Wednesday, Dec 17, 2008
A senior figure at the investment arm of Commerzbank has claimed today (December 16th) that gold prices could double in the next three to five years, Reuters reports.
It has been widely reported in recent weeks that gold would struggle as a period of deflation sets in, but the dollar – which tracks in the opposite direction to the yellow metal – is on the slide.
Now Edward Hands, a portfolio manager for the corporates and markets division of Germany’s second-largest bank, has explained that the fiscal and monetary stimuli currently taking place mean that “it would be prudent to have some exposure to gold”.
He told the news provider: “The purpose of the stimulus is to reduce the debt burden. The easiest way to reduce debt is through inflation, achieved primarily through currency depreciation.
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“Certainly over the course of three, four, five years, you could see the gold price double quite easily.”
Mr Hands’ view that prices could double from the current level of around $830 per ounce was strongly corroborated recently by Citibank, the second-largest financial institution in the US.
Chief technical strategist Tom Fitzpatrick explained earlier this month that the group sees gold as being on a strong bull run and that prices could even break the $2,000 per ounce barrier next year.
“We continue to believe that a move of similar percentage to that seen in the 1976-1980 bull market can be seen, which would suggest a price north of $2,000,” he commented.
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This article was posted: Wednesday, December 17, 2008 at 5:04 am