As gold prices hit a 2012 record of $1,787.40 per ounce on Friday, Bank of America Merrill Lynch analysts said the precious metal could soar to $3,000 or even $5,000 over the longer-term.
“We will be focusing in on gold. Ultimately we think gold can trade between $3,000 and $5,000 an ounce going forward,” MacNeil Curry, head of foreign-exchange and rates technical strategy at BAML, told CNBC’s “Worldwide Exchange.”
“Certainly not within the next few months, but on a long-term basis we are on a well-defined uptrend, and we have got more to run before that runs its course.”
Sabine Schels, senior director and head of fundamental commodity research at BAML, added: “The best long story for commodity markets right now is gold. In the type of aggressive monetary policy easing environment we have right now, post what the Fed has done with an open-ended QE, and what the ECB has done, you really want to be invested in gold.”
Schels forecast gold prices would reach $2,000 within six months, before rising to $2,400 by the end of 2014.
While Bank of America’s call on gold is among the most bullish, other market participants have also weighed in to suggest the yellow metal’s rally is far from over.
In a Deutsche Bank report published on Tuesday, analysts Daniel Brebner and Xiao Fu forecasts gold prices will exceed $2,000 in the first half of 2013.
Like Schels, Brebner and Fu think a soft global monetary picture will be positive for gold prices.
“We believe the growth in supply of fiat currencies [those without intrinsic value] such as the U.S. dollar and dollar-linked currencies such as the renminbi is a key driver, followed by concerns regarding inflation and inflation volatility which could follow,” Brebner and Fu said in the report.
They added that the low interest rate environment meant investing in commodities rather than other asset classes came with negligible opportunity cost.
While the current global economic picture is supportive of gold, its intrinsic characteristics also help.
“Gold is truly scarce, having a concentration of around 3 parts per billion in the Earth’s crust… Scarcity may create some stability in the value that it represents, and in turn impact the confidence with which the public regard it,” Brebner and Fu said.
“The rate of gold supply growth is normally quite slow and reasonably predictable,” they continued.
There’s a great wealth transfer taking place right now. Are you on the losing end or the receiving end?
Wealth Transfer Planning
Precious metals have always been a safe haven for investing in high inflationary times. Historically speaking, a recurring cycle that always seems to repeat itself is periods of high inflation as a precursor to the crash of paper currencies. Those who understand this wealth cycle and position themselves in gold and silver are those who prosper.
Precious metals are assets that will never lose their value. They are not subject to systematic risks as paper money and serve as a hedge against inflation and other threats of devaluation. Cornerstone Asset Metals was established to help guide investors safely in and out of the precious metals market.
The Great Wealth Transfer
Watch Terry Sacka: The Wealth Transfer show on the Christian Television Network discussing the financial and influential decline of the Western world and the simultaneous wealth increase of the East. With the wealth of nations shifting, it’s imperative to understand moving forward how hard tangible assets will allow you to maintain a quality lifestyle.
Visit the Wealth Transfer archive for more episodes.
Learn more about how buying gold and silver today is a smart move for your investment portfolio.
» Contact Cornerstone Asset Metals today to learn more about buying gold and silver as an investment.
» Read our article: Why Silver is Going Up Today?
» Read our article: Why Gold is Going Up Today?
Past performance is not an indication of future potential values.