As global central banks speed up their money printing presses in an attempt to promote recovery, the prospects of further currency debasement will help gold exchange traded funds strengthen, with some anticipating a run up to $2,000 gold prices.
“We’ll take out $2,000, we’ll go higher,” Raymond Key, London-based global head of metals trading at Deutsche Bank AG, said in a Bloomberg report. [End of Year Outlook for Gold, Commodity ETFs]
Governments and centrals banks around the world are implementing stimulus packages and loose monetary policies to promote economic growth in face of global recessionary pressures and to hedge against a potential fallout from the ongoing European financial crisis.
“We’re still working out the excesses that we’ve seen in the past,” Jamie Sokalsky, chief executive officer of Toronto- based Barrick Gold Corp. (ABX), said in the article. “This takes time, and easy monetary policy is going to have to exist for some time.”
Consequently, the added liquidity will debase currencies and fuel inflationary pressures, which typically drives investors toward gold investments as a safe store of wealth.
“With central banks continuing to buy gold around the world and with the macroeconomic environment which is still there, the demand should remain very strong,” Sokalsky added. “We’re not going to see the reaction on the supply side to make up for that in the industry.”