Kiener: Gold Prices To Double On Paper Market Default

Jurg Kiener, CEO of Swiss Asia Capital, told CNBC this morning that the flight from paper currencies as a result of global interest rate cuts will lead to a doubling in the price of gold within a short period, as demand for physical precious metals outstrips supply, causing paper contracts on gold to default.

“The physical market has been on fire - it’s getting very hard to buy one ounce coins and smaller bars, most jewelry shops have been running out so we have a supply problem,” said Kiener.



Kiener said that there was a two tier market in gold, the one on Wall Street where the bankers continue to gamble, and the physical market which is “red hot” and demand is outstripping supply.

“I think we’re going to get very close where we see the environment where the paper contracts on precious metal defaulting, and with that we’re going to get a massive price increase in the overall prices of precious metal,” said Kiener.

Asked where he expected gold to go after the paper market broke down, Kiener said he expected gold to double in price, “in a very short period of time, it will spike up quite fast,” he added.

“If you had an oil rally going from $65 to $140 dollars in nine months, I think it can double in gold in a much shorter period because the market is much much smaller,” Kiener stated.

Kiener pointed out that the expected global reduction in interest rates, kick-started last night by the Australian central bank’s one point cut, means gold is a far more attractive option than any currency because purchasing power of paper money will continue to decline.


Source :

1. CNBC : Gold Prices May Spike, Tuesday Oct 7, 2008 08:11
2. The Politics Blog : Kiener: Gold Prices To Double On Paper Market Default, Oct 7, 2008

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