Experts Weigh In: Where Gold ETFs Are Going In 2010

December 17th at 11:00am by Tom Lydon

Gold ETFsGold and gold exchange traded funds (ETFs) shattered records this year. With two weeks to go, investors are now thinking about what 2010 has in store for the popular precious metal.

Gold’s amazing advance this year could be marked by high volatility and corrections along the way, but does the metal have the strength to remain one of the hottest investments into the new year? [Why the dollar bulls are ready to charge.]

Paul Farrow for Telegraph talked to industry experts, and here is what they have to say:

  • Ted Scott/ Director, UK Strategy. The only way that gold can underperform is if the United States and other developed economies recover in a conventional way by cutting spending and raising taxes while at the same time embarking on a period of stable economic growth.
  • Jim Rogers/ Commodity expert. I have learned the hard way not to sell something short in a cyclical bull market. I’m not buying anything now, but if I am buying, I’ll be buying agriculture, silver, natural gas, palladium and all things that are very depressed.
  • ODL Markets/London Retail Trading Experts. The recent surge in gold prices has come as people move out of dollar holdings; but a resurgent dollar can have the opposite effect. We are now back down to the lowest levels seen in a few weeks but still remain just ahead of support at $1100.
  • Macquarie Investment Bank. Their 2010 projections call for a $1,150 and $1,100 per ounce average gold price in 2010 and 2011, respectively. With respect to silver, Macquarie has raised their forecast to $17.69 in 2010 and $16.92 in 2011.
  • Ian Henderson/ JP Morgan. I think investors should focus on what is happening to currency as that is the prime mover. The general sentiment is in favor of diversification but I don’t think that the metal will move by enormous amounts.
  • Suki Cooper/ Barclays Capital. In terms of technical trends the prospects for gold look strong but the underlying fundamentals look weak. Commodities Research has a quarterly average for Q1 2010 is $1050, but our technical analysts have a target of $1120.
  • Evy Hambro/ BlackRock. The recent new all-time high in the price of gold seems to have been caused by the convergence of a number of important drivers. Falling mine supply, a weaker U.S. dollar and the potential for a reduction in net central bank sales will all support prices over the medium term. [Are gold bugs creating a bubble?]

The surge in gold is being driven by five major factors: inflation concerns, liquidity chasing asset prices, carry trade and diversification of U.S. dollar, supply cannot keep up with demand and sovereign risk is getting higher, says The Pragmatic Capitalist. [Is gold's hiatus temporary?]

For more stories about gold, visit our gold category.

This year not only marked a record run for gold prices, but it also marked the introduction of more ways to play the metal. Among the options investors have now include:

  • iShares COMEX Gold Trust (NYSEArca: IAU)
  • UBS E-TRACS Bloomberg CMCI Gold Total Return ETN (NYSEArca: UBG)
  • PowerShares Global Gold & Precious Metals (NYSEArca: PSAU)
  • SPDR Gold Trust (NYSEArca: GLD)
  • PowerShares DB Gold Fund (NYSEArca: DGL)
  • Market Vectors Gold Miners (NYSEArca: GDX)
  • Market Vectors Junior Gold Miners (NYSEArca: GDXJ)
  • PowerShares DB Gold Double Short (NYSEArca: DZZ)
  • PowerShares DB Gold Double Long (NYSEArca: DGP)
  • PowerShares DB Gold Short (NYSEArca: DGZ)
  • ProShares Ultra Gold (NYSEArca: UGL)

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.