Gold News

End of hedge fund de-leveraging 'will see Gold Price hit $1,300'

The head of US Global Investors has claimed that Gold Prices could reach $1,300 per ounce in the current bull run, usfunds.com reports.

Frank Holmes, CEO and chief investment officer for the firm, draws attention to the fact that many hedge funds "borrowed in dollars and yen and then invested that inexpensive money all over the world".

Speaking on a special webcast, he goes on to note that as soon as this period of de-leveraging is over, anyone with a Gold Investment will be rewarded because the dollar's artificial strength will subside.

"There will be a point when this de-leveraging stops and I believe that would be a big, significant factor to the dollar declining and the price of gold holding at price levels or even rising to $1,200 or $1,200 an ounce," he was quoted as saying by the news provider.

Those comments come after a new report by leading precious metals consultancy GFMS claimed that net flow of money into gold investment in its various guises increased by 80 percent to a record $26 billion in 2008.

Daniel Willis, an analyst at ETF Securites, explained in an interview with Fund Strategy that he expects the yellow metal's popularity to continue in the current economic environment.

"The crisis has highlighted the importance of robust, reliable investment vehicles from a liquidity and credit risk perspective," he told the news provider.

"Full collateralization (and in the case of gold, physical backing of allocated bullion) and the use of multiple market-makers are fast becoming the industry benchmark."

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