Where to now for Gold? Peter Schiff, James Turk and Richard Russell weigh in

The three men most well-known to the broader investment community seeking a fair shake and honesty from the financial industry, Peter Schiff, James Turk and Richard Russell, all have recently gone on the record as raging bulls on the gold price in the coming weeks and months.

Each man has his unique style of communicating the fundamentals underlying the move in the precious metals; the widely misunderstood concepts regarding money, in general; and why it’s vital to act now to protect wealth from monetary events expected to materialize one way, or the other—with both outcomes varying in degree of tragedy.

Either politicians and monetary authorities will standby idle and let nature takes its course regarding irreparable insolvencies of governments and many of the largest financial institutions, globally, or they will attempt to fix only the symptoms of a malaise that cannot be ultimately fixed without profound consequences, which are inevitable anyway, but will take on a different guise.

All told, both outcomes point to gold as a no-brainer asset of choice during the widespread and profound awakening coming soon, globally, and will most likely avail is itself in earnest some time by New Year.

Starting with the man with the most stamina and passion for waking up the mainstream investor: Peter Schiff of Euro Pacific Capital.  Schiff possesses the business sense to promote almost any investment, making a living while guiding his clients through both calm waters and avoiding tidal waves.  A win-win situation for him and his clients.

“ . . . gold is going to go higher because people want refuge, Schiff told King World News, yesterday.  “In fact the other safe havens in the currency world, like the Swiss franc or the yen, the central banks there are trying to undermine their currencies.”

Investors thinking that they can avoid the decision to acquire the politically incorrect asset, gold, by buying Swiss francs, instead, will ultimately be disappointed, according to Schiff.  A very strong currency can be almost as troubling to portions of an economy than a weak one is other part of the economy.

Both Japan and Switzerland have taken measures to halt the rapid appreciation in its currencies against the two major reserve currencies of the U.S. dollar and euro.

“I mean the Swiss are actually thinking about pegging their currency to the euro,” Schiff continued.  “One of the reasons people were buying the Swiss Franc was to get out of the euro.  Now they are threatening to turn the Swiss Franc into the euro.  So what’s the one asset that central banks can’t print?  That’s gold and so gold is the last man standing and everybody is going to be piling into it.”

Next, James Turk of goldmoney.com, the man who is presumably closest to the bullion market than either Peter Schiff or Richard Russell given his experiences of running a bullion storage business on a day-to-day basis.  Turk has been as accurate with his short-term predictions as one can with the information, deep knowledge and vast experience he possesses.

“Gold has been rising against all national currencies, and that’s significant,” Turk told IB Times, Monday.  “Politicians and central bankers are making decisions that debase national currencies, and the resulting bad monetary policies they are following are causing the gold price to rise.”

Turk continued, “When there are problems with a national currency … (investors) begin to worry about the value of their money, whether they’re going to lose purchasing power because of inflation or other problems. As a consequence, they look for safe havens.”

And last, but certainly not least, Richard Russell, the publisher and editor of Dow Theory Letters, has been successfully guiding subscribers of his investor newsletter for more than 50 years.  The 87-year-old survivor of the Great Depression, WWII, and many recessions as well as a few inflationary scares told his readers to hunker down like no other time of the past 65 years.

“ . . probably 90 percent of living Americans have never seen or lived through what I call really ‘hard times,’” Russell noted in his newsletter last week, implying that many investors suffer from a term floating around recently, a normalcy bias.

“When chaos reigns, people look for certainty,” he continued.  “When all is lost, only one item stands supreme and has been supreme for thousands of years. That item is gold.”

And if it wasn’t for Russell’s stellar reputation as a man of rigorous reason and steady hands, the notion of the gold price reaching the cost of a used Ford sedan at the end of the bull market in the world’s safest of safe havens would appear to most unfamiliar with the true meaning of money as ridiculous.

“At 2,000 [gold price], the next objective would be 2,500, and from there, 5,000, and from 5,000 – 10,000.  As gold marches higher, it’s playing the death knell for fiat money. And every central banker knows it.”

That statement, coming from the Godfather of financial newsletter, is not to be taken for the purpose of entertainment.

Gold Short Squeeze is ON

In a dramatic change of events from decades-long control of the gold market by the gold cartel, led by JP Morgan (NYSE: JPM) and HSBC  Holdings (NYSE: HBC), the cartel shorts took a bloodbath in the overnight trade after Monday’s close in New York.

The long awaited short squeeze is ON in the gold market.

“Well, what’s happened with the shorts that were in there is they were absolutely crushed on that overnight rise on Monday,” said King World News’ (KWN) anonymous London trader in a Tuesday interview with Eric King.

