Tags: Rosenberg | gold | Bernanke | 3000

Gluskin Sheff’s Rosenberg: Gold Is (Still) Headed Higher

Wednesday, 06 Mar 2013 10:57 AM

By John Morgan

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A target price for gold of $3,000 per ounce is his long-term story, and Canadian economist and “permabear” David Rosenberg is apparently sticking to it.

Rosenberg, the chief economist and strategist at investment firm Gluskin Sheff + Associates, made the assertion anew in a speech at a CFA Institute of Chicago conference this week after the Dow Jones Industrial Average hit a new historic high, MarketWatch reported.

“I may change my name to Goldberg,” Rosenberg was quoted as saying in a bullish jest about the precious metal.

Editor's Note:
Get David Skarica's Gold Stock Adviser — Click Here Now!

Rosenberg has been calling for $3,000 per ounce gold since at least 2010, when he maintained a secular uptrend in gold prices could take years.

“When you look at gold in real terms, or normalized by the money supply, you can see that we have a way to go to get to the old highs nearly three decades ago,” he wrote at the time, Business Insider reported. “When you look at what prior bubbles did across asset classes, you can also see that this bull market in bullion also has a way to go before it even enters a manic stage, let alone bubble territory.”

According to a current research note from Rosenberg, the fact that stocks are hitting new highs now is not necessarily a sign of complete strength in the market.

Gluskin Sheff research shows the Federal Reserve’s highly accommodative policy of quantitative easing has padded 300 to 500 points on to the Standard & Poor’s 500-stock index alone, MarketWatch reported.

“Contemplate that,” Rosenberg wrote. “The Fed’s incursions have been so powerful that the bulls have [Fed Chairman] Ben Bernanke to thank for nearly half the rally from the lows during this four-year cyclical run.”

Apart from gold, Rosenberg suggested investors should focus on four themes for now: noncyclical dividend stocks, companies with strong cash flow, corporate bonds and large-cap stocks that are increasing their dividends.

In a column he wrote the Financial Post, Rosenberg said investors have no choice but to invest their money because Bernanke is pursuing low-interest-rate policies and continues to print money.

“The one thing we know with certainty is that Mr. Bernanke is going to punish and relegate investors who are sitting in cash to negative real returns, not just for another five months or five quarters, but five more years, and therefore cash is arguably the least safe asset class to be in today.

“It makes the case for capital preservation and preservation of cash flows in the debt and equity markets and alternatives all that much more compelling. Any wall of worry can be vaulted when Helicopter Ben chases you out of your safe haven,” Rosenberg wrote.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

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