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Rally expected to push gold to US$2,000 (10Oct09) |
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Although gold rose 19% this year to US$1,072 an ounce, consumer prices had almost tripled in the past three decades, and as such gold prices are still 53% below the 1980 inflation-adjusted peak. Bullion hasn’t kept pace with the cost of bread, fuel or medical care. The record gold price of US$873 an ounce reached in 1980 would be US2,287 an ounce in today’s dollar. Using a more accurate inflation-adjustment method of calculation, John Williams, an economist and the editor of Berkeley, California-base Shadowstats.com said gold would need to rise more than six-fold to top the 1980 record.
According to Martin Murenbeeld, the chief economist at Toronto-based Dundee Wealth Inc, gold is not at any peak. The world’s money supply has increased and gold hasn’t kept pace. We’re now in a period where gold is catching up.
Banks have raised their gold estimates, with JPMorgan Chase & Co predicting the metal would average US$1,006 an ounce next year, compared with an earlier projection of US$950. Deutsche Bank AG forecast an average of US$1,150, up 32% from its estimate in July. Barclays Capital said that “prospects for a run at US1,500 should not be underestimated” next year. John Brynjolfsson of Armored Wolf LLC predicted bullion will top US$2,000 based on the fact that people use gold as a hedge against currency devaluation.
(Source: The Star 20 October 2009)
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