Anonymous added, “These guys in London woke up with their asses handed to them and I don’t think some of these guys will ever be short again, if they are still in business.  So some of these perennial shorts that have always joined in the party got screwed, I mean literally lost everything.”

After the Fed announced Tuesday afternoon it would extend its ZIRP through mid-2013, the 2 and 3-year Treasury notes soared, while the Swiss franc jumped 400 points against the dollar in a matter of minutes.  And gold, it sold off $50 after short covering in the pits took the metal to a new record price of $1,782.50.

But in New York trading this morning, gold trades at less than $5 from its all-time high.

Earlier, on February 10, Goldmoney’s James Turk told KWN he was watching the gold futures chain closely for signs of a breakdown in the dollar.

As of the close Tuesday in New York, the gold futures chain now look like the silver futures chain, all but completely inverted, a sign that Turk’s backwardation scenario in gold could be near.

“It will be interesting to see whether the backwardation in silver will lead to a backwardation of gold,” said Turk.  “If it does, the end game for the U.S. dollar is near.”

Last month, Turk had warned investors that this summer was shaping up to look like the summer of 1982, the time when the Mexican government devalued the peso, creating a 50% firestorm rally in the gold market.

Back to KWN’s anonymous London trader, who said Tuesday some gold shorts won’t be playing in the pits anymore, and predicted a possibility of the yellow metal achieving the $1,800 print soon.

“Gold just gapped up and didn’t come back and these guys were heavily short,” the anonymous London trader said.  “I believe there is still enough momentum to push gold into the $1,800’s.”

“I fully expect to have $2 moves in silver and $50 moves in gold as absolutely normal at this point.”

Another new normal.

Eric Sprott: “Silver is the investment of this decade”

As the rising price of silver takes center stage within the financial community, an ever increasingly large number of investors wonder if now is the right time to make a move into this performing asset – or, better stated, to seek haven from a virtually hopeless slide in the value of the U.S. dollar (hand-in-hand with competing currencies) and make a real return on risk capital.

As long-time student of monetary history, founder of one of Canada’s largest independently owned securities firms Sprott Securities, and founder of Sprott Asset Management (with $9 billion under management), Eric Sprott told MineWeb’s Geoff Candy on April 5 that he expects the silver price to “treble that of gold over the next three to five years.”

And Sprott anticipates gold’s move higher is far from over, offering a short-term target for the yellow metal of another nearly 35% rise from present levels of approximately $1,470.

“I think gold will continue to move on here,” he told King World News a day earlier on April 4. “We’ve certainly opined before that it will go north of $2,000 and the wind is at our back because the printing is increasing at a very fast pace here.”

Sprott suggested that if investors like the fundamentals of gold’s potential allure as a moving vehicle away from a more profound currency storm yet to come, they’ll like the potential of silver’s added octane more.

“The fundamentals for the two metals are entirely different,” he told MineWeb.  “There is huge industrial demand for silver; there’s not much industrial demand for gold.” After factoring out industrial usage of silver, “ there are 10 times more gold available for investment in dollars every year, than there is [for] silver.”

Sprott added, “So if the guy is just as happy to own silver as gold, the fundamentals are going to diverge markedly here, and that’s essentially what we believe – that silver’s performance would treble that of gold over the next three to five years.”

On the demand side of the curve, the recently released World Silver Survey 2011, issued by the Washington-based Silver Institute, revealed that investment demand for the kissing cousin to gold rose sharply by 40% last year to 279.3 million ounces, up 169% from 2009.

Supply will struggle while demand is anticipated to soar, creating a set up for a perfect storm for higher future prices, argued Sprott.

Therefore, he, along with another credible source in the precious metals space, Goldmoney’s James Turk, expects silver to continue climbing to a target price of  $50 per Troy ounce, sometime this year.  Both men cite an ancient-held price ratio between the two monetary metals of 16:1 as a guide to their prediction for the silver price.

That ratio has been an accepted rule-of-thumb for pricing the two metals against each other for thousands of years, jibing closely with contemporary geological and production statistics which show earth deposits of 16-times more silver than of gold in Mother Earth.

As of today, the gold price-to-silver price ratio stands at 36.5.

“I’ve always thought that silver would move quickly to $50, and it would move to $50 this year – I thought it would get to $50 before year end,” Sprott said. “If you ask me in the three to five year time frame, obviously I think it’s going to go north of $100 simply because we’ll get that 16:1 ratio.” Gold, he said, is going a lot higher.

“Silver is the investment of this decade as gold was the investment of the last decade.  So we’re sitting back waiting for things to evolve here,” Sprott concluded.