Eurozone Liquidity Seen Boosting Gold

Posted by on April 16th 2012 in Bailout, CFTC, China, Federal Reserve, General Economy, Gold, IMF, Monetary Policy, Quants, Short Sellers, U.S. Congress, Wall Street | Be the first to comment!

Although Monday’s slight drop in gold was attributed to worries about the eurozone, Martin Murenbeeld, chief economist for the Canadian asset-management firm, Dundee Wealth Management, tells Mineweb that the European crisis is “net-net, quite positive for the price of gold.”  Speaking about the above presentation that he delivered at last week’s Precious Metals Summit,  Murenbeeld said, “the high probability case is that the ECB and/or the national banks are going to have to put a tremendous amount of liquidity into the system.”  He cites a firewall study estimating that if “Spain and Italy were to be bailed out in the way that Greece and Portugal are being supported, it would require upwards of 1.8 trillion euros.”

He also sees a 50% probability of further QE from the Fed, either tied to “a Lehman moment” in Europe, or the U.S. economy faltering in the second half of this year:  “And that’s not saying anything about 2013 which is likely to be a weak year if all the fiscal measures that are supposed to be taken at the end of this year, and at the beginning of next year are actually taken.”

More from Murenbeeld in an extensive interview with Barron’s last September, in which he explained why he thinks that gold’s bull market “could last at least another five years, and possibly 10 years or more.”

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