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Four Insanely Bold Predictions About the Commodity Industry


Commodity experts present their cases.

We all know that the world of commodities can be extremely volatile, especially during times of economic uncertainty. Still, there are a number of analysts and experts that like to weigh in with their opinions on where their favorite commodities are headed, no matter how far-fetched the scenario may be. It's no lie that predicting the future prices of commodities is about as easy as forecasting the weather, but these next few predictions are sure to surprise even the most savvy investors.

Gold to $10,000

With gold hitting an all-time high of over $1,900 during 2011, radical analysts were sure to follow with predictions of the precious metal soaring to unthinkable heights. President and CEO of Bullion Management Group Inc., Nick Barisheff, believes that gold has the potential to reach the $10,000 mark within five years. Barisheff contends that "When you take the true debt position of the US - when you add in the things like Social Security and Medicare - then you get the real national debt not being $15 trillion but $120 trillion. And when you try to put meaning against that, you find $120 trillion represents $1 million per taxpayer." Under Barisheff's thesis, debt will eventually force the U.S. to print more money, which will further de-value the US dollar while gold continues to increase in purchasing power.

Oil to $200

The Energy Department recently released their "Energy Outlook" for 2012, which attempts to make an educated guess of where the prices of fuel and power will be headed in the next couple decades. They offer a reference, low, and high level prediction from which analysts are free to speculate why a given scenario may take place. The Energy Department's "high oil price" prediction shows oil reaching $200/barrel. Economically, it is possible that oil could reach these drastic heights if the recovery was to prosper through out the globe, but that would also have to assume peak oil, and it seems like we're finding new reserves on a daily basis.

Silver to $100

Eric Sprott of Sprott Asset Management made quite a bold prediction during his interview with Patrick MontesDeOca. He claimed that this upcoming decade will be the "decade of silver" during which silver will reach $100. According to Sprott, gold and silver have had a historic relationship of 16-to-1; right now it fluctuates around 60-to-1. Since people are buying nearly equal amounts of gold and silver on a daily basis, Sprott argues that silver is extremely undervalued at its current price point. Eventually something has to give, leading Sprott to believe that the price of silver will rise to account for the mismatch within the gold-silver ratio. Considering the industrial and investor demand on silver paired with the rising price of gold, this seemingly far-fetched prediction may be a bit a bit more plausible than the next on the list.

Natural Gas to $0

With new sources of natural gas being discovered daily, it seems that we have more NG than we know what to do with. Being a natural byproduct of drilling for oil, the production and discovery of natural gas will continue until the US stops drilling for oil, which seems highly unlikely, as fracking technologies continue to evolve. Supply greatly overwhelms demand and fears are growing that storage could run out, causing producers to flare the useless natural gas, essentially pushing its price to $0, according to Bruce Krasting. Given that NG has only an increasing role in our energy production, this seems to be an impossibility, but as we have learned time and time again, never say never.

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Editor's note: This article by Jeremy Pylypczak was originally published on Commodity HQ.
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