Renewed claims gold will hit $US1000 an ounceFont Size: Decrease...

Renewed claims gold will hit $US1000 an ounceFont Size: Decrease Increase Print Page: Print July 01, 2008
YOU beauty!

Citi sure knows how to wipe away those end of the worst financial year since 1930 blues with a nifty bit of research on the gold industry which, in part, concludes that the gold price is capable of “doubling or tripling from current levels”.

By the end of the year, according to Citi, the gold price should be up around the $US1000 an ounce mark as financial stresses keep hammering away at the US and European markets and the savvy punters seek hard assets.

Apparently China is the world’s biggest buyer of jewellery gold with some 93 tonnes of the yellow metal finding its way onto the fingers, necks and earlobes of hedonistic Chinese gold lovers during the six months to the end of March.

Shame on us for thinking that Robert Friedland knew best when he said that Chinese folk would tend to favour platinum jewellery more because it looked better when matched against the lighter Asian skin tones.

“Ultimately, gold is a small market with motivated Indian/Asian and petrodollar-fuelled buyers,’’ Citi said.

“We see wealth creation in Asia and petrodollar flows in the Mid-East as secular drivers amid a supply-constrained Gold market.

“We expect gold to regain $US1000 an ounce by the end of 2008, and to work higher through 2009/10. Longer term, we believe gold is capable of doubling or tripling from these current levels.”

Add a dash of pragmatism to the situation and a bullish call on the gold price is not all that new. Given that Citi is making the call adds a fair degree of weight in this instance.

But an industry player told Daily Assay this week that gold stocks won’t get the same sort of re-rating that its counterparts in the coal, iron ore and even tin space have got until the market finally figures out what gold is used for and where the supply/demand pinch points are.

It’s a shame therefore that the Australian Gold Council is no longer in existence having transferred its role to the broader Minerals Council of Australia.