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Greyerz Says Gold May Hit $10,000 in Three Years

Release Date: 
Thursday, July 19, 2012

Gold prices rose as the dollar fell to a two-week low. Gold was $14.00 higher at 7:48 a.m. Pacific Time on the New York Spot market, trading at $1,588.50 per ounce. Spot silver was $.23 higher, trading at $27.51 per ounce. (Click here for the most current spot prices.)

Gold has recovered some of its losses following Fed Chairman Ben Bernanke's testimony before Congress this week. He disappointed traders who expected clear signals regarding further monetary stimulus. "It seems that every time we do not have QE3 announced, gold slips back as some of these more speculative positions are liquidated," Mitsui Precious Metals analyst David Jollie said. "After that disappointed selling, I think the market returns to more normal behavior and some of these speculators will try to rebuild positions. Others such as the official sector are also likely buyers on price declines."

Commenting on gold's move higher, Daniel Briesemann, analyst at Commerzbank, said "the push is definitely coming from firmer equity markets and this lends some support to commodity prices. Gold and the other precious metals are gaining some lost ground from yesterday and so there is some catch-up potential at the moment."

After Bernanke's testimony, gold buyers concluded "we are back to basics and continued stimulus of some kind ... benefits gold if recovery in the meantime occurs," said George Gero, a vice president with RBC Wealth Management, in a note.

"The credit bubble we've had, for at least 40 years, is going to accelerate dramatically, and the failures in the system will continue," said Egon von Greyerz founder and managing partner at Matterhorn Asset Management in Switzerland.  "I see gold reaching $3,500 to $5,000 in the next 12 to 18 months…"

Greyerz discussed the ongoing financial crisis, saying "there is a fire in almost every country in Europe. The US is going to catch fire also. There will be a catalyst coming soon, probably some concerted action of QE or money printing between the Fed, IMF and the ECB. That will happen as a result of the economies, worldwide, collapsing."

"The printing of money will lead to collapsing currencies, and investors buying gold at any price," he predicted. "Central banks, and most probably the Fed, don't have the gold they say they have. The 8,000 tons the US government is supposed to hold is probably not there." Greyerz says "the effect of this is the paper markets will not be trusted. So people will rush into physical gold. I see gold reaching $3,500 to $5,000 in the next 12 to 18 months. Within 3 years, I see the gold price reaching at least $10,000."

"I don't think it will be long before silver goes back to $50, and in the next 12 to 18 months we will be well above $50," Greyerz said. "In a world where most assets will rot, it's critical to hold assets that won't decay and that is gold and silver. And they have to be held in physical form."

(Sources: "PRECIOUS-Gold rises 1 pct as euro, stocks climb," Reuters, July 19, 2012; "Gold trades higher, copper leads the way," MarketWatch, July 19, 2012; "U.S. Stocks Shrug Off Economic News," Wall Street Journal, July 19, 2012; "Greyerz - Gold to Hit $3,500 - $5,000 in 12 to 18 Months," Mineweb, July 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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