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Gold Hits $600. What's Next?
Gold bullion nudged through the $600 per ounce barrier for the first time in a quarter century on Tuesday, prompting investors to ask: can $800, or even $1,000 gold, be far behind?
Most analysts agreed that once the precious metal broke the psychological mark, it would likely keep going. But they were divided over whether gold mining company stocks would be as attractive as owning bullion.
They noted that the big gold miners, like Newmont Mining (NEM.N: Quote, Profile, Research) and Barrick Gold (ABX.TO: Quote, Profile, Research) (ABX.N: Quote, Profile, Research), have failed to see their share prices keep pace with the steady rise in gold. Instead, investors are flocking to smaller, so-called "junior" gold companies that are involved in exploration,
"Gold will go dramatically higher, it's still early," said Peter Schiff, chief executive of Euro Pacific Capital, a brokerage based in Newport Beach, California.
"Will it reach $800? Yes, $1,000? yes, $2,000? yes. it has nowhere to go but up, but it depends on how far the dollar and other currencies will be devalued."
"The momentum for the commodity is going up and if spot prices break the $600 mark, they will probably continue to go up," said Victor Flores, an analyst with HSBC Securities.
Peter Spina, who operates an investor web site, goldseek.com, said in the short-term there was likely to be correction as the market was a little over-extended, with physical demand from India, the world's top consumer of gold, mostly for jewelry, "drying up at these prices.
"But long-term, fundamentals for gold are more as an investment vehicle." He anticipated the price would rise to $800 within the next two years and possibly hit $1,000.
