June 19 (Bloomberg) -- Gold prices may rise to $5,000 an ounce as investors seek to protect themselves against accelerating inflation, said Schroder Investment Management Ltd., which oversees $277 billion of assets globally.
``You could easily see for the next several years that prices rise not to $1,000 an ounce, but prices rise to $5,000 an ounce or beyond as inflation psychology becomes more and more embedded and people become desperate to have a source of value,'' said Christopher Wyke, London-based emerging market debt and commodities product manager at Schroder, which oversees about $10 billion of commodity assets.
Investors are turning to gold for protection as two-thirds of the world's population cope with inflation rates that are climbing to more than 10 percent, Wyke said. Cash and inflation- linked bonds are poor substitutes as low interest rates, coupled with surging inflation, erode the real value of assets, he said.
Bullion for immediate delivery was down 0.2 percent at $892.48 an ounce at 9:57 a.m. in Singapore, after gaining 3 percent in the past four days. Wyke didn't give a time frame for his gold prediction.
Demand for gold will also rise as central banks become net buyers for the first time in 20 years, driven by developing countries, he added. Last year, world production of gold sank to the lowest since 1937 as reserves are depleted and few new sources of gold have been found.
New Fund
Wyke was speaking at a press conference in Hong Kong today to market the Schroder Alternative Solutions Gold and Metals Fund, the first commodity fund authorized for sale to individuals in the city that invests primarily in derivatives, including futures, warrants, swaps and options. Robert Howell and Paula Bujia will manage the fund.
Gold may account for about 40 percent of the fund's assets, based on a ``model'' fund used to simulate returns, said Wyke. The fund would also buy securities linked to metals including aluminum, copper, iron ore, zinc and uranium.
The limited amount of gold available, relative to the size of the global capital markets, means a small shift in investments may lead to significant price changes for the metal, Wyke said. Total gold above ground is worth about $4.8 trillion, compared with global stock and bond markets worth $135.2 trillion.
UBS AG, Hang Seng Bank Ltd., KBC Groep NV and Lehman Brothers Holdings Inc. are among firms that manage commodity funds in the city, according to the Hong Kong Securities and Futures Commission. Bank of East Asia Ltd. in February started a fund that buys shares of companies that produce materials and energy.
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Gold is the measuring stick that tells you how much the fiat money is worth. Gold goes up as the fiat money goes down, and for those who are in the know, hold gold in their personal accounts.
I saw this back in the 80's when gold jumped to $800 per oz. It started out at $35 per oz., now look at it. for it to make such a jump as it did then, $35 to $800, now from $900 to $5,000 is well within range.
Going one step further ... if you take all the fiat money currencies and all the gold, and work those figures, gold has a potential of reaching over $50,000 pe oz.. That's the potential. So, to say it will not reach $5,000 per oz at some point in time is speaking out of ignorance.
I purchase gold from people in my hometown for $2,400 per oz., over a 12 month term on behalf of a trust. That is only 1/2 of what the experts are saying in the thread. So, will the trust be losing money for doing such a thing? I sincerely doubt it.
THE WRITING IN ON THE WALL ... The day will come when a loaf of bread will be $20.00. Look around, the flooding just last week destroyed a great deal of corn. The fuel to transport EVERY item you purchase in the stores except a "phone call" makes the items go up. Oh, the truck did bring the phone to the store so you could purchase it and make the call.
I have a burning desire to do something good to help others, and have been placed in a position that I can now do something. And, post like you pointed out certainly makes it more urgent NOW that a program is set up to help the less fortunate. Actually, ANYTHING that is secured, safe and guaranteed is something that is needed ... wouldn't you say?
Well, Gold does, as a hard asset - have a ceiling. It can only go so high, because it's not as flexible as paper - when it comes to the mechanism of wealth creation (when I say wealth creation, I'm discussing the macro-economic principle of wealth creation). Therein lay the problem with all gold standards. It's ability for growth.
So while I can see us eventually getting back up near the $1,000 mark?
$5000? In my experience when people start saying something is going to go up and up and up forever? That's about the time you start seeing the ceiling develop. Same thing happened in 2001. I remember seeing predictions for the DOW reaching 20,000 by 2004.
