Gold price continued to fall Tuesday morning, plunging $34.25 to $1,625 per ounce

Gold price continued to fall Tuesday morning, plunging $34.25 to $1,625 per ounce. Another hike in margins by the CME Group helped greased the skids of the current correction in the gold price. Today’s decline comes on the back of the price of gold posting its worst week since 1983 as broad-based liquidation engulfed the precious metals space. The spot price of gold tumbled $96.48 to $1,644.27 on Friday, bringing its weekly loss to 9.2%. COMEX gold futures slid $101.90, or 5.9%, to $1,639.80 per ounce on Friday, marking the third largest single-day nominal decline ever. With today’s drop, the gold price is now 15.6% below its $1,922.20 all-time high, reached less than three weeks ago on September 6.

McAlvany’s longer-term bearish stance on the U.S. dollar contrasted with his bullish stance on the commodities complex. He predicted that central banks across the globe will continue to engage in policies that debase their currencies in efforts to stimulate economic growth. As a result, he stated that “I think commodities do have a good long-term play,” but also acknowledged that “certainly as long as there is these liquidity concerns in the market you’ll see a liquidation of most of your industrials and ags.”

Going forward, he asserted that “The real differentiation will be with the precious metals, gold in particular, even more than the white metals, as something that has no counterparty risk.” When subsequently asked what his gold price outlook is, McAlvany responded that “I think this year still would not surprise me to see the year finish above $2,000 an ounce. And beyond that $2,500, $3,000, on its way to 4 or 5 (thousand).” McAlvany did not put a time frame on his $5,000 gold price call, however.

“I think the issue is not so much the price of gold but the value of the currencies that it’s priced in,” McAlvany added. “And as they continue to compete on the downside, you’ll see the price of gold appreciating. In fact that’s why I think on a longer-term basis you have a strong argument for commodities in general beyond the supply and demand constraints that you’ll face on a week-in week-out basis. I think you’ll see them all repriced as we have sort of a beggar thy neighbor policy in place in the currency realm.

Based on his bullish gold price outlook, McAlvany was asked if precious metal mining companies would be “of interest to you.” Although he did not discuss specific gold and silver stocks, McAlvany responded that “It would be, it would indeed.”