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Bannister Says Gold May Rise to $2,300 By Summer 2013

Release Date: 
Thursday, August 16, 2012

Gold moved higher on continued expectations of monetary easing. Gold was $13.00 higher at 8:10 a.m. Pacific Time on the New York Spot Market, trading at $1,617.10 per ounce. Spot silver was $.37 higher, trading at $28.30 per ounce.  (Click here for the most current spot prices.)

Slow growth in the U.S. and China and economic contractions in the eurozone have increased expectations that central banks may provide further monetary stimulus. Chinese Premier Wen Jiabao said that there was "growing room for monetary policy operation," in another sign of potential stimulus measures for the Chinese economy.

"My general view is that for the time being major central banks will let go of the mandate of price stability in favor of spurring growth figures," LGT Capital Management analyst Bayram Dincer said. "This means that the central banks in an explicit or implicit inflation targeting regime will try to anchor inflation expectations around 3.0 percent," he said. "This change would be gold price supportive."

"A downward surprise in U.S. inflation numbers is spurring hopes for more monetary stimulus, which would be positive for gold," Credit Suisse said in a report on Thursday.

John Doody, a former economics professor who publishes the Gold Stock Analyst newsletter, recently said, “I'd be very comfortable seeing gold above $2,000/oz this year…it's partly a function of the macroeconomic environment, what Federal Reserve Chairman Ben Bernanke does to get us out of our economic funk and what the Europeans do to solve their currency crisis…I'm pretty happy being on the side for higher gold… The smart money is there. “All the people whose names we all recognize as intelligent money managers have their bets on a higher gold price.”

Former investment advisor and commentator David Bannister said, “I expect gold to rally for about 8-13 months into at least June of 2013 and our longstanding target has been in the $2300 per ounce arena in U.S. dollar terms. Some pundits have much higher targets in the $3,500 per ounce or higher area but I am using my low end targets for reasonable accuracy….”

Bannister said, “crowd behavior is crucial to the next coming movement in gold and it could be a sharp rally that catches many off guard, much like the downdraft last fall did the same to the bulls. Be prepared to go long gold once over $1630 per ounce and buy dips along the way up to $2300 into the summer of 2013.”

(Sources:  “PRECIOUS METALS: Gold Gains In Thin Trade On China Easing Hope,” Wall Street Journal, August 16, 2012; “PRECIOUS-Gold holds above $1,600/oz as stimulus hopes persist,” Reuters, August 16, 2012; “Stage set for gold to go higher - and silver even better – Doody,” Mineweb, August 14, 2012; “Gold Close To Confirming A New Breakout To All-Time Highs,” Forexpros.com, August 9, 2012)

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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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