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Incrementum: Gold Remains 'Excellent' Inflation Hedge; 12-Month Target $1,500/Oz

By Kitco News
Tuesday June 24, 2014 10:53 AM

(Kitco News) - Gold remains a good hedge against price inflation and potential “worst-case scenarios” and may rise to $1,500 an ounce in 12 months, said a report Tuesday from Incrementum AG, Liechtenstein.

The asset/wealth management firm issued a report titled “In Gold We Trust 2014.”

“We believe that the monetary experiments currently under way will have numerous unintended consequences, the extent of which is difficult to gauge today,” said a report authored by Ronald-Peter Stoeferle and Mark Valek. “Gold, as the antagonist of unbacked paper currencies, remains an excellent hedge against rising price inflation and worst-case scenarios.”

They suggest while inflationary forces may not “win the race,” policy-makers’ actions suggest they will tolerate higher inflation.

“Should the inflation trend reverse, there would be excellent opportunities in inflation-sensitive assets like gold, silver and mining equities,” the report said.

The gold market experienced much technical-chart damage during last year’s collapse in prices, the firm said. Many of the bulls threw in the towel and exited from positions.

“We like the fact that the consensus considers the gold bull market over,” the firm said. “Gold is now a contrarian investment.”

Meanwhile, the migration of gold demand from Western nations to Eastern ones continues, the report said.

“The growing importance of Asia's middle class for gold demand is widely underestimated,” the firm said. “Assuming that incomes in China and India will continue to rise, gold will inevitably be one of the beneficiaries of this ‘love trade.’”

Incrementum suggested gold is nearing the end of a long consolidation period, with a stable bottom having formed.

“Our 12-month price target is the USD 1,500 level,” the firm said. “Longer-term, we expect that a parabolic trend acceleration phase still lies ahead. In the course of this event, our long-term target of USD 2,300 should be reached at the end of the cycle.”

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By Allen Sykora of Kitco News; asykora@kitco.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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