$2,200 Gold Seen as “World’s Financial Problems Are Far from Over”
The price of gold is likely to reach a new record high of $2,200 per ounce within the next year, according to ScotiaMocatta.
In its Precious Metals 2013 Forecast, the firm – which is the gold bullion banking division of Scotiabank – wrote that “There remain a multitude of factors influencing the gold price, but one of the main reasons we are still bullish is because of the mess the Western world is in.”
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“Europe has a debt problem that is proving all but impossible to solve and all efforts to date have revolved around throwing more money at the problem to avoid the monetary system from breaking down,” ScotiaMocatta added. “That should be reason enough to be bullish for gold and we think the latest move higher in gold prices shows that it is…It is hard to have much confidence in the economic outlook and in governments’ ability to get a grip with all the interlinked problems.”
The firm went on to say that “We would not be surprised to see prices reach $2,200 per ounce. Should prices undergo another correction in the short term then we would look for good support around $1,600.”
If the yellow metal were to reach the $2,200 level, it would represent an all-time high on a nominal basis, but not in real terms. In 1980, gold reached $850 per ounce, which on an inflation-adjusted basis equates to approximately $2,300 in today’s terms.
ScotiaMocatta went on to say that “As faith in policymakers wanes with their handling of the crises, we expect investors will not want all their wealth backed by paper assets and therefore will look to spread their risk by holding gold and other hard assets. Greater monetarisation of gold is likely to be bullish for prices.”
“Overall, we do not think we have seen the peak in gold yet as we think the world’s financial problems are far from over,” the firm continued. “However, the higher the gold price goes the more volatile trading is likely to become and the more nervous investors and funds are likely to be.”
2012-11-21 20:06:41
Source: http://www.goldalert.com/2012/11/2200-gold-seen-as-worlds-financial-problems-are-far-from-over/
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