Tags: Vito | Fossella | Gold | surge

Fossella: Gold Can Surge to $1,500 This Year

Friday, 26 Feb 2010 05:56 PM

By Dan Weil

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Gold could hit reach $1,500 an ounce by year-end, says Former Republican Rep. Vito Fossella, chief operating officer of Superfund Investment Group, a global money management firm.

A weaker dollar and the huge U.S. debt burden will fuel the rise, the former congressman told Newsmax.TV.

“As a U.S. citizen, I’d love to see the dollar be as strong as it can be. But excessive debt incurred by the government has caused long-term punishment for the dollar,” said Fossella, who represented New York's 13th Congressional district in the U.S. House of Representatives for 12 years, serving as the lone Republican from New York City.

Video — Fossella: Gold Can Surge to $1,500 This Year

“Meanwhile, assets like gold have seen a tremendous increase. I think that trend in gold will continue,” said Fossella.

Superfund (www.superfund.com) is an international consortium of investment companies specializing in trading and offering managed futures, with offices worldwide and managing investments in 120 global markets.

Meanwhile, the dollar’s recent surge to a nine-month high against the euro is just temporary, Fossella argues.

“There’s pretty good evidence that’s more flight from the euro to the dollar” amid concern about Greek debt, rather than a sign of strength for the greenback, he said.

“Over time, the market will still calculate if the U.S. government is serious about reducing the excessive debt, bringing down the deficits — trade and otherwise — and what, if anything, is going to happen with interest rates,” he said.

So without a clear sign from Washington that it will solve these problems, Fossella sees the dollar falling back during the next year.

During the past 35 years, the greenback has weakened, while gold has strengthened, he says. The precious metal hit a record high of $1,225 last year before falling about 9 percent. It recently traded at about $1,112.

“While there may be a short-term correction now, once investors look to the markets globally, there still seems to be a long-term (upward) trend on gold,” Fossella said.

“I wouldn’t be surprised if gold rallies to $1,400 to $1,500 by the end of the year.”

There is a good chance that the Federal Reserve will raise interest rates during the next several months, Fossella notes. Investors need to be aware that a rate rise could hurt the economy, particularly the housing market, and depress stock prices, he says.

Fossella opposes the government’s economic moves of the last 18 months.

“Much of our economy sadly has been taken over by our government — too much so out of the hands of the entrepreneurs, the individuals who really should have the power and freedom to make this economy grow,” he said.

Recent signs of strength in the economy come thanks to government intervention and restocking of inventories, Fossella says.

As a result, “There doesn’t seem to be any clear signal that the economy will grow as much as it should.”

Video — Fossella: Gold Can Surge to $1,500 This Year

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