Bullion breaks $1,000 U.S. (March 14, 2008)
Lisa Wright
business reporter - Toronto Star
All that glitters is definitely gold after bullion hit the key milestone of $1,000 (U.S.) an ounce in New York yesterday, and some analysts expect it will more than double in the next few years as investors flock to the commodity as a safe haven in turbulent financial times.
Other precious metals including silver, platinum and palladium hopped on the bandwagon as the battered U.S. greenback dipped below 100 yen for the first time since 1995 and hit a new low against the euro.
Growing fears of a U.S. economic slowdown and expected interest rate cuts also sparked demand for shiny bullion.
"I'm happy because I've been forecasting this for some time," said John Ing, a mining analyst at Maison Placements Canada in Toronto.
"But more relevant is where it's going. In the near term I can see gold at $1,200 and I wouldn't be surprised if it reached $2,500 in this cycle" over the next few years, he said.
And if you believe Goldcorp Inc. founder and bullion investment maverick Rob McEwen – who correctly predicted seven years ago that gold would reach its old record of $850 this year – the gold price could spike to $5,000 by the end of the cycle, which he guesses will be around 2013.
"Gold has not been in the mainstream for over 20 years. If you look at it, gold is up four-fold since 2001," McEwen said in an interview, adding there will be the usual corrections along the way.
Investors consider gold a hard asset and safe investment amid economic uncertainties, and as long as the dollar continues to take a beating as forecasters expect, bullion appears poised to continue its rapid climb, since the two tend to move in opposite directions.
While enjoying a wild ride now, bullion was seen as lagging other commodities, particularly base metals like nickel and copper, in the continuing metals bull market that began in 2002.
Now, however, it's the standout as some of the shine has come off the industrial metals.
"Things are looking good now, but if I had said two years ago that gold was going to $1,000 an ounce, they would have had me committed," joked analyst Barry Allan of Research Capital Corp.
"It's a reflection of the fact that the markets aren't in good shape so gold is now recognized as a viable investment vehicle," Allan said.
After touching a record $1,001.50 an ounce yesterday morning, gold futures for April delivery pulled back later to close at $993.80, up $13.30, on the Comex division of the New York Mercantile Exchange.
Spot gold briefly traded at $1,000.45 an ounce earlier in the day but ended up at $992.30, up $13.50.
Canadian senior producers also benefited from gold's rise, with Goldcorp Inc. jumping $1.52 (Canadian) to close at $44.11, and Barrick Gold Corp. up $2.04 to $52.19.
Red-hot gold has jumped 17 per cent so far this year on the back of increasing concern that the U.S. economy and financial markets in general are in hot water and headed for more trouble down the road.
The last big milestone gold hit was in early January, when it surpassed its spot price closing record of $850 (U.S.), which was last seen in January 1980, at a time when U.S. inflation was running in the double digits and oil was climbing after a decade of Middle East instability.
The old highs from 1980 would today, if adjusted for inflation, be worth more than $2,000, according to precious metals research firm GFMS.
These days, oil prices are soaring and inflation is creeping up in the U.S. and Canada while economies in China, France and Japan are also in the midst of 10-year inflation rate highs, and "gold is the classic inflation hedge," Ing explained.
"It's a bit like the canary in the coal mine, letting us know that there are a lot of problems around us," he said.
"The unprecedented gold bull market of 2008 is getting stronger all the time," said James DiGeorgia, editor of the Gold and Energy Advisor newsletter.
"But the ongoing gold bull is acting strangely. Normally as prices go up, supply would rise and demand would fall. But that's not happening in the current market. Instead, supply is falling and demand is rising.
"The metal's fundamentals are even stronger now than they were when this massive bull market began. My target price for gold is $2,500," he said.
On the supply side the industry is grappling with a scarcity of new gold deposits globally, while soaring demand for gold jewellery continues from commodity-hungry China and India.
Statistics South Africa also announced yesterday that its gold mining production dropped a sharp 16.5 per cent in January after power shortages closed mines for five days that month, strengthening a downward trend that saw South Africa lose its status to China last year after more than a century as the world's top gold supplier.
Gold reaching four digits is a psychological hurdle for investors, and gold bugs believe the sky's the limit.
