Economist David Rosenberg says we’re in a secular bull market for gold. He says central bank purchases, led by China, will eventually push gold to $2,600. Like Jim Rogers, though, Rosenberg thinks the short dollar/long gold trade is crowded. He expects a short-term correction in gold of as much as 20%. That would bring gold near its 200-day moving average of $970 without violating the trend line.
Making a gold correction even more likely, Rosenberg’s biggest gold catalyst, China, already said it won’t recklessly chase prices up…
“We must keep in mind the long-term effects when considering what to use as our reserves,” said Hu Xiaolian, the vice-governor of the central bank. “We must watch out for bubbles forming on certain assets and be careful in those areas.”
With China’s $2.3 trillion in reserves, it’s difficult to buy gold without moving the market. Expect China to buy on the dips, creating a floor for the metal.
For those out there who haven’t had a chance to fill their safe deposits or stock portfolios with gold assets, another opportunity may be coming. In consumerism circles they might refer to this as a Last Chance Sale.