RBC Analyst: Aggressive Fiscal Policies Will Push Gold Higher

Nine of the last 13 interest rate-cutting cycles by the U.S. Federal Reserve occurred during recessions, and in two-thirds of them both gold and gold equities clearly outperformed, according to RBC Capital Markets.

While gold prices may demonstrate seasonal weakness in October and November, RBC analysts suggest aggressive fiscal and monetary policies of central banks around the world will likely push gold higher. This is a result of both the elevated financial risk and possibility of higher inflation.

The firm recommends investors buy gold stocks at current levels and forecasts that bullion will rally above $1000 per ounce in the first quarter of 2009.

RBC said gold equities appear to be discounting a long-term gold price in the range of $650-$750, with large-cap names at the higher end. Its Tier I and Tier II global gold stocks have target price returns of 62% and 104%, respectively.

Comments

[Keer-eh Khar:]

Gold eleavtor and DJIA elevator will pass by each other at 3000 each.

2008 Oct 10 04:11 PM

[Diegojames:]

If we just LOST two TRILLION in market value plus home prices are falling ....think deflation... why is gold going up??? Or is the government really going to throw dollars around the world.

Diegojames
Northridge, California

2008 Oct 11 12:10 AM

[Keer-eh Khar:]

Deflation first, hyperinflation later.
Think breathing when a patient is terminally ill.
Don't confuse short term with long term.

Gold elevator up and DJIA elevator donw will pass by each other at 3000...

2008 Oct 11 03:44 AM