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Swiss Asia Capital’s Kierner: Own Gold

Release Date: 
Friday, August 17, 2012

Gold moved slightly higher today following yesterday’s rise, following pro-euro comments that pushed down the dollar. Gold was $2.00 higher at 8:25 a.m. Pacific Time on the New York Spot Market, trading at $1,617.70 per ounce. Spot silver was $.05 lower, trading at $28.27 per ounce.  (Click here for the most current spot prices.)

German Chancellor Merkel expressed support for ECB President Mario Draghi who has pledged to protect the euro, bolstering investor sentiment that Europe would ultimately solve its debt crisis. Markets continue to monitor central banks regarding future monetary easing that may drive gold higher. 

Juerg Kierner, chief investment officer for Swiss Asia Capital, said gold prices may rise above $2,000 an ounce. “I think owning a credit risk-free asset in your portfolio is key,” he said. “How much, that’s another question. For some people, it’s close to zero..for most of them…as total holdings are well below one percent of investment holdings. We think people should boost that up in order to have a risk-free asset in their hands.” 

Kierner discussed how a decline in today’s major currencies will continue to support gold.  “What started as a dollar weakness trade the first seven years of the last decade has been now turning into weakness of western currencies full stop…I think that both [gold and silver] are key beneficiaries of monetization, but I think even without monetization in very high order, … basically, covering the shortfall in the system, gold and silver can run because the overload stock is relatively small, the investment holdings are relatively low, so just new commitment money to the sector can move the sector significantly higher….”

(Sources: “Gold lower; platinum gains with Lonmin in focus,” Marketwatch, August 17, 2012; “PRECIOUS-Gold rises for 3rd day on hopes of ECB action,” Reuters, August 17, 2012; “Soros and Paulson on Track as Gold May Top $2,000,” Bloomberg, August 16, 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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