The RELIC, as its detractors like to call it may not be so useless after all according to Barclays. The firm has set a price target for the yellow metal of $1850 by Dec 2011. They cloak their bullish argument on generic reasons like demand from emerging markets and supply constraints. Those factors may be important, but the real reason for gold's rise is dollar devaluation (same can be said for the Euro, Pound, Yen, Yuan, Peso, etc.). The RELIC, as it turns out has a very important use: protection against competitive currency devaluations. Unfortunately, most people will not realize this fact until it is too late. From Barclays :
Gold prices are likely to hit $1850 an ounce by the end of next year on strong demand from emerging economies and supply side constraints, Paul Horsnell, managing director of Barclays Capital said in a media briefing in Mumbai on Thursday.Black Swan Insights
Gold will first slide to $1,310-1,325 early next year on profit booking. But, the precious metal will get good buying support from central banks in Asia and West Asia regions, who are looking for opportunities to increase their gold portfolio.
Any aim to pick up gold in good volume will raise prices steadily to $1,450 by mid-next year and then the targeted $1,850 towards the end, Horsnell said.
Gold surged over 34 per cent since October 1, 2009 and 23 per cent so far this year.