Gold chief tips $US1000 an ounce on Asian demand
MIRIAM STEFFENS and CHIA-PECK WONG
The price of gold could top $US1000 an ounce within five years as Asian demand for the precious metal outstrips supply, the flamboyant president of US gold giant Newmont Mining, Pierre Lassonde, said yesterday.
Speaking on Channel 9's Business Sunday program, the renowned gold bull said the gold market was "hot and it is going to get hotter".
"By early next year you are going to see $US525 and down the road even a lot higher than that," he said, adding it could top $US1000 an ounce "in five to seven years".
The spot price of gold touched $US497.02/oz on Friday, its highest price since December 1987, as Japanese investors bought bullion to hedge against inflation and jewellers in Asia and Europe stocked up for the holiday season.
Mr Lassonde's prediction surpasses that of US bank Merrill Lynch in July which tipped gold might rise to $US725 by 2010 because of rising demand from China.
"When any of these markets get momentum behind them, you tend to find some pretty outrageous calls," said Daiwa Securities analyst Mark Pervan. "There's going to be a lot of gold calls made in this environment, it's similar to the oil market about six months ago when people were saying oil may reach $100 a barrel."
Investors typically buy gold as a hedge against accelerating inflation.
"Everybody thinks inflation is going to stay at 2 per cent, I don't believe it," Mr Lassonde said. "There has been way too much money printing in the world for that to happen."
Furthermore, world gold production last year showed the biggest decline in 39 years and would keep falling for the next "couple of years", Mr Lassonde said, while demand in India - the world's biggest gold consumer - rose 47 per cent and demand in China jumped 14 per cent.
Gold has rallied from a 20-year low of $US253.20 an ounce in 1999 partly because 15 central banks in Europe agreed to limit their annual bullion sales to 400 tonnes through to 2004.
The banks, under a second agreement that began last year, increased the annual limit to 500 tonnes.
Mr Pervan said Mr Lassonde's target was "ambitious" given the amount of gold still held by central banks and the attraction of selling at current prices.
Meanwhile, Mr Lassonde said he was undecided if Newmont should make a counter bid for big Canadian producer Placer Dome, which is fighting a hostile $US9 billion ($12.2 billion) bid from Barrick Gold.
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