North American Precious Metals Weekly
Merrill Lynch
Date: April 9, 2007
Gold could break the $1,500/oz barrier within five years
In the April 3, 2007 edition of the Portfolio Manager’s Review, David
Rosenberg, Merrill Lynch North American Economist, discusses the
resurrection of inflation expectations and its potential impact on gold
prices. The following two paragraphs are taken from his research...
"We reiterate that gold is in a secular, not merely cyclical, bull
market. Indeed, gold formed a very similar bottom formation in 1999 as
the S&P 500 did back in 1982. And, if this plays out like other
secular bull markets have in the past – emerging markets, bonds,
stocks, oil, real estate – then this is a run that can be expected to
last at least another five years and ultimately see bullion break the
$1,500/oz barrier...
... if gold had merely kept pace with inflation during the past 25
years, the nominal price would have already cleared that $1,500/oz
threshold. As we have already seen so far this cycle, gold has proven
to be a very successful hedge against deflation ... and inflation fears
(which is one reason why it is in a secular bull market)"...
Gold Markets – GFMS "Gold Survey 2007
"...we continue to believe that bullion will trade up to and likely
through $700/oz by late April, mid-May. We note that bullion usually
weakens into the early summer months (on weaker fabrication demand);
thus, we would not be surprised to see bullion back below $650/oz by
the end of June.
Last week, GFMS Limited, a global leader in precious metals
research, released its "Gold Survey 2007" publication. GFMS noted the
potential for the gold market to hit new highs in 2007 and 2008, with
the strong likelihood that the average spot price for 2007 will be
higher than the record average of $614.50/oz set in 1980 (the year that
bullion hit an all-time high of $850/oz)...
The above information has been redacted from the article as it
originally appeared in Merrill Lynch's Gold & Precious Metals
Weekly April 9, 2007.
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