De Dollar Hegemonie 21

'Experts: Gold Is Cheap.

Gold, which has undergone a correction, is undervalued right now, say experts including analysts for Deutsche Bank, JPMorgan Chase, Merrill Lynch, and a former head of research at Citigroup.
The experts point to gold’s role as an inverse play against the fragile U.S. dollar. In other words, as the U.S. dollar falls, gold should rise.
"Gold is the purest play against the dollar," Louise Yamada, managing director of Yamada Technical Research Advisors, tells Bloomberg. Yamada, who is the former head of technical research at Citigroup, is forecasting $730 gold next year, and says gold will reach $3,000 per ounce within a decade. When she was at Citigroup, Yamada correctly said gold was cheap when it traded at $279 in 2001.
Yamada argues that central banks are diversifying away from the dollar and are buying gold instead.
"Gold is probably the most straightforward investment to go with in this environment because of its consistent inverse relationship to the dollar," said Yamada, voted Wall Street's best technical analyst from 2001 to 2004 in surveys by Institutional Investor magazine. "Other countries are trying to diversify their dollar holdings. They're buying gold and anything they can to get out of the dollar."
Deutsche Bank’s chief metals economist, Peter Richardson, recently proclaimed gold his favorite pick for 2007. "If you can only make one commodity investment," Richardson tells Bloomberg, gold is the "choice for 2007."
JPMorgan Chase analysts John Normand and Jon Bergtheil said gold was only second to corn as the best bet based on tight supply and the flailing dollar. Normand and Bergtheil predict gold prices will rise 11 percent to $678 an ounce in 2007 and to $725 an ounce in 2008.
"Gold is the only metal, base or precious, which will see no meaningful increase in mining supply next year," the analysts wrote, estimating that supply will grow by 1 percent.
Merrill Lynch analyst Michael Jalonen upped his price target for gold through 2010. Jalonen expects gold to reach $650 an ounce in 2008, up from a previous prediction of $600. He also raised his 2009 projection from $600 to $625. And Jalonen maintains his 2007 prediction that gold will rebound to $675 in 2007.
Jalonen tells Bloomberg the 2007 rally will be "due to a rebound in gold fabrication demand for bullion, lower central bank sales, and continued growth in investment demand."'

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