Will we see gold surpass its all-time record of $850.00 per ounce and soar to $1000? Analysts say that will happen, like John Ing, president of Maison Placements Inc. who stated, “I think we are days away rather than months away.” Charles Oliver, a fund manager at AGF Management Ltd., anticipates that gold may reach the record $850 an ounce by 2008 or early 2009. There is even a possibility, according to Oliver, that gold could reach $1000 earlier than his 2010 projection.
There are several factors that contribute to this rising price of gold such as the continuously struggling U.S. dollar and weak economy, the supply and demand factor, and the price of oil. The U.S. Federal Reserve Board cut its key interest rate to 4.5 per cent last week to combat the worsening economy and subprime mortgage woes which caused gold to rally. Mr. Oliver says that there is a significant decrease in investments in new gold mines resulting in an elevating price based on supply. Another reason for the escalating price is due to the rising price of oil which closed at a record $96.70 a barrel on Tuesday November 6, 2007 in New York. (Adjusted for inflation, the 1980 record gold price would be worth more than $2,000 today).
According to fund manager Benoît Gervais of Mackenzie Financial Corp., gold will hit $1000 within the next 18 months but this isn’t significant in Canadian currency since the cost of producing gold is up as well. Mr. Gervais says using the price of gold is a good “insurance marker” but investing in companies with good franchises will do just as well.
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