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Analyst: Nearly Impossible to Have a Better Long-Term Backdrop for Gold

Release Date: 
Tuesday, January 29, 2013

The price of gold rose as investor appetite for high-risk assets equities fell.  Gold was $9.10 higher at 7:27 a.m. Pacific Time on the New York Spot Market, trading at $1,664.60 per ounce.  Spot silver was $0.38 higher at $31.32 per ounce.  (Click here for the most current spot prices.)

In his “Basic Points” publication, global commodities strategist Don Coxe stressed the importance of including gold as part of a portfolio. “The astonishing recent increase in Chinese and Indian economic power and personal wealth have naturally meant that interest in gold as an investment among citizens in those countries has surged…The richer Indian people become, and the richer Chinese people become, and the more than central bankers have reason to worry about the politics and profligacy of the Eurozone and the US, the more those gold buyers will influence gold prices.…”

“We remain of the view that gold’s long-term outlook remains bright. It may be the last asset left standing if governments run out of money to spend and central banks run out of money that people believe in…But it doesn’t require Apocalypse to be a sound, long-term investment …It is almost impossible to conceive of a more bullish long-term backdrop for gold.”

David Donora, head of commodities at money manager Threadneedle Investments, said he plans to maintain his gold exposure which comprises 11% of his portfolio.  Noting central bank purchases and limited supplies, Mr. Donora said, "We're feeling pretty bullish on gold and consider those long-term fundamental drivers that have been supporting the market still very much intact…"

Jeffrey Sica, president and chief investment officer of Sica Wealth Management, is boosting his fund's exposure to gold. He says he plans to increase the share of his fund's portfolio dedicated to gold from the current 7% to 25% over the next few months.

Analysts and money managers have positive expectations for the yellow metal.  “Gold, long-term, is still number one,” said Warren Gilman, Chairman & CEO at research and investment firm CEF Holdings, commenting on his best commodity play for 2013.

(Sources:  “‘…Impossible to conceive of a more bullish long-term backdrop for gold'—Coxe,” Mineweb, January 28, 2013  “Commodities in for a Good 2013: Pro,”CNBC, January 27, 2013; “Gold Bulls Are Holding On,” Wall Street Journal, January 25, 2013)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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