NEW YORK (TheStreet) -- Gold should reach $1,450 a troy ounce this year, according to a recent poll of analysts, bankers and producers attending the London Bullion Market Association annual conference.
If gold rises to that level, it will boost the
SPDR Gold Shares ETF
iShares COMEX Gold Trust
PowerShares DB Gold Fund
ProShares Ultra Gold
One driver behind gold's expected increase is its use as a monetary asset by numerous central banks. Russia, China, India and the Philippines traditionally have been known to be net sellers of the precious metal. But they have recently increased their gold holdings to shore up their balance sheets and protect against the potential of a falling dollar. As a result, these nations are now net purchasers of gold, which is further bolstering demand.
A second driver supporting gold is the continuing fear of a double-dip recession in the U.S. In fact, the Conference Board recently reported that its index of consumer confidence fell to 48.5 in September from a revised 53.2 in August, primarily driven by concerns about the weak job market and the possibility that it will fail to significantly improve.
Traditionally, a declining trend in consumer confidence indicates weaknesses in consumer buying patterns, which could be detrimental to overall U.S. economic growth.
Furthermore, expectations of further monetary easing by the
to stimulate the U.S. economy are providing positive support to the precious metal. The Fed continues to keep interest rates at near-record lows, and is likely to continue to do so for the remainder of the year. It could potentially further boost money supply. These policies are viewed as likely to lead to inflation and a weaker U.S. dollar, thus increasing gold's safe-haven appeal.
Lastly, gold appears to be trading much lower than its inflation-adjusted 1980 prices, indicating that there is plenty of upside potential in the metal.
In conclusion, the overall outlook on gold remains bullish. As noted earlier, some easily accessible ways to invest in gold include:
SPDR Gold Shares ETF, which is the most commonly traded gold ETF.
iShares COMEX Gold Trust, which is backed by physical gold bullion.
PowerShares DB Gold Fund, which holds futures contracts in gold.
ProShares Ultra Gold, which is a leveraged security that seeks to replicate twice the performance of gold bullion
--Written by Kevin Grewal in Houston.
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At the time of publication, Grewal held shares of the SPDR Gold Shares ETF.
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Kevin Grewal is the founder, editor and publisher of
ETF Tutor and serves as the editor at
www.SmartStops.net , where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Prior to this, Grewal was a quantitative analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.