TORONTO (miningweekly.com) – The gold price could reach as high as $2 500/oz next year, and Europe’s debt woes are now “too big to handle”, Sprott Asset Management CEO Eric Sprott said on Thursday.
“I’m sure it will go through $2 000/oz in a year, maybe it get’s to $2 500,” he told Mining Weekly Online.
Asked for his view on where bullion might be headed longer term, Sprott said this depended on monetary policies governments adopted.
“If governments keep printing more money, the price can go anywhere. It could go to $10 000/oz, it could go to $20 000/oz,” he predicted.
Earlier on Thursday, Thompson Reuters GFMS said that gold could push through the $2 000/oz level by year-end on the back of strong investment demand.
While Sprott was bullish on gold and silver prices, he said there was the threat that “cyclical” commodities could retreat, such as iron-ore and copper, both of which have held near record price levels despite weak markets.
“It looks like the world economy is starting to slack off here,” he said, pointing to the recent announcement from Coldeco, the biggest copper producer globally, that some of its European and US customers had cancelled orders earlier this month because of the market turmoil.
In an earlier speech to the Toronto Resource Investment Conference, Sprott said that the debt problems in Europe and high leveraging of banks were threatening the global financial system.
Europeans had already started withdrawing funds from banks there, and a run on banks has begun in the continent, he said.
“The problem is now too big to handle,” Sprott said of the European sovereign debt crisis.
While leaders in the eurozone insist that Greece will not default on its debts, analysts expect that this is an inevitability in the coming weeks.
And while Europe has its woes, Sprott, whose wealth Bloomberg Markets magazine recently estimated to be at least $1.3-billion, went on to show how the rate of bank failures in the US was also increasing in pace.
Though Sprott has long been known for being bullish on gold, which he calls “the ultimate currency”, he is even more upbeat on silver prices.
The current silver:gold price ratio sits at around 45:1, compared with the historic average of 16:1.
Gold slid to $1 787/oz on Thursday, while silver dipped slightly below $40/oz.
Sprott said that his firm, which runs precious metals funds, had seen greater investor appetite for silver funds than for its yellow cousin.
“People are expressing with their wallets that they’re more willing to put money in silver than gold,” he commented.
Earlier on Thursday, newsletter writer Peter Grandich said in an interview that gold could touch $2 350/oz next year.
His reasons for being optimistic on the yellow metal’s price include the fact that central banks have become net buyers of bullion, producers have removed nearly all of their hedging contracts, and the creation of gold exchange traded funds, which he said were “the single biggest reason to ignite this bull market”.
Countries like the US printing money, was also a major contributing factor to the belief gold prices would go higher.
That unnamed investors had been manipulating the precious metal’s price and suppressing it also meant that gold would ultimately rise, Grandich said.