GFMS Ltd.: Gold Bull Run Over

In an incredible statement, consultancy firm GFMS Ltd. announced in a press release that the gold bull run was over, and it'll probably play out over the next year or so.

Of course that's cowardly in itself, as they give themselves enormous wiggle room if gold keeps on going up in price to say it's taking some time to wind down.

In the press release, GFMS chairman chairman Philip Klapwijk said this, "We're certainly in the end-game now, although that could still take a year or more to play out. But after that, it's difficult to see how we can avoid a hefty drop in prices if we want to boost jewelry and trim scrap to bring the overall market back into equilibrium."

So the trillions in paper money printed around the world, increasing inflation and place of safety aren't factors any longer in the price movement of gold? That can't even be taken seriously.

Now that doesn't mean there won't be a correction, as there is always that as part of any commodity or investment that rises quickly. But to announce the gold bull run is over is the height of ignorance to me, and must have been thrown out there to garner attention rather than to be taken seriously.

But when the gold bull run continues, people need to remember it was GFMS that said it was over, and determine from there if they want any other input from the company.

GFMS Looks for Gold to Surge in Second Half of 2009

While gold could average around $915 an ounce in the first part of 2009, it's in the second half that it could really soar, according to consultancy GFMS in its Gold Survey 2008 report. They project gold could reach as high as $1,080 an ounce as the U.S. dollar inevitably weakens. (Why the U.S. dollar will plunge in 2009.)

The average price of gold in 2008 was just under $872. Today gold was trading over $816 at 4:30 EST.

For the year, GFMS is looking for a trading range for gold of $750 an ounce to $1,080an ounce.

There's no doubt gold will rebound, as the bubble will burst sometime in the year for U.S Treasury bonds, which are wrongly being touted as havens of safety. Click on the link above to find out why that's so.

Because we don't have any idea how much more forced liquidation is out in the market, it's the one variable that could allow the U.S. dollar to remain temporarily strong, as companies continue to sell assets to cover their losses and raise cash.

Even though demand for gold in jewelry fell by almost 11 percent last year, that shouldn't have any impact on the price of gold, as safety and inflation protection will be the driving forces pushing the yellow metal up.

With the Federal Reserve going to be forced to print more money to cover the misguided bailout-mania and acquisition of Treasury bonds, that will also eventually push the strength of the U.S. dollar down and drive people toward gold. It's only a matter of when, not if.