Winmill estimates that gold will fluctuate in the $1,200-$1,800 range. “But we should hit $1,800 more often than $1,200,” he said in a phone interview Thursday.
If there are short-term geopolitical factors, like tension in the Koreas or sovereign-debt defaults, that could make the precious metal rise as an alternative to currency holdings, says the portfolio manager, whose Midas Fund (MIDSX) is up more than 40% in 2010.
In the medium term, Winmill explains, gold prices reflect the dynamics of supply and demand. As jewelry demand increases in emerging markets like China and India, for example, the price should move up accordingly. There is also demand from central bank purchases and the scrap industry.
“This is why I’m largely bullish,” he explained. “The central banks have become net buyers in the past five years.”