Gold futures rose to a record $1,500.50 an ounce as U.S. debtconcerns weighed on the dollar, boosting demand for the precious metal as an alternative investment. Silver surged to a 1980 high.
“The U.S. credit rating will undoubtedly be lowered in the next few years,” said Michael Pento, a senior economist at Euro Pacific Capital in New York. “This will mean much higher borrowing costs and a much lower currency. International investors have been using gold and silver as an alternative currency and an alternative to the dollar, and this will only exacerbate and accelerate that process.”
“Silver is like gold on steroids,” said Jon Nadler, an analyst at Kitco Inc. in Montreal.
Euro Pacific’s Pento, who correctly predicted gold’s rally in the past three years, said the metal will reach $1,600 in 2011. The commodity has gained every year since 2001 on increased investment demand for raw materials.
“The bullish trend becomes pronounced as more and more people get out of the dollar to buy hard assets,” said Lim Chae Myung, a Seoul-based trader with Hyundai Futures Co.