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The Silver and Gold Prices 'Super Cycle' is Far From Over

Looking at a 10-year gold prices or silver prices chart and seeing respective gains of 423% and 650% can get investors pretty excited, and for good reasons.

Whether you enjoyed the previous commodities bull run and are currently adding to your positions, or just initiating one, now is the time to buy gold and silver, as both are expected to continue climbing in value.

The "commodities super cycle is far from over" is a sentiment Money Morning Global Resource Specialist Peter Krauth has repeatedly shared with readers, and it was reiterated today by Jeffrey Currie, head of Commodity Research at Goldman Sachs Group Inc. (NYSE: GS).

"We believe current market developments are simply the next phase of a commodity investment cycle that commenced in the late 1990s and, like previous phases, it will create new investment opportunities and should therefore be viewed more as a renaissance," Currie told Bloomberg News.

This "renaissance" is something investors should enjoy by having part of their portfolio invested in precious metals and other commodities.

Here's why.

Gold Prices in 2013 Will Reach All-Time Highs

Both individuals and institutions are scrambling to buy gold as uncertainty surrounding the fiscal cliff and the dollar's future weigh on investors' minds.

Money Morning's Krauth expects gold prices to reach all-time highs next year as global economies become increasingly inflated with fiat money, fresh supplies of gold remain low and demand for gold continues to increase – even among central banks.

Gold's run has largely been spurred by central banks through their rapid and unprecedented increases to the global monetary supply.

The U.S. Federal Reserve is currently purchasing $85 billion a month in bonds and has plans to continue that for possibly two years, which would put the total bill for QE3 around $2 trillion. Europe is trying to keep up with the U.S. through stimulus measures of its own, and China and Japan aren't too far behind.

From a demand standpoint, two of the fastest-growing nations, India and China, have grown to account for 47% of global demand for gold, up from 23% 10 years ago. Demand is also growing among central banks, which have already bought 493 tons of gold so far this year, surpassing last year's total.

For all these reasons, we expect gold prices to set an all-time record nominal price in 2013, and to reach the $2,200 level in the process.


Silver Prices like "Gold on Steroids"

As history has shown, silver moves almost in sync with gold, but exaggerates its movements, both on the up and down sides.

That's why we like to think of silver as "gold on steroids."

Today, silver is trading around $33, but our 2013 silver price forecast now has the shiny metal going much, much higher.

What will cause this rise?

Since it's slaved to its richer cousin, all the fundamentals for higher gold apply.

Besides technical indicators, such as the gold/silver ratio, and investor demand, silver prices are geared for a move upward on industrial demand alone.

From solar panels to electronics and medicine, silver has a wide range of industrial uses that translate into even more reasons to be bullish on silver.

And even if Ben Bernanke is replaced as Fed chairman, the fact that U.S. President Barack Obama will be appointing his replacement means more of the same fiscal policies that resulted in silver's remarkable run in the first place.

That's why Krauth now sees $54 as the next price target in silver's relentless and historic climb.

For those looking to play other commodities that should continue their super cycle, check out the S&P GSCI Spot Index. It covers 24 raw materials from energy, industrial and precious metals, as well as other raw materials. The index is basically flat this year but has increased almost fourfold since 2001.

In Thursday afternoon trading, gold prices were around $1,698.70 an ounce.

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Join the conversation. Click here to jump to comments…

  1. H. Craig Bradley | December 6, 2012


    Why is gold such a great deal? If you purchase bullion coins or other physical gold, you pay a 15% premium to the current spot market price ( eg. Goldline). If you later convert it to cash, you pay another fee or %. If you have a capital gain, you pay the 28% Federal collectible tax on it, plus the applicable state income tax ( states don't usually have a capital gain tax). ( 28% + 10%= 38% tax at current rates).

    Everybody has their hand in it. In addition, you have to guard against counterfit ( or "replica" ) gold coins which are extremely hard to identify at the time of purchase. If you buy a fake, you are out some serious money. Then you have to arrange for secure, non-bank storage. Remember too, in a collapse, gold coins are not fugible ( you can't buy food with them at the local grocery store).

    This means the price must go up at least this much to make any money!! If the Federal government again decides to outlaw private ownership of most physical gold as they did in 1933 under President Franklin Delano Roosevelt, you lose.

    • johnny | December 7, 2012

      In last 10 years gold is up by 600%+ so lets minus the 15%+28%+ shipping and storing etc …………………if you cant be up from that you sir have no imagination. As for buying food??? You can sell before they outlaw it like they did in1933 they offered money in exchange for gold prior to outlawing it……… do your homework .

  2. Keith | December 7, 2012

    I love getting your morning e-mails. I like this one today about Gold and silver Prices.

    I have a question for you guys? What are your thoughts on investing in Copper bullion Coins and bars. I read something a while back that said it a good investment. The writer said copper is priced now like silver was in the 70s or 80, $1.00 an ounce in coin or bar form. I have seen some dealers already selling these coins. Do you think copper could be our next silver?

    If you could please give me your thoughts on this, it would me much appreciated.

    Thank you


  3. J M Briley | December 16, 2012


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