Gold Fever? Banking Crisis Impact for Metals and Miners

The gold price passed US$2,000 per ounce twice last week — where will it go next?

David Morgan, publisher of the Morgan Report, shared his thoughts on what’s next for the yellow metal, telling the Investing News Network that the crisis in the banking sector is motivating people to get off the sidelines and protect themselves.

“I think that problems always push people to do something that they might not have done otherwise, and we’re at that point,” he said. “I’ve always talked about the run to gold and all that — and I’ve said fairly often that there is a tipping point, a trigger of some type that usually propels people that are knowledgeable, who have studied it … but they’ve never taken action.”

What does that mean for the gold price? Morgan believes if the precious metal hits a new high it could go on a run.

“Once you get into the new high, we’ll call it US$2,060, then the algorithms kick in. The algorithms know that the momentum play is whenever you make a new high there’s no upward resistance. So even a little bit of buying will drive it higher. And when you get another new high, then everyone says, ‘Oh, gold’s on a run. How far will it go?’ And there’s no selling — I’m exaggerating slightly, but there’s not that much selling. And so then a little bit more buying or a lot of buying will take it even higher,” he said.

Successive new highs can lead to parabolic movements, especially given the banking issues currently at play. Because of these problems, Morgan expects the run to gold to accelerate as diverse groups of people make purchases.

“It’s going to feed on itself. There’s an old adage that says there’s no fever like gold fever. That came about for a reason.”

Silver is known to lag gold, but Morgan said the white metal’s prospects will improve if people can’t get gold or can’t afford it. He also said that while he believes it’s important to own physical gold and silver, the best leverage is still in mining stocks.

Watch the interview above for more from Morgan on gold, silver and the overall market.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.