Central banks are buying gold to back up their currencies when the worldwide economic collapse occurs. How much will gold rise? Morgan Stanley believes it will hit $2175 in 2013. Most conservative estimates are at least $2000 in 2013. If governments are buying gold, future investment choices are clear.
Gold’s London AM fix this morning was USD 1,558.50, EUR 1,239.27, and GBP 993.62 per ounce. Yesterday’s AM fix this morning was USD 1,555.00, EUR 1,229.44, and GBP 989.56 per ounce.
Gold fell $5.60 or 0.36% in New York yesterday and closed at $1,561.20/oz. Gold has been trading sideways in Asia and was slightly lower in Europe prior to buying which saw gold rise to about the close in New York yesterday.
Fears about Greece and the EU after the EU summit came up short on delivering a grand solution to solve the debt crisis are supporting gold at these levels and leading to some safe haven buying.
EU leaders once again failed to agree to plans with regards to the increasing possibility that Greece exits the euro. Instead, Greece was again urged to continue to meet targets and continue the austerity to complete the ‘bailout’ schedule.
Meanwhile, the crisis is being compounded by the increasing insolvency of Spanish banks and indeed Spain itself.
Spain announced a 9 billion euro ($11 billion) bailout of Bankia on Wednesday, and endeavoured to find new ways to meet its demanding financing needs which may pull the country deeper into the eurozone crisis. The Irish NAMA style solution of creative accounting and kicking the can down the road is being looked at rather than the more prudent, but short term painful, winding down of all the ‘bad’ insolvent Spanish banks.
Gold may struggle to make gains over the coming trading session ahead of the expiry of monthly US options. However, sharp gains could be seen after option expiration – as has often been the case in recent years.