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Deutsche Bank Says Gold May Top $2,000

Release Date: 
Wednesday, November 14, 2012

Gold was modestly higher on a stronger euro, trading at $1,723, up $.40, at 7:57 a.m. Pacific Time on the New York Spot Market. Spot silver was $0.21 lower, trading at $32.73 per ounce.  (Click here for the most current spot prices.)

Gold prices could rally to a new high of more than $2,000 per ounce next year as central banks increase monetary stimulus to sustain the recovery, according to Raymond Key, head of metals trading at Deutsche Bank in London.  “We’ll take out $2,000, we’ll go higher,” Key said at the London Bullion Market Association’s annual conference. “That’s on the view that they’ll continue to print money.”

“With central banks continuing to buy gold around the world and with the macroeconomic environment which is still there, the demand should remain very strong,” said Jamie Sokalsky, CEO of Barrick Gold Corp., the world’s largest miner. “We’re not going to see the reaction on the supply side to make up for that in the industry.”

"With the U.S. fiscal cliff continuing to draw attention, gold looks like it could well soon benefit from fresh investor demand," traders with TD Securities said in a note.

Albert Cheng, World Gold Council Managing Director, Far East, believes gold is still a safe haven asset, primarily as a hedge against uncertainty.  Cheng also discussed gold’s growth in Asian markets. 

“If you look at this megatrend of the market moving from the west to the east, if you look at China and India together, 50 years ago they accounted for only thirty-something percent of the world market, now it is about 58 percent,” Cheng said. “If you look at Europe and the U.S. together, they used to account for almost 60 percent of the market.  Now they are about 30 percent.  So this is a big change, and the trend is that gold is still moving from the west to the east in terms of investment as well as jewelry consumption.”

According to the World Gold Council, China's gold demand has risen 27 percent per year since 2007 and China's world share has doubled from 10 percent to 21 percent from 2007 to 2011.

(Sources:  “Gold to Gain to $2,000 on Money Printing, Deutsche Bank Says,” Bloomberg, November 14, 2012; “Greece, FOMC meet on Wed, US fiscal cliff to be catalysts for Gold: Sharps Pixley,” Commodity Online, November 14, 2012; “PRECIOUS METALS: Comex Gold Rises on Euro Gains, Demand Hopes,” Wall Street Journal, November 14, 2012; “Is Gold No Longer a Safe Haven? CNBC, November 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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