After solid earnings for the second quarter were reported by Barrick Gold (NYSE:ABX) and Agnico-Eagle (NYSE:AEM), executives at both companies said they see gold going to $1,400 an ounce by the end of 2010.
Agnico CEO Sean Boyd said this in an interview concerning how people are viewing gold at this time:
“I think a lot of people are jumping to the conclusion that it's over, it's run its course.
“But I would not count gold out. We are going into a period, September/October, which is traditionally strong, let's see how things go there.”
The major reason behind the drop in gold prices is the easing of concerns over the sovereign debt crisis in Europe, said Boyd, and I agree with him. That and the typical slow summer gold season.
Much of this came about from the stress test bank results in Europe which gave the illusion all things were well. Many people that understand how it works said the tests were really a joke, and follow-up research revealed that far more than seven of the banks are under stress; up to 24 of them, according to Citigroup (NYSE:C).
No matter what gimmicks and tricks are attempted to fool people, there is no way you can hide the disaster that Europe is, and it's only a matter of time before conditions worsen and people look for a safe haven for their money again.
News from China continues to confirm they're slowing things down there, and the United States is far from any type of sustainable recovery.
In other words, conditions that caused gold prices to skyrocket in the first place haven't changed, and even though people are in denial and shrugging off what is right in front of their face, won't change what the reality is, and these conditions will continue to contribute to the rise in gold prices, even as Ben Bernanke reiterates he'll do what he needs to do to prop up the economy, i.e., print more money. All of this offers support to ongoing increases in gold prices, and people and institutions who ignore that will do it to their loss.
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