SAN FRANCISCO (CBS.MW) - A funny thing happened on the way to the gold rally: one analyst issued specific, month-by-month forecasts that thus far are hitting the mark.
The spot gold price Tuesday morning rose $5.20 to $376 an ounce, its best since November 1996. The gain earned the precious metal a 9 percent return since Jan. 2, when gold stood at $345 an ounce.
Nearly all bullion analysts, on Wall Street and Main Street, link gold's continuing rally to tensions in the Middle East and in North Korea. For his part, James Turk is convinced the talk of war in Iraq, or a nuclear showdown in Asia, have little to do with gold's 25 percent gain in 2002 and the metal's current gains.
The longtime editor of New Hampshire-based Freemarket Gold & Money Report (http://www.fgmr.com/) instead points to monetary metrics that compare the ascent of gold, or its decline in the 1990s, to government budget spending trends and the supply of paper money flooding the globe.
On Tuesday, for instance, Russia, joining China and several other countries in a shift toward bullion-linked reserves, said its central bank will boost gold and foreign-currency holdings to $55 billion by year's end, a rise of 17 percent.
Following up his early January forecast http://cbs.marketwatch.com/news/story.asp?siteid=mktw&dist=nwtwatch&guid=%7B9484AA97%2DD085%2D480C%2DB9C6%2D85DDFBD936D2%7D that the gold price would surpass $370 an ounce in the coming weeks, Turk on Tuesday told me he expects the metal's price to reach $434 an ounce by the end of February, less than four weeks' time. Such a gain, 15 percent at current levels, would hearken back to the middle of February 1996, when the metal peaked at $415 an ounce before beginning a 5 1/2-year slide into the dungeon.
The researcher's predictions, bold in their specific timing and price level, depart from those found at investment banks in London and on Wall Street, where analysts are reluctant to forecast an average gold price higher than $360 an ounce or so for all of 2003. Turk is confident gold, logging inevitable gains as international investors flee the "dollar bubble," will reach $600 this summer and surpass $900 an ounce by February 2004.