With the Euro in full-blown collapse, money market funds in trouble and a feeble dollar--the only asset people can trust is gold. MF Global in a research note predicts $1700 dollar gold by December 2011 Dow Jones reports:
Gold is likely to reach a new record high and trade up to $1,700 a troy ounce in 2H, MF Global says in a report. The house expects the yellow metal to trade between $1,650/oz and $1,700/oz in the remainder of the year, and forecasts a 2011 average of $1,551/oz. Gold's current high is $1,576.52/oz, reached on May 2; spot gold is at $1,552.90/oz, down $1.50 from its close in New York. Gold will likely push higher later this year on stronger physical demand from China and India, the house says, while concerns over inflation will boost its safe-haven appeal. "Expectations of more People's Bank Of China purchases to increase China's gold holdings as a means to diversify reserves is another bullish argument supportive of fundamentals," it says, noting that a 1.0%-2.0% increase in mine supply will be offset by better physical demand.
Notice how gold was up during today's sell-off--along with the dollar. As the meltdown in Europe continues, gold will be the primary beneficiary.
And if you think MF Global is too bullish on gold try this on for size. Standard Chartered in a research report said gold could reach $4,869 by 2020 during a super-bull market scenario. This will likely prove a conservative target if the Bernank has it his way.
Black Swan Insights