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Investing in Precious Metals: Is Morgan Stanley Bearish on Gold and Silver?

The market continues to wait on a debt ceiling outcome as the August 2nd deadline nears.  The Dow closed lower on Tuesday, while oil and precious metals climbed higher.  Commodities in general received a strong boost from a declining U.S. Dollar .  Gold and silver in particular are looking strong as paper currencies and investments remain in question.  Furthermore, a major bank has raised average target prices for both gold and silver.

Gold has been hitting new highs this week, and Morgan Stanley is taking notice.  The bank has raised its average target price for gold this year, and the next five years.  For the current year, Morgan Stanley believes gold will average $1,511 per ounce.  The following years are listed below.

  • $1,624 in 2012
  • $1,550 in 2013
  • $1,450 in 2014
  • $1,300 in 2015
  • $1,150 in 2016

Do these targets look unreasonable? Check out our Gold & Silver Investment Newsletter.

Although the target prices of gold decline after 2012, each target price was revised higher than previous estimates by Morgan Stanley.

New average price targets were also released for silver:

  • $36.21 in 2011
  • $36.90 in 2012
  • $32.98 in 2013
  • $29.00 in 2014
  • $25.00 in 2015
  • $20.91 in 2016

Although gold and silver are already above $1600 and $40, Morgan Stanley is forecasting lower prices in the coming years.  Perhaps they are more optimistic on the U.S. Dollar and debt ceiling fiasco?  Either way, investors should strongly consider protecting themselves by holding gold or silver in some form.

Investors looking to hold metal miners in their portfolio may want to consider gold plays such as AngloGold , Newmont Mining , or Market Vectors Jr Gold Miners ETF .  Hot silver miners include First Majestic Silver , Endeavour Silver , and Global X Silver Miners ETF .

For more analysis on our support levels and ranges for gold and silver, consider a free 14-day trial to our acclaimed Gold & Silver Investment Newsletter.

Disclosure: Long AGQ.