Gold Hits $6,000 Target as US Debt Soars
John Ing, President of Toronto-based brokerage Maison Placements Canada, forecasts that gold could reach $6,000 per ounce due to swelling U.S. debt and central-bank buying. This prediction is based on the current federal debt of $39 trillion, with $1 trillion being annual interest costs.
The analyst believes that official-sector demand will continue to drive up gold prices, and that this bull market has only just begun. Ing also points out that gold's recent pullback has not changed his target price of $6,000 per ounce.
Ing notes that the dollar's share of global reserves has fallen from 71% in 1999 to 54% in the first quarter of last year, leaving Washington exposed if overseas demand weakens. He also points out that central banks bought 244 tonnes of gold in the first quarter and another 41 tonnes in May.
The analyst favors producers with near-term growth, including Lundin Gold (TSX, Nasdaq Stockholm: LUG), which is expected to produce 475,000 to 525,000 oz. this year at all-in sustaining costs of about $1,100 per ounce.