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Gold at $36,000 Not as Ridiculous as It Sounds?

CNBC.com
Wednesday, 26 May 2010 | 7:20 AM ET

Gold has reached record highs in recent weeks, but it will continue to rise, Ben Davies, CEO of Hinde Capital told CNBC Wednesday.

Gold should be viewed not as a commodity, but as a cash supplement, Davies said.

Will Gold Replace Currencies?
Gold has reached record highs in recent weeks, but it will continue to go much higher in price, Ben Davies, CEO, Hinde Capital said. Davies said he views gold, not as a commodity, but as a cash supplement. Less developed countries will buy gold to increase reserves, he added.

“There’s been such proliferation of currency,” he said. “As a consequence, gold is very undervalued.”

“I could be really obtuse and say $36, 000,” he said. “But actually it’s not as ridiculous as it might sound.”

-Watch the full interview at the left with Ben Davies, CEO of Hinde Capital.

If all the reported Fort Knox gold was re-valued at $36,000 per ounce, it would pay off all the debt in the US, he said.

On Monday, Dennis Gartman reversed his call for gold investors to rush to the exits, saying the precious metal was no longer overbought, but also warned that it was a technical call and he is "not a gold bug."

Davies argued that as the money supply increases, gold will see an increase in use as currency, boosting demand. Emerging markets will also buy gold to increase reserves, he added.

Great dynasties in history have come out of crises with large amounts of gold to use in the markets to buy cheap assets, Davies said.

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