quoted from Forbes columnist Bob Lenzner’s 9/5 article…

Almost everyone is bullish on gold which was up 13% in August alone, beating every other asset in the world. Gold is up 21% since QE2 ended, which suggests the gold players are expecting QE3. What if they’re bloody well wrong?

Gold has become a hedge against the stock market where it once was a hedge against currency debasement, or against commodity price inflation. The gold rage is so pervasive that CNBC runs the moving gold price on the tv screen along with the S & P 500, the Dow and the NASDAQ averages. Jim Cramer, the most widely known barker for the stock market, has been pushing gold hard, harder, hardest.  No wonder gold only experienced 2 sharp down days when the price fell over $100 an ounce– and then recovered smashingly before you get your orders in.

John Paulson, the hedge fund manager, sees $5000 an ounce possibility. Others believe zero interest rates assure further moves up in fits and starts. They see a correction maybe, but higher gold prices by year-end. Suggest Dec. calls at $170 could be worth $50.

Then, there are naysayers like Ananthan Thangavel, a young trader, who put me onto silver at $28 an ounce last November(it’s over $43 today) , arguing that  “the risk in holding gold has now reached unacceptable levels– and it’;s now prone to a collapse.”   As for my source, I can tell you that Thangavel predicted silver would spike to $50 because of pent-up speculation– which makes his bearish view demand serious consideration. As he wrote in a recent well-considered report, “when everyone is bulllish on an asset, there is a good chance that prices are headed for a precipitous fall.”

I agree with Thangavel that if there is no QE3, then gold prices could snap lower in a hurry. Or if the European debt problem hurts the euro more than the dollar– and the dollar rallies then the run-up from $1000 an ounce to $1900 looks a very envious trade indeed.

Now, to be fair my pal Frank Holmes, CEO of US Global Investors, a perpetual gold promoter, is adamant that gold has far further to run since it takes just a small move to do better than the negative interest rates in the  fixed income market. He likes to fancy that gold is lagging the rise in the level of the stock indexes or US GDP. Hmmm. I’m not sure.

Rather than recommend the ETF, GLD, Holmes is still riding his gold-mining share hobby-horse, as the price of most gold mining companies seriously lag the price of bullion.  Last week, gold mining shares on the Toronto Exchange were up, especially Kinross Gold(K), Yamana Gold(YRI), Eldorado Gold(ELD), Barrick Gold,ABX, New Gold, NGD, Goldcorp, G, and other lesser names that aren’t followed closely in the US. Be prepared for volatility, political risk, mine accidents, rising costs and the risk of a sharp decline should bullion soften.

Make sure to checkout the latest Forbes coverage from Lakshmi Capital Managing Director Ananthan Thangavel -
We’re Still In The Midst Of A Multi-Year Gold Bull Market

…Most gold investors believe that gold has a limited downside , at least until interest rates begin to rise enough to cost them real money in carrying their positions. However, should John Paulson be found to be selling his vast gold position, there could be a considerable rush to the exits.

“We’re still in ther midst of a multi-year bull market in precious metals and I will be starting to buy again soon,” Athanan Thangavel of Lakshmi Capital, emailed me today. ” I expect gold to hit $3000-$4000 an ounce in the next few years.” On silver, Thangavel believes SLW, Silver Wheaton, which simply buys other mines silver output and sells it on the world market, has “vastly underperformed on the way up,(and) should have limited downside during this correction.”…

Lakshmi Capital silver buy recommendation issued with Forbes on November 11, 2010 – up 80.79% – Silver Could Spike to $50 Based on Short Positions That Need To Be Bought Back

Lakshmi Capital silver sell recommendation issued with Forbes on April 25, 2011 – down 12.71% – Gold and Silver Due For A 10% Correction

Make sure to checkout the latest Forbes coverage from Lakshmi Capital Managing Director Ananthan Thangavel -

Lakshmi Capital Managing Director Ananthan Thangavel Calls Silver “Blowoff Top” for Forbes

Check out our most recent coverage in Forbes from Mr. Bob Lenzner:
Silver Could Rise Well Above $50 To Even $100 As Physical Demand Grows

ALL INFORMATION INCLUDED HEREIN IS THE OPINION OF THE FIRM AND SHOULD NOT BE CONSIDERED INVESTMENT ADVICE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.