Some analysts ponder whether the death of Kim Jong Il will affect the markets or whether gold has entered a bear market.
Posted by Adam King on December 21, 2011
Citi Sees Gold at $3,400? Buy Gold Now
December 21, 2011 – While some analysts ponder whether the death of Kim Jong Il will affect the markets or whether gold has entered a bear market, people have their ears perked to the news coming out of the big banks about the opportunities to buy gold now. The price of gold has dipped 15 percent in the last month, bringing about buying opportunities that we have not seen since September. Generally speaking, the passing of the North Korean leader will probably not make head waves in the gold market. While gold has dipped below the 200- day moving average, the fundamentals still show a strong bull market in action. Though it does provide television gold-bashers with something to say for the time being, that’s about all the dip amounts to.
It’s far more interesting to look at the major banks predictions of the gold market performing well into 2012. Reports have surfaced about Goldman Sachs, Credit Suisse, and Societe Generale all forecasting growth in gold. Citing permanent low interest rates, the banks conservatively put gold retaining its strong position and possibly moving up to as much as $2,500 an ounce. We also learned that following the September correction the central banks of the world began buying gold at forty-year highs. While we cannot find out how much gold central banks are buying now until next quarter, one can assume, based on their performance in the third quarter of this year, they are currently buying gold as fast as they can get it.
Now a report has surfaced that Citi sees gold moving “toward $3,400 in the next 2 years or so.” Anyone who thought Societe Generale was being outrageous as it was screaming gold before central banks saved the institution from failure now knows that gold has a long way to go. Specifically, the report from Citi cites a position we reiterate, stating, “we continue to believe that the bull market remains intact.” The bull market is intact. In the mid to long-term gold is unquestionably the place to be.
In addition, the report goes on to put out a very important mile-marker: “Such a move would likely put Gold in the $2,300-2,400 area in the 2nd half of 2012.” Given low interest rates that are here to stay through 2012 at least and negative real interest rates in the US, gold at $2,300-$2,400 in a year is a very reasonable estimate. The current dip in gold is just that, a current dip. It is a buying opportunity for the keen investor to scoop up a few extra ounces that will pay off big in the coming years. A lot of banks are talking about it and a lot of central banks are buying it. It’s time to buy gold.
Stewart Lawson
Senior Staff Writer – Certified Gold Exchange
Categories:
US Gold Market
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