Tags: Gold | ETF | Risk | Rise

Gold Expert Sees ETF Risk on the Rise

Tuesday, 18 Oct 2011 08:40 AM

Beware the rise of gold metal ETFs, warns a top commodities expert.

The entry of easily traded paper representations of the precious metal has in part driven the recent bull run on gold, but it also raises the chances of a precipitous decline.

"You now have a very sophisticated investor base with very large positions, so when things start to change, you could start to see a lot of gold dumped on the markets," Kevin Norrish, managing director of commodities research at Barclays Capital, told an audience in London this week, reported MarketWatch.

"When the opportunity cost turns negative, you could see a problem," Norrish said, although Barclays still sees gold at above $2,000 in 2012.

Gold hit $1,923.70 an ounce in early September on fears of a stock market rout and rapidly depreciating currencies. It later fell sharply and has since recovered to $1,696.10.

gold200.jpg
(Getty Images photo)
The ongoing and seemingly endless European credit debacle has investors nervous. In the United States, meanwhile, all eyes are on the so-called “Super Congress” committee, which has until Nov. 23 to find $1.2 trillion in savings or face automatic defense spending cuts.

Gold is seen as a haven should the euro and the dollar decline in tandem, a potential outcome if credit conditions deteriorate and new central bank spending is required to fill the gap.

BNP Paribas recently cut its gold forecast, suggesting the metal’s price could rise but would hit a ceiling if the United States raises interest rates. It also warned of a potential short-term decline for gold.

BNP gas cut its 2012 forecast to $1,950 per ounce from $2,080. The bank sees the price in 2013 down slightly, to $2,125 an ounce from $2,200 an ounce.

“We see the gold price peaking in 2013, as the market starts to anticipate monetary tightening in the U.S., but do not expect a sharp fall thereafter,” the bank’s analysts told investors in a research note.

© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
StreetTalk
Beware the rise of gold metal ETFs, warns a top commodities expert. The entry of easily traded paper representations of the precious metal has in part driven the recent bull run on gold, but it also raises the chances of a precipitous decline. You now have a very...
Gold,ETF,Risk,Rise
323
2011-40-18
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved