Citigroup Report Further Fuels Debate about the Future of Gold

Source:

..."As a consequence we remain of the view that Gold will continue to perform well and will do particularly well as the consensus grows as to how we will come out of this mess (or not). Compared to just about every other asset class in the last 5 to 7 years holders of Gold likely look mellow…it is the holders of other assets that are looking a bit "yellow."

Precious metals markets were quiet on Friday. That is, up until the last few minutes when that little line on Kitco's live gold chart went vertical for what amounted to about a $7 gain for gold.

Citigroup's report the other day will certainly add some fuel to the fire when it comes to the debate over the future of gold prices. They figure the yellow metal could rocket as high as $2,000 an ounce sometime within the next two years, possibly before the end of next year, as all the government stimulus money works its way into the system.

Ambrose Evans-Pritchard filed this report on the Citigroup paper and GATA has hosted the document that is full of charts, but, more importantly, ends with the following:

"While we believe that Gold could very well head above $2,000 we do not think that is today, tomorrow next week or next month.

We do however believe that it will happen over time as this financial / economic backdrop heads to “the wings”

What do we mean? The excesses of the last 10 to 25 years have come to fruition in the U.S. and across the World with severe repercussions for financial markets and the Global economy. There is an increasing recognition of this at official levels and the monetary and fiscal floodgates are starting to open...

Considered opinion is that all the Gold in the World can fit in a 25 square metre cube so even a relatively modest a change in the supply / demand dynamics could result in an outsize move in price. Gold has been used as a monetary instrument as far back as you can look. The same cannot be said about precious art or wine or fine cars etc. In times of extreme concern it is highly likely that it will regain that “luster”

As a consequence we remain of the view that Gold will continue to perform well and will do particularly well as the consensus grows as to how we will come out of this mess (or not). Compared to just about every other asset class in the last 5 to 7 years holders of Gold likely look mellow…it is the holders of other assets that are looking a bit 'yellow'."

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