October 2, 2003
Gold Shining Again as Investment
As the World Gold Council plans to launch funds directly linked to the value of gold on the London and New York stock exchanges, several analysts continue to tout the precious metal as a worthwhile investment.
At SmartMoney.com, columnist Igor Greenwald suggests gold may be a reasonable investment that could become an even better one in the years ahead. WGC's initiative will make "buying gold as easy as buying a stock, free investors from worrying about fund and company management, reduceinvestment costs and perhaps even diminish the gold sector's notorious volatility," he writes.
He says gold's price has increased by half in the past two and a half years, though it has rebounded from a record low, but he still sees strong potential for investors. However, potential pitfalls could open should the Federal Bank increase interest rates, a likelihood at least a year away, he writes.
Still, jewelry demand will likely continue apace, given the expansion of gold's ongoing consumer jewelry marketing here and abroad, he says. In addition, recent government initiatives make it easier for consumers to afford gold in large markets such as Japan and China.
Increased demand might limit any negative effects the higher pricing has on jewelry manufacturers. However, jewelry makers are likely eyeing the prices to lock in deliveries at lower costs given anticipated price increases by many in the investment community.
Echoing similar sentiments is Michael Power, a columnist for Business Day in Johannesburg, South Africa, who sees gold as a stronger long-term investment, considering what he sees as the diminished power of the U.S. dollar worldwide.
Reuters reports gold's recent price upswing is taking a rest today at near $380, down from last week's 7-year high at $394. "Analysts see gold testing $400 an ounce this year, with the dollar on the ropes and financial markets seeking alternative investments amid worries that the summer economic rebound could lose steam by year end if the employment picture does not improve," reports Reuters.
by Michael Thompson