An Interview with Trader Vic
Source: Seeking Alpha (1/16/08)
Victor Sperandeo (aka "Trader Vic") one of the most famous commodity traders in the world: "You’re going to get a pyramid into gold for China: People will buy the futures and once they make money, they’ll buy more. Then it will go up more and they’ll buy more. You get to $1,000/ounce quickly on that. I see it all all-time highs."
HardAssetsInvestor.com: In a recent interview on CNBC, you said gold could go to $1,000/ounce … soon. Why do you think there is still upside in the price of gold?
Victor Sperandeo (Trader Vic): I was not bullish on gold until November 2005, when I recommended it at $592/ounce. I recommended it as a “catch up” commodity. If you look at 1982 when the bull market started for stocks, and you took the CPI and compounded it on the price of gold, you got a number close to $700/ounce. In other words, if gold prices just kept up with inflation, gold needed to rise $100/ounce. If you adjusted based on the price of oil, $1,000/ounce was a first stop and fair value was around $1,600/ounce. It is a “catch-up commodity.”
The reason I’m bullish in the short term is that China just came out with gold futures; they started trading on January 7. There are a huge number of Chinese who want to buy gold. The country is industrializing and some of the people are becoming more affluent. The numbers are big. There are a billion-plus people in China, and maybe 500 million men. Maybe 10% of those men will get married in the next several years. If you take the amount of gold needed to make two wedding bands for each of those men, gold would be at $1,500/ounce on that demand alone.
You’re going to get a pyramid into gold for China: People will buy the futures and once they make money, they’ll buy more. Then it will go up more and they’ll buy more. You get to $1,000/ounce quickly on that. I see it all all-time highs...