$2,000 Gold – Why and When?

Macquarie Equities Research, in a note to clients earlier this morning, commented:

“Gold as an alternative currency has been an important theme driving prices higher over the past several years.  As we have discussed previously, none of the world’s three leading currencies (U.S. dollar, euro, and yen) enjoy strong fundamentals, which underscores the long-term case for owning gold…Actions in Europe over the past few days highlight the long, long road that Europe faces to return to financial respectability and the high probability of further setbacks along the way.”

“As long as US real short rates remain negative, the opportunity cost of owning gold is negligible. In a highly uncertain world, gold is effective insurance at a compelling price.”

“We remain cautious about the outlook for gold in the very near term given the strengthening dollar and weakening sentiment. However, we look to add to positions in gold and gold stocks in the coming weeks as the medium-to-long term outlook remains very positive. We continue to see gold reaching $2,000/oz over the next 18–24 months.”

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