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BMO Capital Markets Raises Gold and Silver Price Targets

Release Date: 
Tuesday, October 16, 2012

The price of gold rose today as the euro shot higher on hopes that Spain will soon receive a bailout for its unsustainable debt levels.  Gold was $7.50 higher at 11:56 a.m. Pacific Time on the New York Spot Market, trading at $1,745.90per ounce.  Spot silver was $.19 higher, trading at $32.99 per ounce.  (Click here for the most current spot prices.)

BMO Capital Markets has raised its 2013 price targets for gold and silver by 14.7% and 11.4%, respectively.  The gold price may rise to average $1,950 per ounce in 2013 and top $2,000 per ounce within the next year. The firm expects that silver may average $39 per ounce in 2013.  The European Central Bank’s intentions to purchase sovereign debt and quantitative easing by the Federal Reserve suggest “continued negative real interest rates and appeal for precious metals as a store of value,” the Toronto-based firm said.

Dawn Bennett, portfolio manager of the Bennett Group of Funds, believes that gold’s increase from the $1,500 level is not purely a response to the U.S. Federal Reserve’s third round of quantitative easing.  Gold’s “return to near $1,800 is a sign that some rationality has returned to the market,” she said.

“We view the broader picture as the reason to invest in gold,” Bennett noted.  “In 2013, the developed world is going to have to deal with its massive debt problems and policies that have spent the last few years devaluing local currencies,” she said. “As this happens, gold will be one of few havens available to investors looking to protect their wealth.”

“Gold prices are likely to finish the year with the same strong, upward momentum that was seen during the beginning of the year - only this time, prices will rise further and surpass the Comex settlement record high,” said Viktoria Palushaj, market analyst at investment firm CitrinGroup in Birmingham, Michigan.

“The machinery of democracy ensures that the global economy will continue to be flooded with ‘new’ money - driving up the price of hard assets, particularly gold,” said Cary Pinkowski, chief executive officer of Astur Gold Corp.

(Sources: “BMO Capital raises 2013 Gold, Silver price forecasts,” Commodity Online, October 16, 2012; “PRECIOUS-Gold lifts from 1-month low as euro, stocks rise,” Reuters, October 16, 2012; Gold drops over $20, marks second-session loss,” Marketwatch, October 15, 2012; “Gold’s primed for a breakout, but where to?”, Marketwatch, October 12, 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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