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Martin M

http://www.miningmx.com/events/indaba_2009/murenbeeld-reckons-gold-will-reach-$2,300.htm

Murenbeeld reckons gold will reach $2,300
Brendan Ryan
Posted: Wed, 11 Feb 2009
[miningmx.com] -- THE GOLD price should average $945/oz during 2009 but rise to $995/oz by the end of the year and average $1,050/oz during 2010.

Those are the latest predictions made by gold “guru” Martin Murenbeeld, chief economist for Dundee Wealth Economics, speaking at the Mining Indaba being held in Cape Town.

But Murenbeeld added he believed gold would eventually reach $2,300/oz although he did not put a timeframe on this prediction.

The price level of $2,300/oz holds considerable significance for gold investors and analysts because it represents the current, inflation-adjusted value of the price of $850/oz that gold reached early in 1980.

Interviewed after his presentation Murenbeeld said, “Over the long cycle gold will take out $2,300/oz but that could take up to five years before it happens.”

Murenbeeld said he believed the gold price had held up remarkably well against the impact of the global financial crisis that erupted last year.

“Gold has been the best asset to be in. It has risen to new highs in almost every currency and I have been surprised at how well ETF (exchange traded fund) investment in gold held up last year, “ he commented.

He added, “Recessions are bad for everything including gold. You have to remember that gold represents liquidity of last resort which means that sometimes people sell the stuff.

“It’s what people do to get out of recessions that is good for gold. The metal survived the 2001 recession well because (former Federal Reserve Bank chairman) Alan Greenspan was very quick on the reflation side.”

Murenbeeld highlighted the current reflationary measures being taken by the United States and other major economies and commented, “global money and fiscal reflation will remain necessary for years to come even after the current global financial crisis.

“That’s because of the social promises made by governments to the ‘baby boomer’ generation which is about to retire. Printing money is good for gold and governments’ choices for debt reduction are limited. “

Turning to the role of the world’s central banks – which at times have been heavy sellers of gold – Murenbeeld commented, “I sense central bank attitudes to gold are changing and they no longer view it as inherited nuclear waste.

“I feel central banks are getting religion again and I don’t think they will be as negative on gold as they have been in the past.”

Murenbeeld concluded, “we are in an uptrend. I am absolutely convinced of that but developments might not take place as fast as you might want.

“It is normal in a cyclical, long-term uptrend that you could have one or even two years of counter-trend movements. It could take a while before the previous peak gold price of $1,030/oz gets taken out.”