Gold and Precious Metals
The momentum in gold and other precious metals might wane a bit in 2011, as investor appetite for risk assets picks up as the global economy recovers.
"The much stronger performance of other commodity sectors relative to precious metals over recent months, despite what is arguably an even more severe debt situation for sovereign debt risk, reflects a big change in market psychology," notes Kevin Norrish of Barclays. "With economic growth once again surprising on the upside, the re-emergence of sovereign debt concerns has much less of an effect on energy or industrial metals markets than earlier this year."
Still, analysts maintain a positive outlook for gold as the Fed continues its easy money policy and sovereign debt problems in Europe remain in focus.Adrian Day, who runs an asset management company bearing his name, says gold should remain a defensive holding in investors' portfolios. "Currencies are losing purchasing power. People are buying gold because they do not trust paper money. They are buying it as a defensive measure, regardless of price," says Day. Investors are also likely to continue buying gold even as the economy recovers as a hedge against inflation. "If there is a recovery in U.S. and E.U., I don't see how that can happen without being accompanied by inflation. So copper and oil will do well, but so will gold."
Renowned commodity investor Jim Rogers