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Gold in 2010

 Beyond investment bank upgrades and positive market consensus, there are plenty of solid reasons why gold price is set to rise in the next 12 months.

Technically speaking, gold hasn't even reached its inflation-adjusted all-time high. For that to happen, we'd need to see gold over $2,000 an ounce - a 75% increase from today's price.

Other than technical indicators and charts (which are tough to read for the long term), there are plenty of fundamental reasons to believe the metal will go higher:

1. There is an implicit flaw with Western governments. Governments like in the U.S. inherently choose short-term fixes for long-term problems (it probably has to do with re-elections and such). And I don't see that trend magically stopping in 2010 - chances are it will continue. As short-term fixes expose more government-monetized debt, the prices of precious metals will rise, that's for sure.

2. The second reason that gold will to $1,500 in the next 12 months is supply related. With prices north of $1,100 an ounce, it's clear that demand is strong, but will supply be able to match it? As gold demand rises, you can bet that miners are doing everything they can to pull gold out of the ground. So when scarcity rears its head, watch out! Prices will have nowhere to go but higher.

Best wishes,

Daniel S.
Brazil


Disclosure: long