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Related topics: gold, inflation, emerging markets, metals and mining, Anthony Mirhaydari

With turmoil overseas and energy prices on the rise, investors are worried. They're worried about geopolitical risk. They're worried about a falling dollar. And they're worried about inflation becoming entrenched as the Federal Reserve continues to administer its cheap-money medicine despite signs of inflation.

As a result, gold is on the move again. For much of last year, gold moved higher over worries about Europe's debt crisis and a "double dip" recession in the United States. Prices fell into a funk in the fall, though.

Now, a new set of concerns has gripped the hearts and minds of investors. Fear has returned.

And the yellow metal keeps hitting new highs, closing on April 21 at $1,503.80 an ounce. (Click for the latest prices on gold futures (-GC).)

So how high can it go?

Believe it or not, some analysts are calling for prices to move close to $5,000 -- not immediately, but sooner than you may think. Here's why, and a few ways to play gold's upward.

The road to $5,000 gold

This is because, according to the folks at Standard Chartered Bank, gold is moving into a new "super-cycle" as a number of structural factors -- including consumer demand from Asia and tepid growth in supply -- combine to push prices higher. The team, led by Dan Smith, is looking for prices of $2,107 an ounce in 2014 as its base forecast.

Image: Anthony Mirhaydari

Anthony Mirhaydari

The team's members see the potential for much more. In their words, "statistical modeling suggests a possible 'super-bull' scenario of gold prices rallying up to $4,869 in nominal terms by 2020."

It's all about supply and demand.

The driver is increased wealth in Asia. The evidence shows a strong relationship between rising incomes in places like China and India and increased gold demand. Much of this is cultural, with gold holding a place of special religious reverence.

Data from the Shanghai Gold Exchange show that China's gold imports reached 230 tons in the first 10 months of 2010. But in only the first two months of 2011, industry experts cited by Standard Chartered estimate that imports hit 220 tons. No doubt, Beijing's somewhat weak-handed efforts to fight inflation are contributing to the rise, as people look to protect their burgeoning wealth from the ravages of rising prices.

David Davis, an old-hand mining engineer in South Africa who tracks precious metals for SBG Securities, notes that even poor peasant farmers in India, if the monsoons are good and the crops are bountiful, will splurge on a grab of gold. These people may not understand the value of interest-rate compounding or portfolio diversification, but they know that gold is an ancient and universally accepted store of value.

Indeed, the "super-bull" scenario depends on China and India: This outlook assumes that the average income per head in China and India reaches 30% of the U.S. level by 2030 -- up from 2% of the U.S. level in the 1980s and around 6% now. This seems very likely. Standard Chartered is looking for India alone to create nearly 500 million new manufacturing and service jobs over the next 20 years -- jobs that will expand India's middle class from 10% of the population today to 90% over the period.

The inflation fight

It won't be a straight shot to $5,000 an ounce, however. That's because history shows that while gold tends to rally in the period leading up to an interest-rate hike, it stalls a couple of months before the actual move higher.

We're in such a period now. The European Central Bank became the first rich-world monetary authority to tighten policy last week. In the U.S., the Federal Reserve's $600 billion "QE2" program to push money into the economy is set to end in just two months, and near-zero interest rates appear unlikely to last.

That could result in some volatility for gold over the next few months as the market waits to see how aggressively ECB President Jean-Claude Trichet and Fed Chairman Ben Bernanke attack inflation. Gold, of course, is the traditional hedge against inflation for investors. And right now, the inflation threat continues to grow.

"Real" inflation-adjusted interest rates are negative since inflation is currently running higher than interest rates. The two-year Treasury yield stands at 0.85% while consumer price inflation is running at 2.2%. The negative 1.45% real yield is a sign of extremely cheap cash and bubbling pressure on prices. And it's forcing investors out of cash and into assets that will hold their purchasing power in a negative rate environment -- assets such as gold.