A rapid rise to $10,000 gold ‘strains credibility’

Gold at $10,000 (U.S.)?

It would be a gold bug’s dream come true. That astronomical price for an ounce of the shiny metal would be more than six times higher than bullion was fetching this week.

Ten grand an ounce also makes for a catchy book title and marketing campaign by Toronto-based Bullion Management Group Inc. and its president and CEO Nick Barisheff. Wearing his trademark gold-coloured necktie, Barisheff presented his unabashedly bullish case for bullion to an affluent audience of about 400 at an Empire Club event in Toronto on Jan. 5.

What’s good for gold is good for BMG and its chief bullion booster. Since the launch of its first bullion fund in 2002, BMG has grown to $540 million in assets under management. Along with its mutual fund flagship, the $369-million BMG BullionFund which holds equal amounts of gold, silver and platinum, BMG also offers the $126-million BMG Gold BullionFund, and its BullionBars program that enables investors to make direct purchases of bullion.

Later this year, Barisheff plans to publish a book entitled $10,000 Gold: The Inevitable Rise and Investors’ Safe Haven. His thesis is that amid rising government debt and weakening currencies, gold bullion will soar to stratospheric heights.

Barisheff puts forward a scary scenario of hyperinflation. Governments, he says, are debasing their currencies by cranking up the printing presses to cope with slowing growth and spiralling debt. “This is exactly what we’re seeing today,” he said. “Gold can rise as high as currencies can fall.”

Gold’s glittering performance over the past decade has enhanced its allure, attracting new investors and speculators alike during a period when stock markets have been disappointing. In the 10 years ended Dec. 31, gold has had a compound annual return of 19 per cent in U.S. dollars.

But BMG’s aggressive time frame for predicting $10,000 gold strains credibility. “Nick says if the economic conditions with regard to currency creation continue as they have, then we could see $10,000 gold within approximately five years,” Robert Para, BMG’s vice-president of marketing, told me.

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Posted by admin on Jan 16 2012. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry