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JP Morgan Warns Gold to Go Parabolic and Rise to $2,500 By Year



-- Posted Tuesday, 9 August 2011 | | Disqus

Gold in USD terms is 2.4% higher and is higher against all currencies and trading at USD 1,760.40 , EUR 1,234.10 , GBP 1,075.70, CHF 1,306.80 per ounce and 132,719.00 JPY.  

Gold’s London AM fix was USD 1,770.00, EUR 1241.75, GBP 1080.98. Gold reached new record nominal highs at $1,780.10/oz and new nominal highs in euros and sterling also this morning.

Asian equities were mixed with sharp falls seen on the Hang Seng but the Nikkei recovered to only finish down 1.7% and the Chinese and Australian stock markets actually managed to rise on the day.

The FTSE, DAX and CAC are down 0.7%, 1.9% and 0.2% respectively but US futures are showing tentative gains.

There were further signs of stagflation in the UK as manufacturing unexpectedly fell in June and the trade gap widened. This is further evidence that the economic recovery is faltering in the UK and QE has not worked.

US Major Debt Holders

U.S. Treasuries dropped, pushing 10-year note yields up from the lowest level since January 2009, on speculation the Federal Reserve may introduce new stimulus measures today to boost financial confidence.

More ‘stimulus’, QE3 or whatever new fangled acronym is dreamed up by desperate policy makers will of course be bullish for gold and silver.

Libor-OIS

J.P. Morgan Chase & Co. (JPM) and Goldman Sachs Group (GS), raised their gold-price late yesterday. 

J.P. Morgan now sees gold prices at $2,500 a troy ounce by year-end, while Goldman expects gold at $1,730 in six months and $1,900 in 12 months.

This may be a sign that the current sharp rally may have reached its zenith as neither bank has a great track record regarding short term trading calls on commodity markets.

In the short term there is the risk of a correction as gold’s rise is now becoming front page (on front page of FT today) and headline news.

The fact that silver has fallen in recent days and remains below $40/oz and the fact that gold mining equities have also not risen may also be a warning signal.

Gold has risen from below $1,500/oz to nearly $1,800/oz in 5 weeks (since the start of July) and is up nearly 18% in dollar terms.

Therefore, in conventional terms gold is most certainly overbought.

However, we are not living in conventional or normal times and the ongoing global market crash and global currency debasement means that there is a chance that gold will go parabolic as it did in the 1970’s.

Investors would be prudent to continue to make the trend their friend and any pullback should be used to buy the dip.

Those wishing to take profits might do so after two days of lower prices or a weekly lower close. However, given the level or market, systemic and monetary risk, all investors are advised to maintain a core financial insurance precious metals holding.

Gold’s bull market looks very secure for the foreseeable future due to strong institutional demand (from astute hedge funds and central banks) and store of wealth demand from Asia.

As does silver’s due to increasing investment and safe haven demand and the continuing growth in industrial demand for the versatile precious metal.

NEWS
Gold Hits Another Record
http://online.wsj.com/article/SB10001424053111904007304576497200665715690.html?mod=googlenews_wsj

Traders target $2,500 high for bullion
http://www.ft.com/intl/cms/s/0/bcaad996-c198-11e0-acb3-00144feabdc0.html

JP Morgan analyst sees gold at $2,500 by year-end
http://online.wsj.com/article/BT-CO-20110808-714003.html

Gold may hit US$2,500 in 2011: JP Morgan
http://www.cbc.ca/fp/story/2011/08/08/5223337.html

Britain, other eurozone countries face ratings cut: Jim Rogers
http://www.reuters.com/article/2011/08/08/us-ratings-downgrades-rogers-idUSTRE7771NP20110808

COMMENTARY
European Central Bank must go nuclear to save Europe
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8689824/European-Central-Bank-must-go-nuclear-to-save-Europe.html

If you think gold is flying now, wait for QE3, Turk tells King World News
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/8/8_Turk_-_Fed_May_Announce_QE3_Now_Creating_Gold_Explosion.html

Change You Don't Have to Believe In
http://www.24hgold.com/english/news-gold-silver-change-you-don-t-have-to-believe-in.aspx?article=3597119364G10020&redirect=false&contributor=James+Howard+Kunstler

The Bull Case for Gold
http://www.telegraph.co.uk/finance/markets/8688428/The-bull-case-for-gold.html

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Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: Past experience is not necessarily a guide to future performance. The value of investments may fall or rise against investors’ interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. GoldCore Limited, trading as GoldCore is regulated by the Central Bank of Ireland. The provision of precious metal product or service does not require licensing, authorisation, or registration with the Irish Central Bank and, as a result, it is not covered by the Irish Central Bank's requirements designed to protect consumers or by a statutory compensation scheme. 


-- Posted Tuesday, 9 August 2011 | Digg This Article | Source: GoldSeek.com

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