Credit Suisse Gold Bars - 5 Reasons The Bank Says Buy

Credit Suisse Gold Bars - 5 Reasons The Bank Says Buy

A Credit Suisse Bank of Switzerland publication released June 2010 pinpointed 8 reasons why the price of gold will continue to trend upwards for in the coming years. This article takes a look at 5 of those reasons. It is sure to make interesting reading for both those who are looking to invest in Credit Suisse gold bars as an excellent entry point into bullion and those who are already invested.

Firstly

Dr David Davis, a gold analyst at the bank believes the cost of producing gold will be $1400 by 2015. Naturally the cost of sale is going to have to be higher.

Secondly

In real terms the price of gold is still 34% less than its all-time peak. In other words even though the price of gold recently hit $1200, adjusted for inflation, it is not as high as when gold peaked at $850 in the late 70s. So there is still plenty of room left for this bull-run.

Thirdly

The current economic climate has yet to play out in one of 5 scenarios. These are basically, more quantitive easing, renewed deflation but with no quantitive easing, sovereign debt crisis, normal recovery and recovery combined with loose monetary policy. On balance, the bank reckons that the eventual outcome is 80% likely to support gold prices.

Fourthly

Countries like China and Japan hold a low proportion of their foreign exchange reserves in gold (1.6% and 2.5% respectively). Given that the financial crisis has shaken several of the world's major currencies including the EURO and US Dollar, if these countries choose to transition some of their foreign currency into more gold, it would lead to massive demand.

Finally

Due to the financial crisis, interest rates have come crashing down around the world. One of those rates is the Federal Fund rate, which is the rate at which banks lend to each other. Currently it is under 2% and the Bank reckons it is going to stay that way for the next 3 years. This they believe is good news for gold which tends to perform well when this rate is under 2%.

In summary, all of the above points are good for gold prices. Even though prices look high, higher prices are coming and big profits can be made.

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