Mike Norman, anchor, HardAssetsInvestor.com (Norman): Hello everybody, and welcome to HardAssetsInvestor.com. I’m Mike Norman, your host. Today my guest is Carlos Sanchez, associate director of research for CPM Group here in New York. Carlos, welcome to the program. Thanks a lot for coming by.

Carlos Sanchez, associate director of research, CPM Group (Sanchez): Thank you, Mike. Thank you for having me.

Norman: Sure. You guys are very much involved in metals; gold, precious metals. Let’s talk about it. I mean, gold has been on a tear; very, very strong. We had one of your colleagues here several months ago, Jeff Christian, at the time when gold was probably more or less around $900 an ounce. He was not that bullish at the time, looking at fundamentals such as actual physical demand, mine output, etc. Yet we have broken through; we’ve seen gold vault up above the $1,100 figure. How high do you think it could go?

Sanchez: Well back then, we didn’t expect prices to perhaps rally as high as it did so quickly. We had expected prices to move higher, but over the course of later this year and into the first quarter of next year. Now we’re expecting prices probably to top $1,200 before year-end.

Norman: We’re not that far away as of this taping, anyway. We’re about $65 away, so percentagewise, that’s not a big jump.

Sanchez: Right.

Norman: Let’s break it down. I think from what I’ve read, on the physical side, mine output increasing; jewelry demand, which has historically been the principal source of demand, pretty stagnant; economic growth worldwide coming back a little bit, but nothing to write home about. So when you look at it from that perspective, it doesn’t seem to create a very bullish picture. However, on the flip side, you have a tremendous amount of investment demand. Is that really what’s behind it?

Sanchez: Right. Investment demand has been the main driver behind prices over the past couple of years, and more so over the past several months. I think investors continue to be concerned over financial markets, economic conditions and political conditions as well. So I think with weak economic growth, with high unemployment, with what’s going on in Afghanistan, Iran, etc., you have increased concern. And investors continue to rush to safe-haven assets such as gold.

Norman: By the same token however, we’ve seen since March, the last six, seven months, a very significant rally in the stock market, not just here in the United States, but globally. As a matter of fact, even if you look at the Dow and you compare it to gold, basically the same percentage gain over that course of time. So these arguments, while I understand that there are still fears and concerns out there, it seems like with a lot of bearish arguments, many of them are kind of going away. And are investors sort of coming up with new bullish-for-gold arguments, and bearish on the general economy, even though we’re starting to see things improve?

Sanchez: Even despite the recent stabilization and the pickup in stock markets over the past several months, I think there’s concern that stock markets remain vulnerable, not only in the U.S., but around the world. You also have increased concern over the economic conditions. There have been signs of stabilization, but they still remain vulnerable. Economic growth has not been as it was over the past several years.