- TOKYO (Dow Jones) -- Concerned
that the mounting costs to rebuild Iraq will shackle the U.S economy for
years to come, more investors are now hedging their portfolios with a touch
of gold -- a trend that could push this traditional safe-haven asset over
$400 an ounce before long, industry insiders said.
-
- John H. Mesrobian, president of Virginia-based Constantinople
Advisors, sees a few different price movement scenarios developing on the
gold market.
-
- "A close above $380 will point to a quick move to
$400-plus. Or gold will consolidate first before moving higher. In both
cases $400 is going to be breached -- and soon," he said.
-
- Spot gold was quoted at $377.50 a troy ounce Tuesday
in Asia, up from $375.25/oz late Monday in New York.
-
- Mesrobian, whose firm advises investors on currencies,
bonds, and commodities, said gold is being driven by improving fundamentals
and moves on the currency markets, particularly the slumping U.S. dollar.
-
- "The dollar is toast," he said, predicting
a further slide in 2004.
-
- Michael Kosares, the president of Denver-based bullion
brokerage Centennial Precious Metals, has seen investors hedging their
portfolios against potential losses in stocks and bonds, as well as against
a further deterioration in the U.S. economy.
-
- "Gold investor concerns these days are more centered
around some of the negative fallout from the war on terrorism such as rising
deficits, bond market problems and deteriorating relations with key trading
partners," said Kosares.
-
- Kosares agrees that gold stands to benefit from a further
slide in the value of the greenback, especially if the dollar printing
presses keep rolling to finance the war on terror, which now carries a
$87 billion price tag.
-
- Kosares said most portfolio planners are adopting long-term
strategies that account for any fallout from the efforts to rebuild Iraq,
as well as the possibility of further terrorist acts at any time.
-
- So is there anything else investors should be adding
to their portfolios other than gold?
-
- Mesrobian believes the euro, Swiss Franc, and Canadian
dollar are all headed higher, and says copper deserves a second look.
-
- He also said shares in many junior mining companies offer
nice profit potential.
-
- Conversely, he warns against too much exposure to the
U.S. dollar and stock markets.
-
- "The bottom line is that the U.S. dollar and markets
will see bottoms in 2004 and it is going to be very nasty," he said.
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