A veteran investment strategist yesterday (January 5th) predicted that gold prices will rise to $1,200 per ounce in 2009.
Byron Wien, 75, of Pequot Capital Management, correctly predicted 12 months ago that the US was heading for its first recession since 2001.
However, in the 24th annual instalment of his 'Ten Surprises' list, he expresses his belief that investing in gold is prudent as the yellow metal will hit a significant upturn this year.
One section reads: "In anticipation of a second-half recovery in the US economy, the market improves from a base of investor despondency and hedge fund and mutual fund withdrawals.
"The mantra changes from 'fortunes have been lost' to 'fortunes can still be made'."
Mr. Wien claims that the gold price surge will be underpinned by a "serious downward slide" for the dollar as a result of "huge borrowing", which he suggests could push it to as low as $1.65 per euro.
That view was supported recently by Shaun Osborne, chief currency strategist at TD Securities in Toronto, who explained that the dollar was likely to fall in 2009.
"With the Fed reverting to non-conventional monetary policy, the whole notion of a strong dollar goes out the window," he said.
"The risks are skewed to dollar weakness."
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