Ben Davies: Gold Is Worth $6,000

Molten Gold Smelting Pour Gold Bar

Photo: Kevork Djansezian/Getty Images

Ben Davies, CEO of Hinde Capital, spoke to King World News yesterday giving his thoughts on where gold is headed next. He is somewhat bearish, saying gold could fall over 10 per cent to around $1400 per ounce as Europe continues to muddle through its crisis.Davies told King World News:

If you look at it on a relative basis, gold has maintained its purchasing power. It’s done exactly what it should be doing. Short-term I am concerned that we could be going down to $1,400. Yes, that’s a real risk in this environment…

Unfortunately, the way it’s going we’re just constantly protracting out this problem. So while that’s happening and the solutions are completely wrong, the risk is this constant weight of deleveraging, and that is weighing on all assets.

However, Davies is still bullish on gold as a long term play, saying that Asia is still a major buyer and that gold could go above $6000:

But people are ultimately exiting out of these fixed income assets, this sovereign debt, and they are going to be going into gold. I can see that the Asian demand is still very palpable. In fact it’s increased from last year quite dramatically. That is the buyer in the market. The question is, will they (China) be there over the summer months?

Look, if you were to run M4, M3 numbers, etc, and assert a value to gold on an appropriate metric relative to that, obviously gold would be at stupendous prices. I believe that gold has considerable room to go to the upside, four or five times (Gold price above $6,000). I think that’s not an inappropriate suggestion.


SEE ALSO: SocGen: Gold Could Surge Over 500%

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