Robin Bhar, Senior Metals Analyst, said, "Gold recently traded to a new all-time high price of over USD 1,420/oz amid concerns over Eurozone debt. Part one examined the reasons behind the surge in prices asks a topical question: how high can prices go? Following confirmation that the US Fed is to print an additional USD 600 billion to expand its balance sheet by purchasing treasury securities, the expectation is for the USD to further weaken thereby pushing gold higher. Other investors fearful of competitive debasement of paper currencies have been buying gold. However, we believe that this factor and more QE2 have already been factored into the gold market and that risk reward is now unfavourable towards sustainably higher prices.

Part two looked at the likely impact of physically-backed ETFExchange Traded Funds (ETFs) are a type of index fund that is listed on the stock market. They are investment funds made up by all the constituents of an index, such as CAC 40, S&P Euro, etc. Trackers replicate the performance of their underlying index and pay dividends calculated based on the dividends paid out by the index constituents.s on industrial metals, concluding that a number of hurdles have yet to be successfully cleared, notably logistics and storage costs.

Finally, part three examined whether the right strategy was to buy supply-constrained metals for price out-performance. Against a background of strengthening global growth and robust demand growth, question marks over the supply response have emerged again. Our preference is for those metals that are constrained in their ability to increase supply, such as copper, tin, lead, platinum and palladium."