The Bullish Case for Gold
DB is maintaining its bullish stance on gold. Here is their reasoning:
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1. As discussed earlier (see post), the impact of QE3 on bank reserves has been modest thus far. That may explain in part why gold is lagging previous QE cycles (see discussion). As base money expands, gold prices should be supported (particularly if we see further dollar weakness).
2. US long-term real rates are staying in negative territory (see post). Cash is increasingly expensive to hold, which also provides support to gold prices.