Here’s some good news for the gold bugs.

The recently announced U.S. sanctions on Iran will likely give a boost to prices for the yellow metal.

At least that’s according to one analyst who has studied the bullion market for decades. The skinny is below.

The news should come as some welcome relief to anyone who owns the metal as its performance hasn’t been exactly stellar of late. The price of gold was recently trading around $1,293 a troy ounce, down from an average of around $1,332 in January, according to data from the London Bullion Market Association, a U.K.-based metals market trade group.

The sanctions on Iran not only make it illegal for U.S. people (including businesses) to trade with Iran but also severely restrict the use of any financial institution connected with U.S. banks or the U.S. financial system.  Given that the banking system across much of the western world is intimately intertwined, the sanctions all-but prohibit the use of any major bank in connection with Iranian trade.

What about using precious metals? “The U.S. government is trying to turn off that loophole that was well exploited in the last round of sanctions,” states a recent report from New York-based commodities consulting firm CPM Group.

Unfortunately, the U.S. government is unlikely to succeed in that part of its goal, CPM says.

Source : www.forbes.com