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Analysts Say Gold May Rise Near $2,000 Per Ounce This Year

Release Date: 
Tuesday, February 5, 2013

Gold rose today on safe haven buying as concerns over the Eurozone grew.  The metal was $8.80 higher at 6:18 a.m. Pacific Time on the New York Spot Market, at $1,675.40 per ounce.  Spot silver was $0.26 higher at $31.86 per ounce.  (Click here for the most current spot prices.)

“We haven’t heard that much about Europe lately, and there’s been a shift in focus,” said Alexandra Knight, an analyst at National Australia Bank Ltd. The problems “are re- emerging and worrying investors a little bit,” she said.

Mike Harrowell, Senior Resources Analyst at BBY, said “longer term, we think that too much growth and too much money supply create a very explosive mix for the price [of gold], but that’s not today’s story, that’s more likely for the back half of the year or a bit later….It’s conditional on the way growth goes, but we are looking for gold prices to be getting towards that $2,000 mark by the end of the year, so let’s say…$1,850 to $1,950 [per ounce].”

Harry Colvin, director and senior economist at Longview Economics, said the gold price could rise between $300-400 this year, breaking through the $2,000 per ounce mark.  "Everyone is always bearish at the lows, that's the time to buy it, we're going to get a good rally this year.”

Mr. Colvin added, “on a contrarian basis, there’s a good argument to own gold. The real reason, though, is QE3.  The Fed are expanding their balance sheet $85 billion a month.  And that’s just a similar kind of pace to what they were doing in QE1 and QE2.  And of course it injects liquidity into the markets, debases the dollar, and underpins the rally in gold prices.”  According to the analyst, “the [Federal Reserve] balance sheet is about to expand rapidly. And with that we're going to get a rally in the gold price, it's going to go hard this year and probably into the next."

Eugen Weinberg, head of commodities research at Commerzbank, said as inflationary pressures become more visible in the second-half, it will lend support to gold prices, which could hit $2,000 at some point in the fourth quarter or early 2014.

Byron Wien, vice chairman of Blackstone Advisory Partners and an investment industry icon, believes gold may rise to $1,900 per ounce in 2013.  “I’m not a commodities speculator.  I buy gold as an insurance policy against calamity in financial assets.  If the market is turbulent, if the VIX [volatility index] goes up, I think you’re going to be glad you own gold.  I have a 5 percent position in gold.  I don’t own it because I think it’s going up.  I own it because if my financial assets get in trouble, I’m going to be glad I have a little insurance in the form of gold.”

(Sources:  “Platinum Drops From 17-Week High as European Concern Resurfaces,” Bloomberg, February 5, 2013; “Inflation or Not, Gold Will Still Break $2,000: Analyst,” CNBC, February 4, 2013; “Now's the Time to Buy Gold: Economist,” CNBC, February 4, 2013; “Relationship Between Growth & Gold,” CNBC, February 4, 2013; “Gold or Platinum—Which Will Get to $2,000 First?CNBC, January 31, 2013; “Wien: Where Gold's Headed By Year's End,” CNBC, January 31, 2013)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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