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Gold Heading for $2000 in 2009

Commodities / Gold & Silver Nov 27, 2008 - 07:19 AM GMT

By: Mark_OByrne

Commodities

Both gold and silver fell slightly yesterday as the dollar and stock markets rallied on renewed increasing risk appetite. Euro gold and British pound gold remained near record highs of €628 and £532.

Gold has traded sideways in Asian and early European trading despite the horrendous terrorist attacks in India. Unfortunately, they show that the world remains very unstable and that geopolitical risk remains ever present.


With the Thanksgiving holiday today, trading will likely be subdued.

Increasing negative real interest rates will likely lead to a weaker dollar and markedly higher gold prices in the coming months - the US Federal Reserve is meeting on December 16 and may again cut key lending rates from 1% to 0.75%, new near record lows.

The Citigroup report issued yesterday (see commentary section today) is extremely bullish for gold. Gold is likely to rise above $2,000 an ounce regardless of the long term macroeconomic scenario that unfolds, Citigroup said in a research note.

"For those who refer to gold as 'that useless piece of yellow metal that has no real value and earns nothing' (and have done for years) they might want to look at financial market charts more closely," writes Tom Fitzpatrick of Citigroup in New York.

Citigroup warns that the damage caused by the financial excesses of the last quarter century was forcing the world's authorities to take steps that had never been tried before. This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold.

"They are throwing the kitchen sink at this," said Tom Fitzpatrick, the bank's chief technical strategist. "The world is not going back to normal after the magnitude of what they have done. When the dust settles this will either work, and the money they have pushed into the system will feed through into an inflation shock.”

If they are unsuccessful, Fitzpatrick warns of a deflationary meltdown, civil unrest and massive political instability internationally, and possible wars.

$2,000 looks like an increasingly conservative estimate and many are now calling for far higher prices between $5000 and $10,000 in the long term. Dennis Van Ek, a principal at Mercer Netherlands believes all pension funds should have an allocation to gold (see http://globalpensions.com/showPage.html?page=gp_display_feature&tempPageId=828357 ). "Van Ek stated he expects the price of gold to go on rising, to $9,000 an ounce, or even higher, by 2015."

If gold were to reach some $5,000 per ounce, which is looking increasingly likely in the long term, - at EUR/USD at 2.00 or GBP/USD 2.00 we would be talking about €2500/oz or £2,500/oz (from €625/oz and £532/oz today).

By Mark O'Byrne, Executive Director

Gold Investments
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Ireland
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Gold and Silver Investments Limited
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EC3V 3ND
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Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

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Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

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Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

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Comments

Darshan kumar
28 Nov 08, 07:10
no purchased gold

Gold may Declline heavily in next year,USA new president make well Economic so Doller may rised high.

So Gold Declline heavily as $550,so dont purchased Gold. we have sure All USA persons dont goes for gold, gold is only humen and solve problems of each others.


ethyl manning
30 Nov 08, 07:00
gold will boom, boom

good morning!

Due to the trend of 10xcsn, gold will g thru the roof...maybe 6500.00 usd /ounce like citigroup projects.

buy now, before ALL CURRENCY IS trash wallet and worthless paper.

It is cheap, cheap, cheap.


Dario More
08 Dec 08, 09:59
Incoming Global Hyper-Inflation to remove value from money, and from gold for that matter..

THe inability to repay outstanding credit is to trigger hyper inflation and an interest for real value making enterprises. This will remove value from currencies yes, but also globally, and therefore the intrinsec value of money itself, and that will trigger an unexpected depreciation of value of metals too, whilst concurrently bringing a decoupling of oil from western economies into an array of other energy sources. Speculation is therefore to be managed with inflation, triggering less valuable money , manage greed and fear, and bringing metal speculation and prices down.

http://dariomore.blogspot.com/


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