Two heavy weights of the hard-money camp, James Turk and Marc Faber, once again disagree on the short-term outlook for the gold price.
For those new to the competition in the Fight-to-be-Right, Goldmoney’s James Turk of Team Sinclair-Turk won the first bout against Faber in its predictions for the gold price during the summer months of July and August.
Back in June, Team Sinclair-Turk told its respective readers to expect an uncharacteristic boom in the gold price during the seasonally slowest time period of the year, July and August, while the Gloom Boom Doom Report’s Faber said he expected the price to follow the 30-year historical bias to the downside in the metal.
As we now know, Sinclair-Turk won hands down, as the gold price soared nearly 25% in the face of expected marginal declines—a truly bold call by Sinclair and Turk, who both stood out from the pen of gold bulls reticent of taking one side or the other.
So here we go again. On September 12, Goldmoney’s Turk told KWN’s Eric King that gold’s short-term outlook is for still higher prices—technically overbought conditioned be damned—targeting $2,000 as the next stop for gold by the end of October—which, once again, defies historical data that suggest October is the month when gold typically sells off pretty meaningfully from September’s typical strong rally post Labor Day weekend.
“I was expecting closer to 50% [rally from July 1 $1,480 low] by the end of September; and even though we are not at the end of the month and may not reach that 50%, there is a lot more left in this move,” Turk told KWN. “Gold is headed over $2,000 and if it doesn’t happen this month, it will probably happen in October.”
On the other side of the ring, gold bulls’ favorite pony-tailed Swiss eccentric money manger (who’s lived in Chiang Mai Thailand for the past 20+ years), Faber, of the Gloom Boom Doom Report, told an audience in Mumbai last week he believes the gold price is “extremely overbought” today and wouldn’t be surprised if the yellow metal drops to the $1,500 to $1,600 before resuming its secular bull market rally.
As followers of Faber already know, he’ll “never sell” his gold, but doesn’t recommend adding to a position above the $1,800 level. Though Faber doesn’t make an outright call for the metal in the short term, Faber apparently doesn’t like the looks of the gold chart in the face of another seasonally weak period coming up for the month of October and believes market volatility could prompt some selling in the metal as a means of raise cash to settle hedge fund redemptions.
“I am not selling any gold but traders should realize the gold price is extremely overbought,” India-based Business Standard reported Faber saying at a Mumbai conference, “and that it could easily drop toward the 200-day moving average – that is, between $1,500 and $1,600 (not a prediction).”
So there you have it, two informed and studied men take diametrically opposed positions on the short-term outlook for the gold price. Once again, Turk has thrown away the seasonal charts and has come out with another scary call for a $2,000 gold price “in 45 days,” as we moving into the most dangerous time of the year for the stock market—the seasonally lowest period for money inflows into stocks.
Will hedge funds need to raise cash (from their profitable gold positions) if the Fed disappoints at the close of its FOMC meeting on Wednesday? What if the German parliament rejects funding of the EFSF after its scheduled vote on September 29? What if Greece doesn’t get its second tranche from the IMF? What if Berlusconi opens his mouth again?