Gold price hits record high for third day

THE price of gold has charged to a new high of nearly US$1,055 (S$1,466) an ounce amid speculation that it could hit US$2,000 in the next decade.

Local investors are joining a global gold rush by pouring cash into the precious metal owing to inflation fears and concern that major currencies such as the US dollar will keep falling in value.

They worry that spending sprees by the United States and other governments to tackle the global recession will undermine currency values and fuel inflation. Gold is regarded as a safe-haven investment, and a hedge against inflation or rising prices.

Mr Wong Weiyi, a research analyst at unit trust distributor Fundsupermart, said gold typically rises in price when the US dollar is falling and vice versa.

The price of gold has soared 19 per cent since the start of this year. At 5pm yesterday, it was 1.1 per cent higher than Wednesday’s close of US$1,044.20. Yesterday was the third straight day it hit a record high.

Local investors are charging into gold investments. Fundsupermart’s top three funds with gold exposure had averaged a 38 per cent return before fees so far this year, as of Monday. Sales of the three funds last month were 3.7 times that in August.

UOB Asset Management’s United Gold & General Fund, which invests in gold exploration firms, is up 41.18 per cent before fees so far this year.

Mr Tan Junren is one gold winner. He has been investing in gold-related instruments since March last year. He declined to reveal exact figures, but spoke of a ‘sizeable’ profit. ‘I think there might be a correction of prices in early November but I’m looking at this as a long-term investment and will invest more once the timing is right.’

In an interview with Bloomberg, noted commodities investor Jim Rogers said it was possible gold would top US$2,000 an ounce in the next decade.

He said he may increase his holdings, although he cautioned against buying gold at record-high prices. ‘Gold has hit a new high and I don’t like to buy something at record prices unless there are extremely strong fundamental reasons,’ he told Reuters.

Local jewellers are also getting their share of the gold-crusted pie.

Sales manager Patrick Yeo of Poh Heng Jewellers at New Bridge Road said the number of people selling their gold had jumped by 20 to 30 per cent over the past year. But he has yet to see an increase in the number of people buying physical gold as an investment. ‘The market is bad, and with gold prices going up, people are tightening their belts instead.’

Investors can get in on the gold rush by buying exchange-traded funds linked to the value of the precious metal. They can also put their money into gold-related unit trusts. Other means include purchasing gold certificates which indicate ownership, allowing investors to buy and sell without the hassle of physically transferring the metal.

Source: Straits Times (subscribers only)

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