By Sean Kelly


Even as the price of silver rocketed to multi-year highs this week, Citigroup Inc., one of the largest investment banks in the US, is calling for the price of silver to surge as much as 50 percent and for gold to surpass its previous all-time high.

Citi’s dramatic forecast calls for the price of silver to climb to $25 an ounce in the next six to 12 months, with a potential of climbing to $30.

That would be a 50 percent move in silver from the time the bank issued its statement on Monday (7/20).

The bank expects gold to pass its previous record high of $1,921 before long, saying there is a good chance gold will top $2,000 an ounce before the end of the year.

Citi’s call for higher precious metals prices follows a similar bullish forecast from Bank of America we wrote about just weeks ago.  See “Bank of America Raises Gold Price Target to $3,000” HERE.

As we wrote then, we believe that in reaching new highs and breaking through $2,000, an important psychological benchmark price, gold will move much higher than most analysts expect.  “Based on our experience in the markets, we anticipate that the public attention gold will get in making a new high, and even more so when the price breaks through $2,000 an ounce, will drive large numbers of investors, among them many who planned to buy gold ‘eventually,’ to finally act, pushing the price up quickly.”

Among the factors that will drive precious metals higher, according to Citi, are loose central bank monetary policies and record low interest rates.  “Nominal gold prices have already posted fresh records in every other G-10 and major emerging market currency this year,” say Citi analysts in a client advisory released Monday (7/20).  So it is “only a matter of time” for new highs in dollar gold prices.

Citigroup’s call for silver’s powerful climb relies in part on an expectation of a recovery in global economic activity.  Our view is that silver will move higher even without an industrial recovery, simply because in an environment of uncontrolled deficits and frenzied money-printing, the markets characteristically begin to revalue silver for its monetary qualities.

In any case, bank forecasts are proving to be very modest in the face of audacious and unprecedented new government borrowing and liquidity policies.  Both gold, over $1800, and silver, over $20, are showing enormous strength, haven taken their lead from Europe where EU policy makers have agreed to a produce a new stimulus package of more than $2 trillion.

In the US, policy makers this week are meeting over addition stimulus measures as well, packages that are liable to balloon in size as we draw closer to the November election.

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