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“Sun Worldwide”, the Asian-based boutique brokerage apparently believes that the inevitability of the US dollar’s debasement and the very real prospect of inflation in the months and years ahead is responsible for the price of gold exceeding $1000 in trading this week.
Analysts close to “Sun Worldwide” are thought to suspect that investors who had expected economic figures to have improved after trillions of dollars of bailouts, stimulus packages and inventive schemes, are concerned that the Federal Reserve may be forced to extend its quantitative easing program.
In addition, many investors feel that the rally in global equity markets has been overdone and many are taking profits off the table before an expected pullback in the major indices.
China’s stockpiling of commodities including crude oil and copper appears to be coming to an end and suggests to some that the notion that the world’s 3rd largest economy could drag the rest of the world out of recession is beginning to fade.
Sources close to ‘“Sun Worldwide” say the firm is convinced that China is acquiring gold on pullbacks in an effort to diversify its vast foreign currency reserves to reflect a lower weighting towards US Treasuries.
“Sun Worldwide” analysts suggest that the price of gold could realistically reach $1200 by the end of 2009 and have advised clients to acquire the metal on price pullbacks.
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