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Simon Hobbs: While the market takes some wild swings, gold has pushed steadily higher and higher.
It's up about 10 percent since the beginning of the month.
Will it go even higher? Will we reach $1800? Can you profit from it now?
George Gero is Vice President of Global Futures and a precious metals strategist at RBC Wealth Management,
and David Morgan is the editor of The Morgan Report.
Good morning to you both. Thank you for joining us.
George Gero: Well, good morning. Good morning, Simon. I've seen you on the floor of the NYMEX.
I've been there for 35 years at least.
Simon Hobbs: Good. George, it's extraordinary how bullion continues to track higher,
despite the fact, even, we have the margins raised over there by 22 percent on Thursday.
Where do you think we're headed for?
George Gero: Well, first of all, I think the margin raise did not affect people who are old longs,
meaning they own it at much lower prices, because they've got tremendous equity.
The Central Banks that have been buying gold recently certainly don't care about margin rates.
And, believe it or not, if you take a look at nimble traders who have been going into platinum and palladium,
because there were no real margin increases there, and so, today, you've got a nice up in platinum and palladium as well.
Gold probably will have that $1800 once more, but it seems to have trouble getting past it.
Last time it was there it wasn't there for too long.
And then, of course, if the stock market does straighten out,
the asset allocators are going to move money to where the best performance is.
Simon Hobbs: So, where will that be?
George Gero: Well, that is a good question. I think; we're seeing inflation, if you look at other commodities, they're all up,
and it looks like stimulus on two continents is going to hasten economic recovery,
which is why platinum and palladium are up, by the way.
Simon Hobbs: Well, I hope you're right.
George Gero: And I think, probably, it means that general inflation, if you wear clothes, eat, drive, you'll see inflation next year.
Simon Hobbs: David Morgan, Wells Fargo private bank is warning its clients that gold has, quote,
"reached a level of a speculative bubble" and that they should be wary of having significant exposure to it.
Quote: "With very little warning. The bottom could drop out of gold prices," says the bank.
Should that; should people be aware of that, David? Is that your view?
David Morgan: No, not particularly. I mean, the view I have is that it's not gold that's in a bubble. It's the debt bubble.
It's the increasing of the burden of governments printing more money, and that's the real problem.
Gold's just reflecting that reality.
So, I think the current case is that the United States finally got the message,
with the downgrade by the S&P to a lower credit rating,
and I think this is going to put some stimulation, you might say,
into the political system that may actually cause some action to take place.
If the U.S. can get its debt house in order, I think you'll see some leveling off in the gold price.
If that doesn't occur, you will probably see the opposite.
Melissa Lee: David, my question to you is, gold is viewed as a safe haven; it has been,
but recent developments have; obviously, the fact that Simon can cite this report saying that the floor from gold can drop out,
can it actually be considered, these days, a safe haven, if it is, seeing so much volatility,
to the point where the CME has to step in and raise margin requirements.
David Morgan: Certainly all markets go up and down, and it's true of gold as any other market.
But certainly not the safe haven it was as George indicated years ago.
Simon Hobbs: Unfortunately, we've run out of time.
George, thank you for joining us. David, if you can still hear us, thank you as well.
I think we kind of got the gist of where both of those gentlemen were headed.