"In one sense it seems like a shock that it reached that level, like 10,000 on the Dow and $100 oil. Numerologists would probably be excited about it," Ing joked, adding: "It's another milestone with more to come."
business reporter - Toronto Star
All that glitters is definitely gold after bullion hit the key milestone of $1,000 (U.S.) an ounce in New York yesterday, and some analysts expect it will more than double in the next few years as investors flock to the commodity as a safe haven in turbulent financial times.
Other precious metals including silver, platinum and palladium hopped on the bandwagon as the battered U.S. greenback dipped below 100 yen for the first time since 1995 and hit a new low against the euro.
Growing fears of a U.S. economic slowdown and expected interest rate cuts also sparked demand for shiny bullion.
"I'm happy because I've been forecasting this for some time," said John Ing, a mining analyst at Maison Placements Canada in Toronto.
"But more relevant is where it's going. In the near term I can see gold at $1,200 and I wouldn't be surprised if it reached $2,500 in this cycle" over the next few years, he said.
And if you believe Goldcorp Inc. founder and bullion investment maverick Rob McEwen – who correctly predicted seven years ago that gold would reach its old record of $850 this year – the gold price could spike to $5,000 by the end of the cycle, which he guesses will be around 2013.
"Gold has not been in the mainstream for over 20 years. If you look at it, gold is up four-fold since 2001," McEwen said in an interview, adding there will be the usual corrections along the way.
Investors consider gold a hard asset and safe investment amid economic uncertainties, and as long as the dollar continues to take a beating as forecasters expect, bullion appears poised to continue its rapid climb, since the two tend to move in opposite directions.
While enjoying a wild ride now, bullion was seen as lagging other commodities, particularly base metals like nickel and copper, in the continuing metals bull market that began in 2002.
Now, however, it's the standout as some of the shine has come off the industrial metals.
"Things are looking good now, but if I had said two years ago that gold was going to $1,000 an ounce, they would have had me committed," joked analyst Barry Allan of Research Capital Corp.
"It's a reflection of the fact that the markets aren't in good shape so gold is now recognized as a viable investment vehicle," Allan said.
After touching a record $1,001.50 an ounce yesterday morning, gold futures for April delivery pulled back later to close at $993.80, up $13.30, on the Comex division of the New York Mercantile Exchange.
Spot gold briefly traded at $1,000.45 an ounce earlier in the day but ended up at $992.30, up $13.50.
Canadian senior producers also benefited from gold's rise, with Goldcorp Inc. jumping $1.52 (Canadian) to close at $44.11, and Barrick Gold Corp. up $2.04 to $52.19.
Red-hot gold has jumped 17 per cent so far this year on the back of increasing concern that the U.S. economy and financial markets in general are in hot water and headed for more trouble down the road.
The last big milestone gold hit was in early January, when it surpassed its spot price closing record of $850 (U.S.), which was last seen in January 1980, at a time when U.S. inflation was running in the double digits and oil was climbing after a decade of Middle East instability.
The old highs from 1980 would today, if adjusted for inflation, be worth more than $2,000, according to precious metals research firm GFMS.
These days, oil prices are soaring and inflation is creeping up in the U.S. and Canada while economies in China, France and Japan are also in the midst of 10-year inflation rate highs, and "gold is the classic inflation hedge," Ing explained.
"It's a bit like the canary in the coal mine, letting us know that there are a lot of problems around us," he said.
"The unprecedented gold bull market of 2008 is getting stronger all the time," said James DiGeorgia, editor of the Gold and Energy Advisor newsletter.
"But the ongoing gold bull is acting strangely. Normally as prices go up, supply would rise and demand would fall. But that's not happening in the current market. Instead, supply is falling and demand is rising.
"The metal's fundamentals are even stronger now than they were when this massive bull market began. My target price for gold is $2,500," he said.
On the supply side the industry is grappling with a scarcity of new gold deposits globally, while soaring demand for gold jewellery continues from commodity-hungry China and India.
Statistics South Africa also announced yesterday that its gold mining production dropped a sharp 16.5 per cent in January after power shortages closed mines for five days that month, strengthening a downward trend that saw South Africa lose its status to China last year after more than a century as the world's top gold supplier.
Gold reaching four digits is a psychological hurdle for investors, and gold bugs believe the sky's the limit.
"In one sense it seems like a shock that it reached that level, like 10,000 on the Dow and $100 oil. Numerologists would probably be excited about it," Ing joked, adding: "It's another milestone with more to come."
