Gold Will Hit $1000 in 2008

Due to many fundamental factors, I expect sometime in 2008 the price of gold will reach $1000 for the first time in human history.

Gold is regarded as a positively-sloped investment demand overwhelming the inelasticity of supply. The willingness to hold the stock of gold depends on the rate of return available on alternative assets of stocks and bonds. In a low return cycle for stocks and bonds, monetary and investment demand for gold turns very positive, and there is a dramatic shortage of available metal, which becomes the principal driver of gold.

I believe in the not too far distant future, Gold and mining companies will become another category of alternative investment. Similar to private equity and hedge funds, globalization and wealth in emerging markets will bring much higher demand for gold and mining companies across the world than in the 1970s.

From the supply side, we are facing a more severe scarcity of gold supplies than 1970s. Investing in the gold ETF fund GLD provides a convenient way to capture this potential 20% return in 2008, and investing in many major miners such as FCX, NEM, ABX I expect will gain a 40-50% return, as they usually double gold's return. Investing in the right juniors can easily see your investment doubled, or invest in GDX to enjoy diversification of investing in both majors and juniors in one exchange traded fund.

Disclosure: Long gold and gold stocks

Comments

[User 41387]

Mr.Thomas Tan, You are a good common sense man - your article is simple and logical and should be published in all newspapers so people may benefit from it. Thank you! George Manjounes

[thomast2]

Thank you very much for your comment. Really appreciate it.

[Goldfinger]

Try some emerging gold mining stocks: Rubicon (RBY) $1.47 has property right next to Goldcorp at Red Lake. Great Basin Gold (GBN) $2.60. Pediment Exploration (PEZ.V or PEZFF.PK) $2.78 has great holdings in Mexico.

[foreigner]

Other than location (Congo) I can't figure why Banro has not moved up faster.