Gold Poised. Experts Predict $1000+


"Gold prices are set to jump towards $1,000 an ounce and probably beyond to new records as droves of investors. . .pile into the precious metal."

Expectations of a weaker dollar, which makes gold priced in the U.S. currency cheaper for holders of other currencies, will also help boost prices of the precious metal seen as a store of value during uncertain times. Strong investor interest in the precious metal can be seen in the record holdings above 867 tonnes of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust.

"The core problem for investors is financial instability, if you look at the IMF numbers, we are only halfway through the non-performing loan cycle," said Ashok Shah, chief investment officer at fund manager London & Capital.

The IMF last month declared losses on U.S. loans and securitized assets were likely to reach $2.2 trillion (1.5 trillion pounds), up from an October estimate of $1.4 trillion. These losses replicated in other major developed economies have frozen bank lending to corporates and consumers and led to recession in the global economy.

In an attempt to kick-start bank lending and activity central banks have slashed interest rates. Governments have pumped large amounts of money into the global economy and more is planned.

"Governments are supplying liquidity into the system and unless they sterilize it (issue bonds) they are laying the foundations for much higher inflation for years to come. . .These are the things gold thrives on," Shah said. "More corporate, financial and economic bad news will do the trick. Once it gets a foothold and picks up momentum gold can easily break through to new highs."

Spot gold hit a record high of $1,030.80 an ounce in March 2008 and is now at around $910, a gain of more than 10% since the middle of January.

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