Last Updated : 23 November 2009 at 23:00 IST

Gold to hit $1650 next year: Jim Sinclair

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JOHANNESBURG (Commodity Online): Will the Gold price hit $2000 mark in 2010? This is the question many market analysts are asking. According to Jim Sinclair, chairman at Tanzanian Royalty Exploration, the price of yellow metal could reach $1650 per ounce by the end of 2010 and moving into the beginning of 2011.

But, he admits that given recent happenings this could be a bit of a low estimate.

Gold is a contra to the US dollar and recent statements out of the Federal Reserve that interest rates will remain extremely low until 2012 is really a go ahead single for gold to continue to perform as it has until at least 2012.

Speaking to Mineweb Radio, Sinclair explained his reasoning: “If you look at the way US foreign debt is just about touching $3 trillion and our economy is not responding as China has, we have very serious systemic problems that have resulted in high levels of unemployment and I can’t buy on to a new normal economic recovery devoid of hiring people.”

He adds that the US is now beginning to apply fiscal stimulus, which has a habit of sucking inflation out of monetary expansion.

“I do think we are going to see the currency influenced inflation event that is hard for people to understand given the in a difficult conditions in the job market and with the only booming business being Wall Street.”

Given his view of gold’s relationship to the dollar, Sinclair was asked about the dollar’s continued status as the reserve currency.

“We can clearly see the dollar is no longer the universal reserve currency it was back in 2000; currency values come from momentum so you don't need heavy selling of a currency for it to decline you just need less buying. I would think that the dollar will always be around at whatever value the market makes for it and it will always be part of reserves but it won't be the universal reserve currency. You have a super sovereign currency unit, which is really like the dollar index that will be part and parcel of the IMF which I believe is becoming the central bank.”
(Source: Mineweb)