Bull market for gold is set to continue in 2007: analysts

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Bull market for gold is set to continue in 2007: analysts

The price of gold could hit $850/oz in 2007, as investors will continue to increase their holdings in gold and other commodities, according to analyst Ross Norman.

Gold is now in the longest bull market since the Midas metal was released from its ties to the world's monetary system in the early 1970s and became available for trading as a commodity, and most analysts believe this trend will continue through 2007. One analyst is even forecasting a spike to $850/oz (basis the London PM Fix), the all-time-high recorded in 1980 during the 1977-1980 bull market for gold.

So far, gold has benefited from an influx of investor dollars - particularly by hedge funds - in reaction to weakness of the dollar and deteriorating political conditions in most parts of the world. In addition, there has been growing physical demand for gold worldwide, while mine production has not kept pace. Indeed, global mine production has reached its peak and will start declining, according to statistics compiled by some of the leading analysts.

After experiencing a bear trend from 1997 to 2001, during which the gold price plummeted to a low of $252.80/oz - the lowest in 20 years_gold started an uptrend in earnest in 2002. Each year the market has been making higher lows and higher highs, touching a high of $725/oz in 2006 - the highest level since 1980. And gold seems poised to move even higher this year.

"I think gold could hit $850 this year," said Norman. "We are predicting an average price of $700/oz with a spike to $850/oz. In four of the last five years, gold gained more than 20% per year, with a 23% rise in 2006. We are forecasting a further 20% rise in 2007."

This optimistic outlook for gold is shared by Philip Klapwijk, executive chairman of UK-based research firm GFMS. "I will be very surprised if the average this year is not substantially higher than last year's level," said Klapwijk. "The market has been reacting strongly to the dollar and I am pretty bearish on the dollar."

Indeed the dollar has fallen sharply against other major currencies. "Since the greenback's peak in early 2002, it has dropped 35% against the euro, 28% versus a trade-weighted basket of major currencies, and 18% versus the currencies of all countries the US does business with," according to the January 15 issue of BusinessWeek online.

Those analysts who are predicting a further deterioration of the dollar cite a widening US trade deficit, an expanding budget deficit and a weakening US economy. In addition, the US seems to be bogged down in a protracted war in Iraq that is likely to bleed the country's financial resources further.

Besides further depreciation of the dollar, Klapwijk believes investors will continue to pour money into the gold market. "It does not require that much money into gold to make a difference in the gold price," he noted. Other positives for gold, according to Klapwijk, include declining sales by central banks and a reduction in the hedge books of major mining companies.

According to Norman, the prospects for higher gold prices are "very positive" because of strong market fundamentals and "particularly because of the huge amount of cash coming into commodities, which have taken metals across the board to record highs." He sees investor dollars as a solid base for gold. Norman noted that approximatoldy $120 billion was invested in commodities in the past few years, with "almost every pension fund moving a percentage of their assets into gold."

Demand for gold is expected to increase further with the Chinese now being able to buy gold legally. "For the first time in a generation the gold market is opened up in China; in Pakistan, people will soon enter the gold market" and other countries are liberalizing their policies on gold purchases by the public, said Norman. "In addition to that, there are new products in gold, such as ETFs, bringing an entirely new audience into the market." He added: "Central banks seem less willing to sell gold than in the past, and the truth is that some central banks are buying gold."

Besides the potential for a further increase in demand for physical gold, the metal's popularity has been greatly enhanced by the strong performance of gold stocks and other forms of investment based on gold. With the American Stock Exchange's Gold Bugs Index (HUI) and the Philadelphia Stock Exchange's (XAU) outperforming major stock indices recently, the allure of investment in gold has been further advanced, analysts believe.

Consequently, while there is statistical evidence that demand for gold is on the rise while production is likely to decline, the basic laws of supply and demand suggest a continuation of the bull market.

Created: January 09, 2007

当阅读好了∼ 不做交易方向

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KBG

反斗星  在 2007-1-10 01:13 發表:

班竹:有專業人仕,原汁原味翻譯給大家分享嗎?謝謝!

唔使翻译,我只看懂几个数字,信就收钱,唔信就奶野...:P

dwksin

多謝反斗星的番譯

kwy

Thanks for posting, :o:o:o

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谢翻译

忍者

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