How high will gold go in 2010?
TheStreet.com asks readers for 12-month price targets for gold, which topped $1,200 an ounce this week.
By Scott Eden, TheStreet
It's been one of the biggest financial stories of the year and, now, the holiday season: gold.
Apart from the fake foil stuff that dangles from Christmas tree branches, December may be a banner month for the shiny yellow metal. (Of course, November also was a banner month, with gold prices rising 14%, their sharpest monthly increase in a decade.)
On Monday, futures prices crossed the $1,200-per-ounce level and looked to be going higher. But by the end of trading Tuesday on the New York Mercantile Exchange, the December contract had retreated to $1,199.10, up $18, or 1.5%, from the previous day. Gold for February delivery, the most heavily traded contract, settled at $1,200.20, up $17.90, after touching $1,204 earlier that day.
Mining equities also continued to climb, with shares of Barrick Gold, Kinross Gold, Goldcorp and AngloGold Ashanti gaining more than 5% Tuesday.
The reasons the so-called gold bugs, gold bulls and gold hawks have moved with force into this commodity are well known. Doomsday inflation worriers seem to be reacting to soaring government spending -- and debt -- and what that might hold in store for the value of the greenback (which is to say: devaluation).
Gold, in this view, could serve as an ultra-haven -- the world currency of last resort -- and hedge-fund investors such as John Paulson (who recently created a gold-specific fund to much fanfare) and Paul Tudor Jones (who has been amassing long precious-metals positions all through the autumn) appear to be making wagers based on this line of thinking.
Others see simple supply-demand arithmetic at work. In recent years, central banks have switched from net sellers to net buyers of gold, the dawn of the gold ETF earlier in the decade has consumed gold supply, and net output from gold mines worldwide has decreased -- and will continue to do so.
One need look no further than Barrick, which finished unwinding its hedge positions earlier than expected, to see a gold mining concern making a bet on rising gold prices.
As for the short term, many traders said last week that a gold-price correction was in order, but the dollar continued to weaken this week and gold futures popped again. Brian Hicks, co-manager of the U.S. Global Investors Global Resources Fund, expects the metal to top $1,250 during the next 60 to 90 days.
We asked readers of TheStreet to set their own 12-month price targets for the world's favorite precious metal. Where do you think gold prices will settle by the time December 2010 rolls around?
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