what is driving gold?

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    "Iraqi Quagmire Could Push Gold Over $400/Oz In Near-Term

    By Jim Hawe
    Dow Jones Newswires http://sg.biz.yahoo.com/030909/15/3e138.html
    Tuesday, September 9, 2003

    TOKYO (Dow Jones) -- Concerned that the mounting costs
    to rebuild Iraq will shackle the U.S economy for years to
    come, more investors are now hedging their portfolios with
    a touch of gold -- a trend that could push this traditional
    safe-haven asset over $400 an ounce before long, industry
    insiders said.

    John H. Mesrobian, president of Virginia-based
    Constantinople Advisors, sees a few different price movement
    scenarios developing on the gold market.

    "A close above $380 will point to a quick move to $400-plus.
    Or gold will consolidate first before moving higher. In both
    cases $400 is going to be breached -- and soon," he said.

    Spot gold was quoted at $377.50 a troy ounce Tuesday in
    Asia, up from $375.25/oz late Monday in New York.

    Mesrobian, whose firm advises investors on currencies,
    bonds, and commodities, said gold is being driven by
    improving fundamentals and moves on the currency markets,
    particularly the slumping U.S. dollar.

    "The dollar is toast," he said, predicting a further slide in

    Michael Kosares, the president of Denver-based bullion
    brokerage Centennial Precious Metals, has seen investors
    hedging their portfolios against potential losses in stocks
    and bonds, as well as against a further deterioration in the
    U.S. economy.

    "Gold investor concerns these days are more centered
    around some of the negative fallout from the war on terrorism
    such as rising deficits, bond market problems and deteriorating
    relations with key trading partners," said Kosares.

    Kosares agrees that gold stands to benefit from a further slide
    in the value of the greenback, especially if the dollar printing
    presses keep rolling to finance the war on terror, which now
    carries a $87 billion price tag.

    Kosares said most portfolio planners are adopting long-term
    strategies that account for any fallout from the efforts to
    rebuild Iraq, as well as the possibility of further terrorist
    acts at any time.

    So is there anything else investors should be adding to their
    portfolios other than gold?

    Mesrobian believes the euro, Swiss Franc, and Canadian
    dollar are all headed higher, and says copper deserves a
    second look.

    He also said shares in many junior mining companies offer
    nice profit potential.

    Conversely, he warns against too much exposure to the
    U.S. dollar and stock markets.

    "The bottom line is that the U.S. dollar and markets will
    see bottoms in 2004 and it is going to be very nasty," he

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