Tags: Barrons | Bet | Plunge | Gold

Barron’s: Don't Bet on a Plunge in Gold

Tuesday, 02 Aug 2011 03:47 PM

Gold prices have soared 15 percent his year and will continue climbing as debt concerns and weaker currencies in the U.S. and Europe will stick around and make the precious metal even more attractive, experts say.

Gold prices often climb when paper currencies fall, the result of mounting debts and excessive money printing.

The recent default scare in the U.S. was just the latest in a series of events that has made the dollar less attractive, including two rounds of quantitative easing, where the Federal Reserve prints money and buys assets from banks, thus pumping the economy full of liquidity.

gold200APuseme.jpg
(Associated Press photo)
The last-minute agreement to lift the U.S. debt ceiling won't mean a reverse course for gold but rather, a brief respite for gold bugs to take a breather and prepare for fresh rallies.

"While gold may settle into an orbit around $1,500, there's little on the horizon to tarnish its appeal and decade-long ascent," Barron's reports.

"The precious metal is viewed as the cure-all to investor concerns in today's fragile economic environment, serving to assuage fears of a financial Armageddon, or at the least a repeat of the 2008 crisis and ensuing recession."

Goldman Sachs expects gold to reach $1,730 in the next 12 months, Barron's adds.

Chinese investors, meanwhile, are buying gold to hedge against rising food prices, while other countries are buying it to diversify their foreign reserves, thus pushing up prices even higher.

The Bank of Korea is making its first gold purchases in more than a decade, the Los Angeles Times reports.

"The flight-to-quality money is flowing into gold," Adam Klopfenstein, a senior strategist at MF Global Holdings, tells Bloomberg News.

"There's a lot of uncertainty about the global economic recovery."

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Gold prices have soared 15 percent his year and will continue climbing as debt concerns and weaker currencies in the U.S. and Europe will stick around and make the precious metal even more attractive, experts say. Gold prices often climb when paper currencies fall, the...
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Tuesday, 02 Aug 2011 03:47 PM
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