Losing Luster

摘要

In times of economic uncertainty gold prices ordinarily take flight; this process has been suspended, at least temporarily, as the recent flashpoint in the credit crisis has been accompanied by a resurgent greenback. Hedge funds and others are being forced to liquidate dollar denominated assets to meet margin requirements, creating a short squeeze on the dollar. That is offsetting the flood of stimulus and bailout dollars, deferring what ordinarily would be inflationary forces. "It makes sense to me that we would go through a period of deflation and then all this liquidity out there will cause an inflation," says John Carter, president of Tradethemarkets.com. He says gold will trend down to $640 per ounce in 2008, before working higher. "Gold in the $600 to $700 range is a buy. Inflation will rear its ugly head in late 2009," pushing gold to $1,250 by midyear, he says. The wild card would be an Eastern European countiy going into default, as Iceland and Hungary have.