Is Gold Ready To Glitter For Investors?
PAUL KANGAS: Gold prices continued to retreat today, slipping $1.50 in New York to $284 dollars an ounce. Earlier in the week, the precious metal surged to almost $300. But as Suzanne Pratt reports, analysts say the yellow metal probably won't make your portfolio shine.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: It's been a long time since gold has had much luster for investors. Sure, earlier in the week in New York gold prices ran to 15 month highs of nearly $300 an ounce. But experts say the recent rally is pretty much a fake out, based mostly on technical and structural factors. And they warn investors are not buying the precious metal, as they once did, as a hedge against inflation.
BILL O'NEILL, ANALYST, MERRILL LYNCH: It's a different animal. It's not used as a hedge vehicle as much anymore. There are many other ways to more directly hedge off your risk. So, I really think it's a different commodity. It's more of a supply/demand commodity now than it is a monetary commodity.
PRATT: Nevertheless, experts say gold prices will probably hover in a higher trading range in the coming months due to increasingly favorable supply/demand conditions. But they say don't expect much more than $300 an ounce. If that's the case, should investors steer clear of gold stocks? Most experts say the answer is probably yes, at least for now, or until gold prices stage a sustainable rally. Many say the shares have gotten ahead of themselves. The Standard and Poor's Index of Gold Mining Stocks has shimmered, gaining 22 percent this year alone compared to a small loss for the broader market.
JOHN BRIDGES, PRECIOUS METALS ANALYST, J.P. MORGAN: The run up that we've seen over the last of couple of weeks has really been too strong. It's probably been a little bit too much too quickly. But we're very positive on the sector taking a medium term view.
PRATT: Experts say it's hard to know when to take any run up in gold prices seriously. That's because in last few years, there have been several speculative rallies and none has shown any legs. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
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