Tags: gold | bugs | fiscal | cliff

CNNMoney: Gold Bugs Love the Fiscal Cliff

Thursday, 15 Nov 2012 07:52 AM

By Michael Kling

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There's at least one investor group that loves the fiscal cliff — gold bugs.

After all, gold is where you go when you fear inflation and economic calamity, and economists expect another recession after the New Year brings in drastic spending cuts and tax hikes unless Congress acts.

While stocks falter and stall, gold has been rising since Election Day. If the country falls off the fiscal cliff, gold bugs will be clutching tightly to their gold on the way down, according to CNNMoney.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

Optimists hope for a "grand bargain" that will end the fiscal cliff problem, but gold bugs expect Congress to be stuck in gridlock or to kick the can down the road.

The election did little or nothing to resolve the gridlock, as President Barack Obama was re-elected and Republicans still control the House.

"So even if there are compromises to avoid the cliff in the short term, the fundamentals are still there for gold to keep rallying," Christopher Blasi of Neptune Global Holdings told CNNMoney.

In fact, gold could reach $2,500 an ounce, almost 45 percent higher than now, in the next two years, Blasi said.

Central banks around the world might try salve the fiscal cliff injury, but the Federal Reserve's monetary policy can't get any looser, gold bugs reason.

One expert told Bloomberg he thinks gold will pass $2,000 next year.

"We'll take out $2,000. We’ll go higher,” Raymond Key, global head of metals trading at Deutsche Bank, told Bloomberg. “That’s on the view that they’ll continue to print money.”

Money is flowing into gold-backed exchange-traded funds and central banks are holding more gold, Bloomberg noted.

“With central banks continuing to buy gold around the world and with the macroeconomic environment which is still there, the demand should remain very strong,” Jamie Sokalsky, Barrick Gold’s CEO, told Bloomberg.

“We’re not going to see the reaction on the supply side to make up for that in the industry.”

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

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