Bensimon bases his predictions on technical analysis and believes that gold will double over the next two years after it broke through US$1,000 an ounce in September. Gold futures were priced at US$1,050 an ounce at 12.15pm Hong Kong time on October 12, according to Bloomberg.
“Breaking past US$1,000 is a signal that gold has already resumed the bullish uptrend and is on the way to substantially higher levels over the coming year,” says Bensimon.
Gold prices have trended very closely to equities this year. Bensimon believes there will be a 10% to 15% correction in the S&P 500 between November and January as investors realise that the real economy has not turned the corner.
Yet he feels it is unlikely to have much bearing on the commodity. “It won’t give back as much because gold is held up by an inflationary bias,” he added.
“All the financial markets have risen so much in value in the last six months but the real world has not confirmed the recovery. And so the equity markets are vulnerable to sliding back again.”
A weakened US dollar, which has stoked inflation fears, will also boost the Australian, New Zealand and Canadian dollars which have “already resumed their uptrend and will keep driving forward”.
The Australian dollar is trading at US$0.90 and Bensimon expects that it will increase to US$0.98 in the first quarter of 2010. Similarly, he sees the New Zealand dollar, which is trading at US$0.73, rising 18% to US$0.88 by March 2010.
But Bensimon is not a bull on everything. Oil could give back some of the gains and then trade within a tight range after repeatedly failing to cross the US$73 a barrel threshold. WTI crude futures traded at US$72.24 a barrel at 12.15pm on October 12, according to Bloomberg.
“Oil is not favoured to break past US$75 a barrel immediately because the dynamics are different from gold,” he explained. “[Gold’s] move has been [because of] inflation-driven fear, while oil is more related to the reality of industrial and consumer demand.
“Oil, having so much difficulty getting past the US$73 range, is going to lean towards pulling back to the low US$60s range. However, a surprise upside break of US$75 a barrel would trigger a surge to US$90 a barrel.”