Tuesday, June 14, 2011

Gold to Reach $5,000 Due to Supply Shortage: Report

An exhaustive report by Standard Chartered predicts that gold [GCCV1  1525.50    1.10  (+0.07%)   ] will more than triple to $5,000 an ounce because of a lack of supply, not just because of a surge in demand that most bullion bugs cite in their bullish calls.

AP


There are very few large gold mines set to commence operation in the next five years,” said Standard’s analyst Yan Chen in a report Monday. “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 London-based firm is among the first to focus on the supply-side of the gold equation amid the many bullish forecasts out there on the metal. After analyzing 345 gold mines and 30 copper/base metal gold mines around the globe, the team estimates annual gold production will be just 3.6 percent over the next five years.
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