Don Miller
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Gold Prices Will Soar Past $2,500 As Central Banks Buy it Up
With governments all over the planet buying up gold over the past five years, it's no wonder gold prices have risen 142% since 2008.
Central banks bought 254.2 tons in the first half of 2012 and may add close to 500 tons for all of 2012, the World Gold Council said last month.
According to the International Monetary Fund (IMF), Russia added 18.6 metric tons of gold in July. South Korea bought 16 tons — a 30% increase. Kazakhstan increased their bullion reserves for a 12th consecutive month.
Turkey, Ukraine and the Kyrgyz Republic also joined the party.
And the buying continued in August, albeit at a more moderate pace, the IMF confirmed.
"Gold prices continue to be underpinned by growing demand from central banks…we believe this trend is likely to ramp up once liquidity increases in global markets," Justin Harper, markets strategist at IG Markets, told MarketWatch.
That means the cheap money policies by many of these same central banks, such as the Federal Reserve's recently announced QE3 program, will also help fuel the rise in gold prices.
Combine that with skyrocketing demand from the private sector, and government hoarding could easily push the price of bullion as high as $2,500 in 2013.
In fact, the rally could be similar to gold's big breakout move in 2007, when gold prices surged 60%, according to Citi FX Pro analyst Tom Fitzpatrick.
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