Tags: gold | gold bullion | Federal Reserve | European Central Bank

BofA's Blanch: Gold Poised for Run at $2,000 in 2012

Friday, 16 Dec 2011 10:23 AM

Commodities may be tanking now but they're going to shoot up in 2012, with gold jumping to $2,000 an ounce, after the Federal Reserve and the European Central Bank roll out fresh quantitative easing measures, says Francisco Blanch, head of global commodities and multi-asset strategy at Bank of America Merrill Lynch Global Research.

Commodities are tanking as the dollar replaces gold as the safe haven of choice amid European uncertainty.

Fears that the global economy will remain stuck in the doldrums and need less crude and refined products has oil prices dipping as well.

However, the Fed and the European Central Bank will flood their financial systems with liquidity via quantitative easing — asset purchases from banks — to rev their economies, Blanch predicts.

When they do, paper currencies will weaken, inflationary pressures will mount and commodities will soar, with gold jumping to $2,000 an ounce from current levels of below $1,600 an ounce.

"I think you'll see easing in 2012 and that's the reason to look into commodities once we have that initial sell-off over the next three months or so," Blanch tells CNBC.

"At some point crude oil is going to become a very good trade as we go into next year,” Blanch says, adding that gold  prices will climb to "$2,000, maybe a little bit higher, but you do need to see the large-scale easing."

"Frankly, it’s hard to see how you avoid it."

The Fed has not made plans to roll out further quantitative easing but hasn't ruled it out either.

Meanwhile, European Central Bank President Mario Draghi has said he opposes loose monetary policies, pointing out that governments need to tackle the debt crisis themselves via emergency funds and through tough fiscal measures.

"I will never be tired of saying that the first response ought to emanate from the country," says Draghi, according to the Associated Press.

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Commodities may be tanking now but they're going to shoot up in 2012, with gold jumping to $2,000 an ounce, after the Federal Reserve and the European Central Bank roll out fresh quantitative easing measures, says Francisco Blanch, head of global commodities and multi-asset...
gold,gold bullion,Federal Reserve,European Central Bank
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2011-23-16
Friday, 16 Dec 2011 10:23 AM
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