We have a six-month [gold price] target of $2000 an ounce, but see scope as well for prices to rise to $2400 an ounce by the end of 2014,” says the 2013 outlook from Bank of America Merrill Lynch metals strategists this morning, in contrast with the Goldman Sachs gold forecast for 2014 made last week.
“These targets reflect our view that the Fed will maintain mortgage purchases until the end of 2014 and will move to buy Treasuries following the end of Operation Twist in December 2012.
Quite clearly the US wants a lower Dollar and its monetary policy is certainly geared to deliver it,” says currency strategist Steve Barrow at Standard Bank in a note this morning.

 

Submitted by  Ben Traynor  BullionVault

THE SPOT gold price climbed back above $1715 an ounce Wednesday morning, around ten Dollars up from last week’s close, as stocks, commodities and the Euro also edged higher and US Treasuries dipped, ahead of today’s Federal Reserve policy announcement.

 

Silver meantime edged above $33.20 an ounce this morning, a slight gain on where it started the week.

 

Several analysts have predicted the Fed will today announce open-ended Treasury bond purchases worth $45 billion a month. In September the Fed announced it will buy $40 billion of mortgage-backed securities a month, while its maturity extension program Operation Twist, through which it sells shorter-dated bonds to buy longer-dated ones, ends this month.

 

“We have a six-month [gold price] target of $2000 an ounce, but see scope as well for prices to rise to $2400 an ounce by the end of 2014,” says the 2013 outlook from Bank of America Merrill Lynch metals strategists this morning, in contrast with the Goldman Sachs gold forecast for 2014 made last week.

 

“These targets reflect our view that the Fed will maintain mortgage purchases until the end of 2014 and will move to buy Treasuries following the end of Operation Twist in December 2012.”

 

“Quite clearly the US wants a lower Dollar and its monetary policy is certainly geared to deliver it,” says currency strategist Steve Barrow at Standard Bank in a note this morning.

 

“If policy is geared to weaken the Dollar even more, through further monetary easing today, it won’t stop any short-term safe haven demand for the Dollar that might arise out of fiscal cliff, but it could impair the ability of the Dollar to continue any such strength into the longer term.”

 

President Obama and House of Representatives speaker John Boehner exchanged new proposals on how to reduce the US deficit yesterday, press reports says, as part of ongoing negotiations aimed at avoiding the so-called fiscal cliff of tax rises and spending cuts currently due at the end of the month unless Congress passes legislation to prevent them.

 

Obama has reduced his request for additional tax revenue over the next decade from $1.6 trillion to $1.4 trillion, Associated Press reports, but has not changed his call for top income tax rates to be raised.

 

“I’m pretty confident that Republicans would not hold middle-class taxes hostage to trying to protect tax cuts for high-income individuals,” Obama told ABC News Tuesday.

 

The two sides are yet to reach an agreement.

 

In Toronto meantime Bank of Canada governor Mark Carney, who takes over at the Bank of England next year, suggested Tuesday that central banks might consider adopting nominal gross domestic product targets as an alternative to inflation targeting.

 

Under NGDP targeting, a central bank would aim to promote economic growth by targeting a given level of economic output in a given year.

 

“Adopting a nominal GDP-level target could in many respects be more powerful than employing thresholds under flexible inflation targeting,” Carney said.

 

“This is because doing so would add ‘history dependence’ to monetary policy. Under NGDP targeting, bygones are not bygones and the central bank is compelled to make up for past misses on the path of nominal GDP.”

 

Greece concluded its debt buyback program Tuesday, with unnamed official sources reporting it has received bids to sell bonds with €31.8 billion face value – above the €30 billion needed to secure Greece’s next tranche of bailout funding.

 

The average price paid for the bonds was however slightly above that targeted, meaning Greece’s debt to GDP ratio was reduced by 9.5 percentage points rather than the 11 targeted, according to the source.

 

The Euro extended yesterday’s gains against the Dollar Wednesday, climbing back above $1.30.

