Investor demand to continue to fuel higher gold price-Scotia Capital

Scotia Capital is calling for "much higher gold and silver prices in the second half of the year and in 2010."

RENO, NV - 

The investor demand that has proved to be the driving force behind higher gold prices will continue, Scotia Capital analysts David Christie and Trevor Turnbull predict.

"We believe that we will see strong activity in physical gold buying and in gold ETFs in the second half of 2009 and into 2010," the analysts forecast in their monthly The Treasure Vault report. "Fears of rising inflation should be the primary driver."

Scotia Capital believes there will be strong activity in physical gold buying and in the gold ETFs in the second half of this year and into 2010.

"The falling U.S. dollar, rising commodity prices, and the prospects of sky-high inflation should propel investors to own gold and silver as a hedge against these financial uncertainties," the analysts suggested. "We believe that inflation will start to rise more quickly as the world's economies start to benefit from the massive stimulus, which we believe will not happen until later this year."

"In addition, the Chinese and other central banks may actually be buying gold instead of selling, despite the selling that some European central banks will still be doing along with the approved sale of 403 tonnes from the IMF," they advised. "Also, there is the typical seasonal pattern in gold prices/demand from a fundamental point of view pointing to stronger gold prices this fall as we begin moving into auspicious periods to buy gold in many eastern calendars along with the holiday seasons in the West."

Scotia Capital's top picks are IAMGOLD, Barrick, NewGold, and Kinross. "We like these companies as they all have some of the following important ingredients: exploration upside, development projects, production growth, undervalued compared to peers, strong balance sheets, and strong management teams backed by solid assets."

Disclaimer

MINEWEB is an interactive publication, with rolling deadlines through each day, commencing in the Sydney morning,  and concluding, 24 hours later,  in the Vancouver evening.  If you believe your side of an issue deserves inclusion, but has failed to meet one of our deadlines, you are invited to notify the Editor in Chief in Johannesburg, and we will include you in our editing and expanding on our stories. Email him at alechogg@gmail.com

Print story      Email story      Subscribe to free newsletter

Back

 

responses to this article

Name
Subject
Comment