Gold bars
Investec sees gold at record highs
Reuters | Wed, 09 Sep 2009 13:54[miningmx.com] -- Gold could rise another 10-15 percent to all-time highs of $1,150 an ounce as investors flock to the precious metal as a haven from currency devaluation and rising inflation, Investec Asset Management said on Wednesday. Spot gold rallied to 18-month highs of $1,007.45 an ounce on Tuesday as the dollar slipped sharply against the euro, boosting the metal's appeal as an alternative investment. More gains could come if the currency weakened further and if fears over the effects of global stimulus measures on inflation took hold, the firm said. "We believe that the combination of unprecedented global fiscal stimulus, quantitative easing and increased money supply has the potential to result in broad currency devaluation, negative real interest rates and the return of high rates of inflation," Investec Asset Management said in a note. "We believe this points to a very supportive backdrop for gold to sustain moves above previous highs." The firm added that it sees more upside in gold equities than gold exchange-traded funds, which issue securities backed by physical stocks of bullion. It said gold companies should see costs stabilising, allowing them to expand margins. "We believe it would not be unreasonable for gold to trade 10-15 percent higher from current levels, hitting the $1,100-$1,150/oz range," it said. It said a return of heavy scrap supply to the market, as seen when prices rose through $1,000 an ounce for the first time in February, represented a potential downside risk to prices.
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