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Picking a 'target price' for precious metals

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Lisi Niesner / Reuters / File

(Read caption) Silver bars are displayed at the Austrian Oegussa gold and silver separating plant in Vienna, in this file picture taken February 28, 2011. Trying to pick a target price for gold and silver is "a perfectly childish waste of time," writes guest blogger Joshua M. Brown.

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What's your "target price" on the precious metals? How much ink has been spilled by those pontificating on exactly that question. There are two types of bloggers who will tell you there is no need to pick arbitrary targets in this particular bull market:

1. Real Traders

2. True Believers

Only journalists or analysts waste their time coming up with a number and then reverse-engineering a fundamental rationale for something like the gold or silver bull market. It's OK to have a hypothesis (mine on silver is low- to mid-50's before a bludgeoning - purely a guess based on psychology).

But to say "Here's the target because of fundamental factors X,Y and Z" during a phenomenon like this is patently absurd.

Still unconvinced and in search of THE NUMBER? I have two takes on this oh-so-unanswerable enigma of precious metals targets - one from a real trader and one from a true believer, both are equally valid hypotheses and make way more sense than those coming up with "valuations" or "price objectives".

First, the High Chart Patterns blog on looking for a top as sport or skill-sharpening practice:

These guys are looking at an extremely-extended chart and licking their chops...they're going about it in a disciplined way and with tongue firmly planted in cheek at the lunacy of "calling tops". They may nail a short-term blow-off top or possibly THE top. They are not concerned with the growth in silver mine production estimates into 2012 or what the Chinese central bank may do or any of that claptrap. The number is not the point, just the possibility of a trend reversal, however fleeting.

Now let's hear from a True Believer, my friend Get Yourself Connected. He also rejects the notion of price targets for the precious metals but for entirely different reasons than the trend traders...

It was not until this week that I had an idea why many stock players hate the metals but go all starry eyed over a name like LULU. I think it is because the metals are an outside idea that Wall Street (I am using this loosely; I think you know the type) has no control over...


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