Gold, Agriculture, Are `Safest Long Positions,' Deutsche Bank's Lewis Says

One cannot apply the previous manias as measuring tools for the current price adjustment in gold. The size (& speed) of this adjustment is heavily influenced by the size of debt burden created during previous expansion. The greater the debt burden, the greater upward adjustment in the price of gold.

Forecasts such as $2,000 or $3,800 will soon be recongized as far too low. For further discussion on long-term equilibrium prices please review:

Source: gold-and-silver-approaching-critical
Source: federal-debt-held-by-foreign

Lewis’s call for higher gold prices echoes forecasts from other investors and analysts including Jim Rogers, who has said it may jump to $2,000 an ounce over the long term. Myles Zyblock, chief institutional strategist at RBC Capital Markets, said last month gold may soar to $3,800 within three years as it follows the pattern of previous “investment manias.”

Gold would need to rise to more than $1,455 an ounce to surpass its all-time high in real terms as measured by producer prices, Lewis said, according to a copy of remarks to clients in Tokyo today. Adjusted for changes in consumer prices, the metal would need to advance to $1,880 an ounce to reach the level seen at the beginning of the 1980s, he wrote in the remarks.

“The gold price would need to hit $2,100 to represent the most powerful rally in percentage terms, and surpass the 1976- 1980 gold-price rally, when prices surged by just over 720 percent,” Lewis wrote in the speech.

Source: bloomberg.com