Fat Prophets, an independent research and fund management specialist, has announced its catchy prediction that the price of gold will reach US$2,000 by 27 July 2012, the official start to the Olympic Games 2012 ... just one year away.
The Company, who turned bullish on Gold in 2002 at US$260 per ounce is today marking Gold at a price of US$2,000 per ounce, within 12 months; key drivers being the on-going diversification by investors away from the US Dollar and into hard assets, and the increasing appeal of gold as an inflationary hedge against a backdrop of unprecedented fiscal and monetary stimulus.
Commenting today, Greg Smith, Managing Director of Fat Prophets, said: “I think the price of gold has a big 12 months ahead for a number of reasons. From the fundamental perspective, the supply and demand dynamics remain extremely supportive. There is a lack of supply; mining output has weakened over recent years and average grades have fallen by around a third since the late nineties. On the demand side, jewellery demand India and China is holding up well in spite of higher prices and I expect demand here to strengthen as the Asian middle classes grow.
“Emerging market growth – particularly China - is also important in terms of investment demand which I can see continuing at pace. Vehicles such as physical ETF’s are more prominent these days and are providing investors with a new way to invest in gold.
“The prevailing US earnings season has had some real bright spots but there is no telling how the market will react as the effects of the withdrawal of QE2 take effect. Over the coming months I expect US economic data to ebb and flow. Bouts of US economic strength will be followed by further hints of QE3 which will continue to push gold higher and I wouldn’t be surprised to see US$2,000 per ounce within 12 months.”
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