Gold exchange traded funds (ETFs) were pushed to new heights this year as a global currency war and a flood of newly printed money pushed investors to the relative safety of the gold bullion. Will the good times end when the clock strikes midnight on Dec. 31?
Bill O’Neill, a principal at Logic Advisors, stated that “all the factors that have driven gold higher — the uncertainties, commodities as an asset class, gold as the ultimate currency — I don’t see that changing significantly,” reports Claudia Assis for Yahoo! Finance.
Still, gold investors need be on the look out for any signs of swift interest rate hikes since higher interest rates push investors away from non-interest paying gold to investments that would have attract yields.
Gold observers believe that gold prices have another $100 to $400 more to go, and analysts at Goldman Sachs believe that prices will continue its uptrend but it may peak in 2012 as interest rates rise. Still, if the economy fully recovers, the dollar would begin to appreciate and commodities would become less attractive – the dollar and commodities hold a negative correlation since dollar-based commodities would become more expensive to foreign investors. [Gold ETFs: The 200-Day Says It All.]
Nevertheless, “a slow economy, low opportunity costs, negative real yields, wealth preservation, and central bank buying should all offer support,” remarks Tom Pawlicki, an energy and precious metals analyst with MF Global. [Why Precious Metals ETFs Are the Best Way to Go.]