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Gold Prices to Hit $2,400, Says Schultz in Final Letter

Release Date: 
Thursday, January 13, 2011

GOLD PRICE NEWS – The gold price bounced $15.00 off its morning lows, rising to $1,393 per ounce heading into Thursday’s open on Wall Street. The price of gold accelerated higher after jobless claims came in higher than market expectations and inflation data showed price pressures are building.

Initial jobless claims of 445,000 for the first week of 2011 exceeded the 410,000 estimate by a margin of 8.5%. The jobs data follows a weak December unemployment report. Meanwhile, the Producer Price Index data showed a 1.1% monthly rise versus expectations of 0.8%. Gold prices surged higher on the economic data as stubbornly high unemployment suggests Fed Chairman Bernanke will continue to pursue easy money. The combination of high unemployment and budding inflation pressures presents a bullish cocktail for gold.

The U.S. dollar sank on the news, falling 0.60 to 79.44 as measure by the U.S. Dollar Index (DXY). Silver rallied alongside the gold price, moving back to unchanged at $29.67 per ounce after a 1% decline early this morning. Cyclical commodities weakened slightly on the economic data, although crude oil held near its $91.86 per barrel close yesterday – the highest level since October 3, 2008.

The move to record highs in the gold price received its latest endorsement from legendary investment consultant Harry Schultz, author of the world’s longest-running investment letter, the International Harry Schultz Letter. In keeping with his penchant for bold market predictions and frank criticism of economic and political issues, Schultz issued a bold forecast for the price of gold in light of the escalating money supply and worsening fiscal position of the United States.

“For gold to match the growth in US M1, M2, public debt & budget deficit, gold will have to reach $1,800, $2,400, $7,800 & $13,200, respectively. While I can’t imagine gold going to $13k, these numbers tell me that calling gold a bubble is a bit premature. In my view, money supply, public debt & the budget deficit are in a bubble, not gold, not yet…Wake me up at $2,400 gold,” Schultz wrote in his most recent letter – and his last. Schultz, at the age of 87, will officially retire.

Schultz also had some particularly harsh criticism for policymakers and politicians in the United States, saying that “Roughly speaking, the mess we are in is the worst since 17th century financial collapse. Comparisons with the 1930’s are ludicrous. We’ve gone far beyond that. And, alas, the courage & political will to recognize the mess & act wisely to reverse gears, is absent in U.S. leadership, where the problems were hatched & where the rot is by far the deepest.”

Schultz’s latest and final words echo those of Richard Russell, who with Harry Schultz’s retirement will assume the position of the oldest investment letter on the planet via Dow Theory Letters. Russell, who has also been bullish on the gold price for many years, has been highly critical of the U.S. government and Federal Reserve’s insistence on trying to “inflate its way out” of its mounting debt problems.

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This article is independently provided by and does not represent the views or opinions of Goldline International, Inc. Although the information in this article has been obtained from sources believed to be reliable, Goldline does not guar­antee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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