
"FLIGHT TO SAFETY" GOLD-BUYING
Gold is up $20 and silver is up $.30 in early trading after support held overnight. Support also came from stronger crude oil in anticipation of higher demand due to the fiscal stimulus in the U.S. There is also a good deal of "flight to safety buying" according to the analysts and a bounce from chart support for technical traders. Some short covering was also triggered early this morning.
Frank Lesh of Future Path Trading said, "There is still a push for safety in the market. When we get corrections in the gold, buyers come in." As we know, a number of analysts are forecasting gold will rise above $1,000 an ounce this year. UBS is forecasting gold will average $1,000, while Goldman Sachs also forecasts $1,000 an ounce and $13.75 for an average price on silver.
Some market participants who are looking for queues have been tracking U.S. Government debates over the proposed stimulus plan. There is also some concern about what Treasury Secretary Geithner will be saying about the bank bailout plan. I heard one analyst on CNBC this morning saying he sees inflation ahead and warns people to be protecting themselves from rising inflation pressures. One of the ways to do that is with gold or silver. Goldman Sachs analyst J.B. Were has said gold does well when the purchasing power of fiat currencies comes under threat. That threat is currently present in the form of government efforts to address the recession and financial crisis, which is likely to lead to printing of money and debasing of paper currencies. He also points out that the transfer of risk from governments bailing out banks raises the risk of sovereign debt default. After multiple devaluations of the Russian ruble, many are now worried that the sovereign debt of Russia will come into question. In fact some are worrying there could be a sovereign debt default by Russia. That would have significant consequences. We have only to think back to the Russian crisis that occurred in the recent past to recognize that would put considerable additional stress into the markets.
Again, these kinds of risks and the risks of competitive currency devaluations, the risks of protectionism, and geopolitical risks are all among the reasons that Merrill Lynch says that gold is a "no brainer." They are recommending gold for safety, diversification, purchasing power protection, and a hedge against the debasement of the currency and rising inflation pressures. This is the same logic that should be utilized by individuals in evaluating their own portfolio holdings. They are now saying that the new bank bailout may top $1 trillion in a combination of public and private funds. You can see the inflation on the horizon. The time for delay is long past; the time for action is now.
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- S&P Capital IQ - Gold: $1,900 (in 2012) "Leo Larkin, metals and mining analyst at S&P Capital IQ, thinks that $1,900 gold might not be that much of a stretch [in 2012]. 'Gold has been ..."
- Citigroup - Gold: $2,300 - $2,400 (by end of 2012) "While we remain cautious on Gold in the near term...we continue to believe that the bull market remains intact...we believe that 2012 may be..."
- Leeb Capital Management - Gold: $2,500 - $3,000 (in 2012) "I'll give you my target for gold at the end of 2012, it's going to be trading somewhere between $2,500 and $3,000. This..."
- Global Hunter Securities - Gold: $1,800 (in 2012) "'What I am looking for is a gold price of $1,800 an ounce in 2012,' says Jeffrey Wright, senior research analyst at Global Hunter..."
- US Global Investors - Gold: $3,600 (by 2017) "'People get so caught up with the next three minutes for gold and they should really be focused on the next three years,' says Frank Holmes, ..."
- Goldman Sachs - Gold: over $1,900 (in 2012) "Wall Street investment bank Goldman Sachs predicts that gold's bull run will continue into 2012 with a low interest rate environment and..."
- CNBC - Gold: $2,400 (no period given) "Gold will top $2,400 an ounce. The long-term bull market in gold marches on. Gold won't make a straight shot to a new inflation-adjusted high. As long..."
- Nomura - Gold: $2,000 (by end of 2012) "Nomura has raised its forecast for gold prices to $2,000 an ounce by the end of 2012, from $1,800 earlier. The brokerage said the low-interest rate..."
- Morgan Stanley - Gold: $2,200 (in first half of 2012) "Gold will lead a rally in commodities in 2012 as Europe's sovereign-debt crisis continues to roil financial markets, spurring demand for ..."
- UBS - Gold: $2,050 average in 2012 "[Gold] remains one of the top commodity picks for 2012 as 'most of the factors that pushed gold higher in 2011 are not going away,' according to UBS..."
- Bank of America Merrill Lynch - Gold: $2,150 - $2,200 (average in 2012) "From a technical perspective we believe that the bull trend for gold remains intact… with gold having not yet met any of..."
- TheStreet.com - Gold: $2,500 (by May 2013) "I want to own gold here. I think gold is going to $2,500 eighteen months from now... Gold has been up for ten straight years and this going to be the..."









