* Investor demand increased 10 times over the last 10 years, indicating a new stage of exuberant growth
* Long term price target: 2,300 USD; upward trend continues
* Institutional investors - particularly insurers and pension funds - will dominate the next stage of exuberant growth on the gold market
Gold demand from investors increased over ten times over the last ten years, which indicates that gold is entering a new stage of exuberant growth, as China and India stimulate demand, analysts of Erste Group state in a report.
According to them, the price of gold was also affected by the monetary stimuli, and a new rise in the price of gold is expected. Erste indicates a target price of 2,000 dollars for gold in the coming 12 months.
"Since we published our first report concerning gold five years ago, its price has increased 140%. Expert estimates from three years ago, which expected its price to reach 2,300 dollars in the long run, could even be considered too conservative now", said Ronald Stöferle, gold analyst at Erste Group.
* Gold has a lot to win from the sovereign debt crisis
The issue of excessive debt is still without a solution, as most of the debts have not been cancelled or repaid. Because of this, real interest rates will remain low, which provides the perfect environment for gold, the Erste report states: "There are only a few ways to get out of the debt trap: increasing the debt, like the United States did after WW2, or the alternative of drastically cutting spending and rigidly consolidating the budget, like the Scandinavian countries did in the in 1990s.
Some of the most painful options are massive tax hikes, creating inflation, depreciating the currency, or, as a last resort solution, sovereign default. We expect gold to come out a winner from any of these scenarios".
Analysts also mention that In