The reason gold has gone from $400 to $800 in the last few years is because the US dollar weakened (lost its buying power) a lot, and will probably continue to go up with the US economy being at its worst point in the past 15-20 years or so.
One thing is for sure: get rid of all your US dollars and put it into a tangible asset like precious metals or food. I don't have all the numbers in front of me, but the US dollar has lost roughly half of it's buying power since 2000! The US dollar is going down and much faster than in previous decades. I would stay out of the stock market too because many of the companies on there are loosing value like crazy, banks are going under like never before, and the Govt is setting itself up to be financially ruined by adding to the already high amount of govt debt when they bail out these banks.
Get rid of your dollars and buy precious metals and other commodities to preserve your money. If the recession/depression gets as bad as some experts say it will the US dollar will be worthless, as in $50 for a gallon of gas worthless!
Take care guys, study and help other people so we can get thru these hard times.
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"who... knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat."
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The reason gold has gone from $400 to $800 in the last few years is because the US dollar weakened (lost its buying power) a lot, and will probably continue to go up with the US economy being at its worst point in the past 15-20 years or so.
One thing is for sure: get rid of all your US dollars and put it into a tangible asset like precious metals or food.
Missed that boat by a few numbers.
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I don't have all the numbers in front of me, but the US dollar has lost roughly half of it's buying power since 2000!
Actually - I do. It's only 1/3, not half.
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The US dollar is going down and much faster than in previous decades.
Actually, over the last month, the dollar has made stronger gains in the given time period, than it has in the last 36 years.
Chart of the Dollar Index over the last few months:
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I would stay out of the stock market too because many of the companies on there are loosing value like crazy, banks are going under like never before, and the Govt is setting itself up to be financially ruined by adding to the already high amount of govt debt when they bail out these banks.
That's no reason to stay out of the stock market. In fact, it's times like this that Warren Buffet is looking to get involved in the stock market.
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Get rid of your dollars and buy precious metals and other commodities to preserve your money. If the recession/depression gets as bad as some experts say it will the US dollar will be worthless, as in $50 for a gallon of gas worthless!
Take care guys, study and help other people so we can get thru these hard times.
Yeah, been hearing that for decades. Only problem is, you are way, way, way too late with your information. It's a bit out of date. You missed the commodity bubble - by like 5 months. Gold has nearly lost 1/4 of it's value in just one month.
Although I like gold, always have, $5000. is a bit of a stretch, but I do feel we will see $2000. next year as the financial turmoil continues to get worse with this bail out disaster only delaying the inevitable, the collapse of dollar.
In today's dollars, 1975 gold at $196 is more like $750 in the current market. And 1980 gold, the peak year at the historical price of $850, would now clock in closer to $2,176. And remember, this is what you get using only the most conservative market calculation of gold's worth. There are other, even more telling ways to value gold.
Try this on for size...
$38,349 per Ounce!
Remember, for a good part of America's history, every dollar in your pocket was a dollar backed by gold. So it's not so crazy to ask yourself... if America has 8,180 tons — nearly 261.7 million ounces — of gold in reserve... how many dollars does that buy?
The answer will shock you.
When dollars became unhinged from gold, the printing presses at the Fed cranked up. By 1980, for every ounce of gold in America, the financial system carried $6,966 in cash. That's $1.8 trillion total. But get this — by the end of 2005, the total real money supply shot to over $10 trillion.
That's $38,349 in circulation for every ounce of gold in reserve!
Of course, it's even higher now. The printing presses are still cranking, well into 2008. Only now, it's much harder for you to know how fat the actual money supply has gotten. See, by March 23, 2006... the number had gotten so embarrassing... the Fed actually "retired" a number, "M3," which was the most broad-reaching measure of how much cash floats around in the system.
Yep. Instead of fixing the problem, the politicians just stopped talking about it. Is that any surprise? Fortunately, you don't need Washington's help to get the real picture of what's happening today in the economy... or to find out what's next for the price of gold. No doubt it is going to head up, even if it dipped today, just wait when this bail out fails and only delays collapse of U.S. banking.
$5000 an Ounce Gold Prediction
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