Gold posts fresh record high of $1,282.90/oz on Friday, and has more to go, says Deutsche Bank in weekly commodities review, citing exchange rate and interest rate trends, central bank purchases, heightened macro economic volatility and de-hedging as major demand influences. But how high, and is price over-extended or has a bubble formed?, bank asks, reiterating that prices would need to surpass $1,455 to be considered extreme in real terms, hit $2,000 to represent a bubble. So, bank says its target of $1,600 in 2012 isn't excessive given favourable interest rate, exchange rate trends and appearance of new sources of demand from both private, public sectors. "For the time being we believe the drivers of this rally are fundamental rather than speculative," with physically-backed ETFs playing an important role, it says.It is refreshing to have an investment bank say something positive about gold other than it is a safe haven play. The $2,000 number is on the low side because it is using the government's inflation numbers. Real inflation, as most people know is much higher than government figures. John Williams of Shadow stats believes that if you use real inflation numbers, the price of gold would have to rise to $7,500 to match its inflation adjusted high reached back in 1980. Marc Faber said in the Gloom, Boom, Doom report that he expects gold to reach $4,000 before the bull market is over. Either way, we sill have a way to go in the great gold bull market.
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