China, the world’s biggest gold producer and the second-biggest source of private demand last year, produced 34.6 tonnes of gold in October, China’s Ministry of Industry and Technology said today.

 

October’s production brings the total for the first 10 months of 2012 to 322.8 tonnes, an 11% increase on the same period last year.

 

Over in India, which imports most of its gold and is traditionally the world’s number one source of demand, efforts should be made to reduce imports of gold and so lower the current account deficit that has risen to record levels, the All India Gems &Jewellery Trade Federation said Wednesday.

 

Lending 10% of the gold held with temples and householders to jewelers would provide three years’ worth of supply, according to federation chairman BachhrajBamalwa.

 

“The only way India can reduce its dependence on imports is to tap the gold lying with individuals and temples,” agrees Kishore Narne, head of commodity and currency at Mumbai broker MotilalOswal.

 

“By doing this, the country can reduce influx of gold at these high prices. Appetite for gold is never going to diminish.”

 

  1. Let’s do the math.  Right now in 2012 $1 trillion is spent annual in transfer payments to the needy. 50 million people are on the EBT dole.  Another $725 billion goes to Social Security and Medicare.  Defense budgets absorb $700 billion.  If by some slight of hand  the government threw the folks receiving the $1 trillion in dole payments off those roles (never mind that they would end up starving and riots in the streets) this would not balance the budget.  If the USG stopped payments on all treasury obligations, saving another $500 billion and thus defaulting on the national debt, that would then get us to $1.5 trillion.Voila, Budget balanced 
    We are spending $1.4 trillion more than we take in so that is the bridge to far that we must cross
    Here is the dilemma.
    Thrown granny under the bus by repudiating Social Security and Medicare.  Disarm and save the defense budget?  Not likely but if peace broke out all over we might put that off. There you can save $1.4 trillion. Voila Balanced budget. Make the needy less needy and thus no longer needing their piece of the pie.  There are not enough body bags to contain the dead from that solution.  Stop paying on the debt?  It’s been done before but at great cost.  More wars and dead bodies would be the least of our problems.
    In the end, there is no solution to these intractable budgetary difficulties.  We are spending well past our abilities to pay.  There is no tax revenue solution that will create $1.4 trillion in additional revenues.  The loggerheads in D.C. will stop that
    There is no one willing to take “LESS”   Whatever element of the mandated payment population, entitlement people or Mooch Class is asked to sacrifice, no one is willing to take the first step.  The last presidential election cemented that. 
    Obamacare will be a large nail in the coffin of businesses, profits and employment growth. It is a fatal disease that destroys everything and everyone and helps no one, not even those who need medical coverage. Forget about the $220 trillion due bill that needs to be paid over the next 30 years, our budget dilemma is real and it’s here. Got phyzz?

    • So, it is mathematically certain that the US dollar will collapse and it is inevitable. Also in my opinion, hyperinflation will begin when the 500$ bill or the 1000$ bill is reintroduced in the USA but by then, I think the government will stop the cash transactions to implement the electronic transactions to cover up hyperinflation. 

  2. “Got phyzz?”

    As a matter of fact, I do!  :-D

    My question is, however, how much phyzz is enough to see a family through the most likely financial disaster?
    This is a fair question and one that many of us ask at some point.  It isn’t that I can’t swap more FRNs for more phyzz because I can.  The trick is, there are other things that are also of considerable value that compete with phyzz for the money that I do have.  I would appreciate anyone’s thoughts on this and their reasoning behind those thoughts.

    • It also depends on how big the family is. Right now, I’m stacking some physical gold, silver, copper and nickel to diversify my wealth to avoid losing too much of my wealth in terms of dollars. I don’t have any plans on selling them but I think 3000 ounces of silver should be just enough.
       

  3. Why 2400$ per ounce for gold when QE infinity is a reality. The Federal Reserve itself has admitted publicly that it will continue to do QEs until the USA’s economy recovers but it won’t in reality. So, gold will go way higher than 2400$ per ounce. It will go to (infinity)$ per one milligram!

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