RBCCM predicts bullish gold price upswing to last remainder of decade – but….
The Royal Bank of Canada’s investment banking arm is looking to $900
gold in 1Q 2008 and a continuation of the bullish gold price trend for the
remainder of the decade, but feels there could be a very sharp correction
first.
Author: Lawrence Williams
15 November 2007
LONDON
RBC Capital Markets, which today is hosting an invitation only major gold
seminar in London, has this week released a research report which predicts
that the bullish upswing in the gold price will likely last until the end of
the decade. Investors would continue to use gold as a safe haven and with
the current perceptions of economic uncertainty and global geopolitical
risk.
The London seminar has an impressive array of speakers including the CEOs of
Barrick, Newmont, Polyus Gold, Goldcorp, Gold Fields, Harmony and Kinross
among others.
The investment banking arm of the Royal Bank of Canada also says that the
"continued weakening of the US dollar, potentially leading to the unwinding
of Bretton Woods II, is another factor increasing the metal's credibility."
But - and it is a very big but if it comes about - RBCCM's analysts believe
that with the gold price currently sitting at near record levels, and with
November being a seasonally quiet period for gold, a "significant
correction" could be in store. The sharpness of the predicted correction
could, it is felt, take the gold price right back down to the $725-750
level.
But, following such a shake-out, the analysts further believe that the price
could bounce right back up again to as high as $900 an ounce in the first
quarter of next year.
Stephen D. Walker, Director of Global Mining Research at RBC Capital Markets
commented: "RBC Capital Markets remains bullish on gold and gold equities
for the medium-term, and believes the commodity is in a secular recovery;
however, the bank's short-term outlook is more cautious.
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