Friday, July 13, 2012

Erste Group Gold Report 2012 – In GOLD we TRUST

Erste Group was founded in 1819 as the first Austrian savings bank. Now more than
 50,000 employees are serving around 17 million clients in over 3,000 branches in 8 countries. Erste Group is one of the largest financial services providers in Central and Eastern Europe.

Original source

The foundation for new all-time-highs is in place. As far as sentiment is concerned, we definitely see no euphoria with respect to gold. Skepticism, fear, and panic are never the final stop of a bull market. In the short run, seasonality seems to argue in favor of a continued sideways movement, but from August onwards gold should enter its seasonally best phase. USD 2,000 is our next 12M price target. We believe that the parabolic trend phase is still ahead of us, and that our long-term price target of USD 2,300/ounce could be on the conservative side.

Since our first Gold Report we have discussed the gradual remonetisation of gold. Last year, we saw numerous signals indicating the fact that gold was gradually becoming “politically correct” again. Due to its high liquidity and unique characteristics, gold is becoming ever more prominent as collateral. Therefore, we are currently seeing the renaissance of gold in international finance. The foundation for a return to “sound money” has been laid.

Negative interest rates constitute a perfect environment for the gold price. During the 20 years of the gold bear market in the 1980s and 1990s, the average real interest rate level was around +4%. Since 2000, real interest rates have been negative for 51% of the time, which constitutes an optimal environment for gold. The fact that the Federal Reserve will now maintain its zero-interest policy until 2014 should result in prolonged negative real interest rates and thus create a positive foundation for further increases in the gold price.

We believe that financial repression will continue to crop up in many shapes and sizes and gain in importance over the coming years. Although we are currently faced with the highest level of public debt in time of peace, far-reaching consolidation of public budgets does not seem to be up for discussion. According to Austrian economics, every act of consumption has to be preceded by production. There seems to be no painless therapy for these problems. We believe that gold is an effective medicine. 

Download the report here

1 comment:

  1. Dont trust any bank. The money junkies and money control freaks will drive gold and silver prices down to demoralise the population. They are the money masters. By driving the gold prices down they will be able to buy on the cheap as the lemmings will throw the gold to them as they think it has become worthless.

    It is time to abandon the banking system and start to trade civily amongst each other purchasing in gold and silver. MF Global is the wake up call to everyone, but the majority say it has happened to me and they still love the financial system.

    The banks and companies are imploding one by one which does not have major effect on the population as a whole, so life goes on, question is will you be caught unaware if your bank implodes?

    Are people so thick that why would a profitable company sell itself to the stockmarket.
    1) the owner of the company sees the company not doing so well.
    2) The owner borrows money from the bank to keep the company going
    3) The owner returns to the bank to borrow more money and the bank says get stuffed, you're too much of a risk.
    4) The owner sells the business to the stock market and gives himself a big fat pay rise.
    5) The company goes under and investors look on as stunned mullets.