Merrill Lynch Predicts $2,000 Gold

With expectations the Federal Reserve will be forced to provide another round of quantitative easing, Merrill Lynch said they see the price of gold jumping to $2,000 an ounce.

According to Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research at Merrill, he sees the Fed adding up to $500 billion more to its asset-purchasing program sometime in the second half of 2012.

Blanch said this on Squawk Box:

"We think that $2,000 an ounce is sort of the right number. We believe that ultimately the Fed will be forced to do quantitative easing. If it happens in September, as our economists expect, we will get a rally sooner in gold. If it happens after the election, we will get the rally a little bit later; probably we will touch $2000 an ounce sometime next year."

Many high profile investors concur with the bullish view on gold, as they assert the Federal Reserve and other central banks won't be able or willing to refrain from attempts at "stimulating" their economies, even though it had done nothing to help in the past.

That points to eventual inflation, which favors gold, silver, and other commodities which trade in U.S. dollars, which will also eventually plunge from its temporary lofty position.

Some people even think that when Ben Bernanke talks to Congress next week about the economy that he could at that time announce another stimulus package.

Since the U.S. dollar has risen to fast and high recently, Bernanke could in fact make a move next week, as he favors a weak dollar as his tactic for attempting to alleviate a recession.

Another factor on the U.S. side is the presidential election, where the horrible American economy threatens the reelection of Obama. There will be pressure behind the scenes to make it look like something is being done to address the issue in order for Obama to look good.

More stimulus is a certainty. It's only a matter of when, not if. At that time the price of gold will soar again, pulling up many other commodities with it.