CNBC’s Fast Money program published a story today wherein London based Standard Chartered Bank is projecting gold prices of $5,000 per ounce based on an extensive supply/demand economic model they have developed. Quoted in the article, Standard Chartered’s analyst, Yan Chen stated:
“There are very few large gold mines set to commence operation in the next five years. The limited new supply comes at a time when central banks have turned from being net sellers to significant net buyers of gold. The result, in our view, will be a gold market in deficit, even assuming flat growth in demand. With the supply-demand balance so out of kilter, we see the gold price potentially going to US$5,000/oz.”
The article wraps up by stating: “Standard Chartered recommends that clients buy shares of smaller gold miners to get the most upside from its prediction, but also said clients could buy physical gold and gold exchange-traded funds.” Of course, we are somewhat partial to the former of those ideas on how to best take advantage of a continued bull run for gold.
Standard Chartered PLC is a multinational financial services company headquartered in London, United Kingdom with operations in more than seventy countries. It operates a network of over 1,700 branches and outlets (including subsidiaries, associates and joint ventures) and employs around 80,000 people.
The full article is available here.