Erste’s Stoeferle says gold price to rise to $2,300

By Prieur du Plessis, on July 5th, 2011 posted in: Gold, Investment

Erste Group Bank’s new report on gold, written by analyst Ronald-Peter Stoeferle, has just been published. It is very comprehensive in nature and makes for insightful reading.

GATA (the Gold Anti-Trust Action Committee) summarizes the major conclusions as follows.

• Negative real interest rates are the main driver of the gold price and will continue to be powerfully supportive.

• The arguments supporting a return to some form of gold standard are strengthening.

• Government debt burdens could be substantially eased by a higher gold price.

• There is no “bubble” in gold, as the public is hardly invested in it and has little interest in it.

• Increasing dependence on government transfer payments for the public’s income works against restoring solvency to government.

• Many paper pledges of gold cannot be fulfilled by real metal.

The report concludes, in part:

“Given that the majority of debt has neither been written off nor paid off but simply transferred, the problem of excessive debt is still waiting to be resolved. There has been no deleveraging, only an adjustment of booking entries from the private to the public sector. The quantitative easing has left monetary stability short on credibility, and it will be very difficult to remedy this situation. In this fragile environment gold will continue to thrive.”

Please click here for the full report.

Stoeferle also discusses the Erste Group report and the outlook for the gold price on Bloomberg Television, speaking from Vienna.

Source: Bloomberg, July 4, 2011.

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