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JP morgan expects gold to go to $2500/ounce (or Rs.42000 per 10 gm)

We thought we had seen it all… Then JPM's Colin Fenton came out with a
prediction of gold hitting $2500 by year end. That's right: JP Morgan…
$2500…."Gold and sugar have potential to run a lot higher. It has been
clear for weeks that the prompt CMX gold price has been building in a
rising probability of a re-flaring of financial crisis, gaining by
9.7% since June 30 as the MSCI World Equity index dropped by 10.1%.
The correlation in daily price changes between these two assets has
dropped to –0.09 from +0.29 over the prior year. Gold's correlation
against TIPS has doubled to 0.35 from 0.18. Against Italian and
Spanish 5-year sovereign CDS prices, the gold correlation has moved to
0.27 and 0.32, from 0.07 and 0.04, respectively. Before the downgrade,
our view was that cash gold could average $1800 per oz by year end.
This view will likely now prove to be too conservative: spot gold
could drive to $2500 per oz or higher, albeit on very high
volatility." Funny, when discussing yesterday's Goldman upgrade of
gold we said: "Next up: everyone else." Little did we know… Also, it
is unclear if Blythe pre-cleared this client note. But at this point
it probably does not matter.

Read full at: http://www.kitco.com/ind/Kirtley/aug092011.html
Kitco is one of the leading credible websites where commodities are
monitored and forecasts given.

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