Analyst predicts $1,500 gold price as supply squeezed

The future of gold has never looked brighter, according to a recent report from Edison Investment Research.

The independent equity consultant is predicting that the precious metal could attain $1,500 per ounce in the months ahead.

In a new report, Edison analyst Charles Gibson proposes that the actions of central banks and governments worldwide are creating a gold shortage because financial institutions are no longer leasing gold from central banks in a process than can create an annual surplus.

According to the study, interests rates in the US and elsewhere are below inflation and this has disrupted the mechanics of the gold leasing trade.

The trade normally involves gold mining companies selling a proportion of their output in advance, through bullion banks. The banks then lease gold from central banks to cover their positions.

Changes in the leasing market can therefore indicate a squeeze on supply, as investors seek out physical gold rather that buying futures in the metal.

From here, Mr Gibson argues that the price of gold could soar during 2000, eventually hitting $1,500 an ounce.