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Gold Set to Smash Through $1,800 per Ounce by Year's End

LONDON -- Gold prices have remained in the doldrums in recent months, putting in their worst quarterly performance in more than 10 years during January-March and conceding 5.3% since the start of the year. The metal plumbed as low as $1,540 per ounce late last week -- its cheapest since May 2011 -- before recovering ground to $1,570 recently.

However, I am convinced that current prices provide a sound base from which investors can build excellent returns. I believe that a backdrop of escalating macroeconomic and political uncertainty, particularly in Europe and the U.S., combined with rising inflation should push the store-of-value asset higher in coming months. And investors can tap into this theme by purchasing SPDR Gold Trust  (NYSEMKT: GLD  ) and Gold Bullion Securities  (LSE: GBS  ) , instruments that are designed to track movements in the gold price.

Analysts predict golden charge later in 2013
Metals consultancy Thomson Reuters GFMS announced last week that it expects gold prices to soar above $1,800 per ounce by the end of 2013, providing chunky upside from current levels. Specifically, the forecasters reckon that the likelihood of fresh political turmoil in the U.S. could herald fresh safe-haven investment in the yellow metal as the year progresses.

The twin issue of heavy budgetary cutbacks, and discussions over the lifting of the country's debt ceiling, could prompt fresh battles between Democratic and Republican lawmakers in the coming months, and GFMS does not expect these issues to be resolved in the near future.

Ongoing QE to boost store-of-value metal
The consultancy noted a multitude of other supportive factors for the gold price, such as the continued implementation of loose monetary policy by the Federal Reserve. GFMS says that it does not expect the current unlimited quantitative easing program to start to wind down until well into 2014 at the earliest -- these measures erode the value of the dollar, increasing inflation and boosting demand for hard currencies like gold.

Elsewhere, the possibility of political and economic turbulence in the eurozone could send gold interest higher, the organization added. Inflows into gold exchange-traded funds (ETFs) received a shot in the arm last month, while discussions regarding the Cypriot bailout were at their height, during which time gold struck its highest since early February around $1,615 per ounce.

Central bank demand for gold remains bubbly -- official sector purchases hit their highest since the 1960s last year, at 534.6 tonnes, according to the World Gold Council -- due to doubts over the state of the global economic recovery and escalating fears over the value of fiat currencies. I expect these themes to boost gold prices much higher as the year progresses.

Mine gold stocks for gains
Investors can also gain exposure to a rising gold price through shrewd stock picks in the mining sector. Galloping demand for natural resources should continue to drive broader commodity stocks higher over the long-term.

This special wealth report from The Motley Fool -- "10 Steps to Making a Million in the Market" -- gives investors the lowdown on how to make a mint from choice stocks in the mining sector, including one major African-based gold producer. Click here now to download our totally free report.


Read/Post Comments (3) | Recommend This Article (1)

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  • Report this Comment On April 08, 2013, at 5:39 PM, duuude1 wrote:

    Royston, duuude, are you a fool or a Fool? Gold? I'm not going to argue with you on whether gold prices will move up or down in the short term. No one knows what happens to prices over the short term.


    Check out the multi-year (1975-2013) gold price chart at any of these sites:

    Do these charts remind you of any other recent price charts? Has anything else recently shot up in price relative to its past price history? Come on... how about real estate? And what happened to the folks who bought real estate at those 2005-2007 nosebleed levels?

    For what bloody reason should a chunk of metal or a pile of masonry and lumber shoot up at double-digit annual gains for a decade? Absolutely NONE!!

    Duuude, do NOT fan the flames and inflate yet another bubble. This contributes to getting people deeper and deeper into losses - compounding from real estate losses into gold losses. That is not responsible.

  • Report this Comment On April 11, 2013, at 9:00 AM, TheInvestmentMan wrote:

    I think there are better places to invest than in home policies. A standard British ISA is only offering an average return of interest of 1%, which in my opinion is due to the downfall of most currencies, and the short life cycle they are achieving.

    So why not invest into something which is going to be required forever, or in an area which is on its way to the top. For example previously it was the BRIC (Brazil, Russia, India, and China) nations which have lived their boom and now at a steady rate.

    Next Continent which is on its way to flourish is Africa, especially the western Nations, such as Ghana to be more precise. A company called Reflex Eco Limited contacted me with an extremely lucrative proposition available. Offering 100% security on invested money, and potential of 11%+ return over 12 months in alternative investments and emerging markets.

    The detail behind the proposition was investing into metals such as Gold or silver which are unlikely to depreciate and likely to remain as a commodity forever. Also stating that initial money invested will not be lost (Within reason).

    A group of Chinese organizations previously invested production facilities into western Africa, facilities such as roads and public transport, which has resulted in an improvement in the nation’s economy in general. The potential of this market seems so lucrative large British companies such as Cadburys and Vodaphone have moved operations to western Africa which will support the economy, also being followed by copy cat corporations which is going to pump action into the economy, and therefore keep it active.

  • Report this Comment On April 13, 2013, at 9:47 AM, stockmktdouble wrote:
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