Gold demand to surge on debt crisis

McEwen says he expects gold to hit US$5 000 an ounce, a 300 percent increase from the current prices.
The shift to gold is likely to be influenced by the fact that China, which holds a lot of EU and US debt, is slackening.
The World Bank cut China’s growth forecast on April 12 to 8,2 percent which to me could touch 6 percent by the end of the year.
The Chinese economy is in the midst of a gradual slowdown, which is not good news and this reinforces my forecast about investors turning to gold.
As a trader the situation in Europe is worsening with the peripheral countries all deeply routed in debt including the United Kingdom and France.
In the month of March alone Spain lost about US$65 billion as investors sought a better government paper in the Scandinavian countries.
Greece, Italy, Portugal and Ireland continue to lose money showing that the EU firewall is not enough to insulate the rest of Europe from the debt contagion.
That’s why the single-currency is so fragile at present as investors cut bets that it will touch 1,40 by the end of the year.
The euro has failed to get support from the EU finance ministers and politician alike.
The pain in Spain continues to overhang the markets as Spanish bonds reached 6 percent which is unsustainable and Italy could be next in line.
Events like these are really weighing on the euro and could mean a gold rally as long as the bond market in Europe reach unsustainable levels.
Last year the demand for gold in Europe surged as investors fretted about a worsening eurozone debt crisis.
European investment in coins and bars rose 26 percent to 375 tonnes according to the World Gold Council, making the re- gion the largest market for physical gold products.
For a while gold has been stuck in neutral levels looking for support to move upwards and since 2008 it has moved violently due to uncertainties and financial turmoil.
A rising Chinese inflation, a depreciating rupee in India and its stubborn inflation, the dangerous impasse in North Korea and Iran on the nuclear issue, a worsening European debt situation and an increase in money supply by central banks will definitely spike gold sales.
Investor demand for gold will continue to surge as long as the Federal Reserve’s accommodative monetary policy continues to spur declines for dollar, boosting the appeal for the precious metal as an alternative asset.
The US debt stands at almost US$16 trillion and is growing at a galloping rate of about US$125-130 billion per month or about US$4,33 billion per day.
Japan is in no better shape with extremely high debt. Governments in the West will continue to run large deficits and to fund these they will print money a factor that will boost sales of the bullion.
Few saw the recession and the crash of 2008 coming, the collapse of Lehman Brothers, AIG, Bear Sterns and all household names came abruptly and this is likely to be the case with the debt crisis.
Republican Ron Paul has advocated for a return to the Gold standard. What’s your take on this?
Happy birthday Zimbabwe.