Gold Prices Finally Catch Fire

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If the United States sinks into a deep recession that spreads into emerging markets, Citigroup Global Markets analyst John Hill expects gold would "double or triple" from current levels.

It took longer than almost anyone expected, but gold prices finally caught fire yesterday and rose a breathtaking $70 an ounce. And according to Citigroup Global Markets analyst John Hill, this may just be the start.

Mr. Hill wrote: Gold is finally displaying classic safe-haven attributes and de-coupling from other commodities, after being held down recently by de-leveraging, distress selling and dis-inflation...Gold appears to be entering a powerful new phase of investment demand tied to safe-haven and monetization themes.

No matter what, Mr. Hill thinks the outlook for gold looks strong. If the United States sinks into a deep recession that spreads into emerging markets, he expects gold would "double or triple" from current levels. A more likely outcome is slow growth accompanied by monetization and socialization of derivative losses, which he figures is likely to hurt paper currencies and help gold.

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