Gold is doing well at the moment, and more increases are predicted.
Gold is doing well at the moment, and more increases are predicted.
KEY POINTS:
Gold prices have doubled in five years and with a weakening US dollar, global inflation and rising demand, industry players predict the rise will continue.
The price is up to US$679 ($920) an ounce, and more than double the value in 2002.
Michael O'Kane, bullion trader at NewZealand Mint, said the strong New Zealand dollar made this a good time to invest.
"With the high dollar, geopolitical instability and the demand for gold and the reduction in the world supply there is no better time to invest," O'Kane said.
The high exchange rate was flattening the increases in the price of gold in New Zealand dollar terms, he said.
So as the value rose daily in US dollar terms it was flat or decreasing in New Zealand dollars.
At an exchange rate of US73.7c, one ounce of gold has a value of $920 but should the rate fall to US65c the same amount of gold would have been worth $1045.
"And that's a fairly huge hike."
A number of factors were helping push the price of gold higher, including a weakening US dollar, rising oil prices, high global inflation rates and a general trend internationally towards investing in precious metals. "It's like a perfect hedge," O'Kane said. "If everything else turns to custard the price of gold's going up."
Norman Stacey, research director at Diversified Investment Strategies, said gold was an attractive asset for long-term investors.
"In the longer term our expectation is that gold will see US$1000 or NZ$2000," Stacey said.
A medium risk portfolio might include about an 8 per cent investment in gold and 7 per cent made up from shares in gold-producing companies, he said.
"It's the anti-dollar," Stacey said.
"So if you don't like the US dollar gold is the logical place to hide."
Rising uncertainty particularly over geopolitical issues was also helping strengthen the price of gold.
"Every time there's another sabre-rattling in Iran or some such gold flinches up."
Gold was the top-performing asset class in the US during the last five years, Stacey said.
There was also continued demand from rising affluence in emerging markets such as China, he added, leading to higher pricdes.
