Home > Royal Canadian Bank expects gold to rally once more

Royal Canadian Bank expects gold to rally once more

Editorial
article image

Royal Bank of Canada Capital Markets analysts Dan Rollins in Toronto and Jonathan Guy in London have come up with a detailed analysis of the gold market over the next few years comparing it with the big ETF driven gold price rally of 2005-2008.

Over this period, gold doubled in price from $450 to $900, and while the analysts are not putting exact price predictions into their prognostications, nor coming up with a precise timescale, the implication is there in their research that this could lead to a big gold price increase in the medium to long term.

There is little doubt that the introduction of gold ETFs, and notably of the World Gold Council backed SPDR Gold Shares ETF (GLD) back in 2004, had a huge impact on the growth in the gold price up until its 2012 peak – and heavy sales out of the ETFs in 2013 were perhaps the principal cause of the gold price collapse that year.

While there may be doubts as to whether this kind of level of investment into the gold ETFs in the boom years is likely to be replicated, so far this year sales out of the ETFs appear to have started to be replaced by purchases, with GLD having put on around 22 tonnes of gold so far as against sales totalling 130 tonnes in the first 2 ½ months of 2013.  Quite a turnaround!

Royal Bank of Canada Capital Markets analysts Dan Rollins in Toronto and Jonathan Guy in London have come up with a detailed analysis of the gold market over the next few years comparing it with the big ETF driven gold price rally of 2005-2008.

Over this period, gold doubled in price from $450 to $900, and while the analysts are not putting exact price predictions into their prognostications, nor coming up with a precise timescale, the implication is there in their research that this could lead to a big gold price increase in the medium to long term.

There is little doubt that the introduction of gold ETFs, and notably of the World Gold Council backed SPDR Gold Shares ETF (GLD) back in 2004, had a huge impact on the growth in the gold price up until its 2012 peak – and heavy sales out of the ETFs in 2013 were perhaps the principal cause of the gold price collapse that year.

While there may be doubts as to whether this kind of level of investment into the gold ETFs in the boom years is likely to be replicated, so far this year sales out of the ETFs appear to have started to be replaced by purchases, with GLD having put on around 22 tonnes of gold so far as against sales totalling 130 tonnes in the first 2 ½ months of 2013.  Quite a turnaround!

This article appears courtesy of Mine Web. To read more daily international mining and finance news click here.

Newsletter sign-up

The latest products and news delivered to your inbox