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To: maceng2 who wrote (675)	12/23/2004 2:51:06 PM
From: maceng2	Read Replies (1) \| Respond to of 1417

Gold set to keep its luster as US dollar weakens By Derek Cher, Channel NewsAsia channelnewsasia.com SINGAPORE : Gold prices have been rising lately, touching 16-year highs amid weakness in the US dollar; and the uptrend looks set to continue, analysts say. But apart from the yellow metal itself, what is also drawing investors are professionally managed gold funds. Gold has traditionally done well whenever the US dollar weakens. The yellow metal is often seen as a safe haven, and used to hedge against market volatility and currency weakness. So it is no surprise that demand for gold has surged in recent months. In fact, analysts are bullish about the prospects of gold in the coming year. That is because they do not expect the greenback to recover anytime soon, as the US continues to struggle with a huge current account and budget deficit. Financial advisers say it will be prudent for investors to put between 5 and 10 percent of their investments into gold. Alfred Wong, portfolio manager at UOB Asset Management, said, "Gold is very unique because it's actually negatively co-related to most of the traditional asset class of equities, bonds and currencies. "So in a very ironic or perverse sense, whenever there's market volatility, economic uncertainty, you see many of your assets, equities and bonds and currencies head south. Gold ironically actually appreciates. So it actually helps you to preserve your capital. It actually acts an an insurance for your overall portfolio." Investors who have bought into physical gold in the last three years would have seen their investments grow by 47 percent. Those who put their money in a passive index like the Financial Times Gold Mines Index would have gained 100 percent. But the highest returns by far are in professionally managed gold funds. United Gold and General Fund, for one, has grown by 120 percent in the last three years. But a downside risk is the rising cost of gold production. Analysts say the implication of this is we will see a floor of the gold price being set, which can be as low as US$300 an ounce. The good news is this could mean more stability in gold prices. But for now, market watchers expect the yellow metal to surge to as much a $500 an ounce next year, up some 16 percent from current process. - CNA