Canaccord Adams has hiked its peak gold price by another US$150 to US$1,100 per ounce now that gold has broken through its previous target of US$950. Given the leverage to gold, the firm’s equity target prices rise by approximately 20%.

“It is fair enough that gold may be in a bubble, but we think the bubble is still being blown up,” analyst Steven Butler told clients. “Overall global financial market conditions remain weak and we believe the safe haven flight to gold can continue.”

While credit risk has fallen from its recent highs, it is as elevated as the first peak last March which coincided with the collapse of Bear Stearns, he noted. However, gold is still below the US$1,003 peak set about a year ago.

Meanwhile, inflation may not be registering yet in terms of near-term expectations, but Canaccord believes that it and a general devaluation of paper currencies will be the result of the concerted monetary and fiscal policies to reflate the global economy.

“Gold’s run since autumn 2008 has been a true bull run, rising despite the strength of the US dollar and outperforming virtually ever other commodity and currency class,” Mr. Butler said, noting that it has set recent new highs in Euro, Pound and Canadian dollar currency terms, among others.

Jonathan Ratner