on the dollar.

So if you're ready to speculate on gold prices then this may be your greatest chance to make a profit. We're not talking 'investing' in Gold, we're talking 'speculating' on Gold. The time to invest in Gold was in 2000-2002 when the gold prices were suppressed, on the bottom. Now is not the time to invest in Gold, we believe, because the action in gold prices will be swift and short lived. As some expectations will become absolute and some resolve in actual events, the prices will fall and fall rapidly. As volatile as it has always been, we expect gold to jump to around $1150 and then to around $1300 within a few months range and this price direction can start as soon as this month of September, 2009. (It may already began on Friday, the 11th.)

Where did we get such price targets for our forecast?
We simply modeled our 2009-2010 price targets of the 2008-2009 price levels. We looked at the last year price chart (above) and noticed that after a prolonged period of accumulation (prices leveled out) gold jumped by about 150 points ($150) twice with a short pause in between. Since the levels and the amount of expectations today are much higher than those of the last year (in our view), at the minimum the same or greater price action is expected to repeat. We chose to offer the 'minimum' numbers, the most conservative targets.

How do we forecast that this explosive move is about to happen now, and not next month or next year?
The answer is simple ... just look at the gold chart. Don't see why? Then let explain ... Charts never lie - they merely reflect the historical(!) changes in the overall(!) buyers vs. sellers sentiment. This sentiment is based on expectations and is changing as the expectations are increasing or fading away. We already learned from the above that the 'uptrend' expectations are abundant like never before. The current price of gold is only meaningful when compared to the previous price levels. As of this September, 2009, the fluctuation in the price of gold has tremendously narrowed down to just about $1000 per ounce, and it is at the all-time-high levels. Which means that the overall public sentiment towards positive price direction in gold, or, in other words, the level of dollar related negative expectations, has reached its culmination point and is about to explode into an outright fear any day now. Which means that the number of buy orders is about to greatly outrun the number of sell orders on exchanges around the world. Gold doesn't care who is going to do the buying ... which country, funds or citizens. Now, let's wait and see ...