Capital Gold Group Report: $2,000 an Ounce Gold is in the Cards
BOSTON
(MarketWatch) -- Frank Holmes, chief executive officer at U.S. Global
Investors, says that gold will hit $2,000 an ounce and that while the
move won't be straight there from current levels investors should not
be surprised by it.
Holmes noted that virtually all commodities have gone through their
"inflation-adjusted 1980 price levels," with the notable exception of
gold, and that to get to that range the price of gold would have to top
$2,000 an ounce. Holmes said he expects a short-term pull-back in gold
-- based on a correction he sees coming in oil and a short rally in the
dollar, both of which will impact gold prices -- but that the long-term
trend will be strongly upward.
In a radio interview
with Chuck Jaffe, MarketWatch senior columnist, Holmes noted that gold
correlates to the price of oil 90% of the time -- meaning it moves with
oil prices almost all the time -- and has an inverse relation to the
dollar 70% of the time. With oil prices on the rise and the dollar
weakening, it's a market condition that bodes well for gold, especially
because gold is "not at astronomical levels yet, when compared to other
commodities ... There's a lot more room."
Holmes also noted that
he's more concerned with the market entering a "big deflationary cycle"
than he is about Federal Reserve rate cuts sparking inflation, noting
that "inflation is easy to stop."
Holmes recommended that
investors looking for a plan to follow through the current whipsaw
conditions should take a long-term approach that divides a portfolio as
follows: 25% in international investments, 25% in resources, 25% in
domestic stocks and 25% in high-income and dividend-paying stocks.
In another interview, Stephen McKee, editor of the No-Load Mutual Fund
Selections & Timing newsletter, says that current headlines have
shown why investors want to look for market momentum rather than value.
He suggested that investors are much more likely to find buying opportunities in gold and natural resources funds, contrarian and hybrid funds -- the latter helped out by a slug of bonds in the portfolio -- and some international issues, although he noted that it appears that foreign funds are starting to slump and lose momentum.
He suggested that investors are much more likely to find buying opportunities in gold and natural resources funds, contrarian and hybrid funds -- the latter helped out by a slug of bonds in the portfolio -- and some international issues, although he noted that it appears that foreign funds are starting to slump and lose momentum.
McKee said that "what
matters is 'Am I making money today for the risk I am taking?'" and
said that investors in great funds that are out of favor with the
market will answer that question and realize that it may be time to
move away from some old favorites.
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Capital Gold Group, gold, gold prices, spot gold, gold record high, safe-have, safe investment, long-term gold trend
