Gold price 'heading for $325'


Gold is heading for $325 an ounce, according to one gold expert

By Geoff Hiscock
CNN Asia Business Editor

SYDNEY, Australia (CNN) -- Gold stocks are returning to investors' portfolios as the precious metal heads for $325 an ounce, according to leading gold analyst Keith Goode.

Gold has not been in the $320-plus range since October 1999.

Driving the gains in the gold price is the U.S. dollar's weakness and a reinforcement of gold's role as a safe haven in troubled times, Goode told CNN Wednesday.

Gold opened in Hong Kong at $317.55 an ounce Wednesday morning - up $2 from the previous close and a 27-month high. Later in the day in Europe, it was quoted at $317.45.

Goode, managing director of Sydney-based Eagle Research, said there was a "fair chance" of gold reaching $325 later this year.

Gold stocks up

He said recent terrorism fears in the United States reinforced gold's status as a safe haven and, via gold equities, as a necessary component of a diversified investment portfolio.

Gold stocks have gained ground in recent days, with AngloGold up 2.7 percent in Australia Wednesday to A$11.50 and Barrick Gold closing about 1 per cent higher in New York Tuesday at $22.73, just 4 cents below its one-year high.

Goode said that before the advent of the dotcom boom, gold stocks usually made up 5 percent of an investment portfolio.

For several years during the boom, gold was spurned in favor of tech stocks, but there were now signs of it returning to its previous role as an investment asset.

Goode said the U.S. dollar's recent weakness was the main factor driving the gold price higher. Currency traders had decided the U.S. dollar had run too far against other currencies such as the euro.

Alternative currency

He said the euro was now establishing itself as an alternative paper currency to the dollar. Black market money that previously flowed exclusively to the U.S. currency now had a second choice.

He said gold usually moved on seasonal factors, with a rise in June at the time of the Italian jewelry fairs and again in August-September as Europe's summer business lull came to an end.

"Now is usually a weak period for gold, so its price is excellent," Goode said.

Hong Kong-based investment adviser Mark Faber, author of the "Gloom, Boom and Doom" report, has been a gold fan for some time.

In a newsletter published earlier this month Faber said his advice was to "avoid for now U.S. financial assets and to invest in commodities such as gold, and the grains as well as in Asian equities."