Global economic weakness will push gold prices higher this year, perhaps 12 percent, says Al Korelin, founder of A.B. Korelin & Associates, which helps companies get their shares listed on exchanges.
“From a fundamental standpoint there’s every reason in the world for the price of both [gold and silver] to go up,” he tells Moneynews TV. That doesn’t mean a jump to $5,000 or even $2,500, Korelin emphasizes. Such a move would require “latent panic,” he says.
“But in terms of gold going up, 10, 12 percent this year, that is very possible.”
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The World Bank just cut its forecast for global economic growth this year to 2.4 percent from its June prediction of 3 percent, Korelin notes. “You have to look at the fact that the United States isn’t really getting anywhere in terms of straightening out our economy, and the same is happening in Europe,” he says.
Those facts are cause for concern in China, where gold purchases are on the upswing, Korelin says. “The price of gold is going to have to go up, because gold is a barometer of investors’ feelings about whether they’re pessimistic or optimistic” on the world economy, he says.
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Korelin is even more bullish on silver, particularly for investors with portfolios smaller than $500,000. “Silver’s a much better place to be than gold simply because of the leverage factor,” he says.
“Silver is trading at roughly $30 an ounce. For the price of silver to go up 33 percent, it only has to go up $10. Well, for the price of gold to go up by 33 percent, it’s got to go up $550, $600. The March silver contract closed at $31.88 on the Comex Friday.
Precious metals miners also are a favorite of Korelin’s. “The reason I like those stocks is for exactly the same reason that I like silver a little better than gold,” he says. “The leverage each share offers is substantial.
Miners’ shares provide leverage because assuming a fixed price for producing the metal that is lower than the price of gold itself, when gold prices increase, so do miners’ profits, but by a higher percentage.
“Probably 40 percent of our hard asset portfolio is invested in stocks,” Korelin says. “I really like stocks that are what I would call project generators -- companies that are exploration-stage . . . and have something to offer to larger companies who perhaps may be looking to take over their assets.”
Korelin likes real estate, too. “Where I am in the Pacific Northwest, if you exclude Seattle, great real estate is selling for unheard of values – 40, 50, 60 cents on the dollar,” he says. “It’s absolutely incredible that you can buy residential and commercial properties up here. If your time frame is mid- to long-term, real estate is a really, really good place to be.”
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