Sky's the limit for gold

$2,000 gold. Who'd believe it?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Gold is on track to break through US$2,000 an ounce, and Australian gold miners could be poised to share in the bounty.

Deutsche Bank analysts have forecast gold prices above US$2,000 an ounce for the first half of 2013, driven by economic stimulus measures, low global interest rates and continued buying by central banks.

Deutsche says that China is expected to increase its holding from 1.7% of reserves to the global average of around 10%, and China's not alone. Apart from central banks, billionaires have also been buying, with John Paulson raising his stake in a gold exchange traded fund by 25%, while George Soros has more than doubled his holdings, according to US Securities and Exchange Commission filings. Hedge funds have also doubled their positions according to Bloomberg.

Chinese companies are taking stakes in gold miners around the globe including Australia. Shandong Gold forked out $227 million for a controlling stake in Focus Minerals, an established miner in Western Australia, while Zijin Mining, a Chinese gold producer, paid $230 million for Norton Goldfields last month.

The current stimulus measures in the US are likely to put upward pressure on gold. The US Federal Reserve has announced that it intends to buy US$40 billion of mortgage backed securities each month, until employment is strong enough. That could be 6, 12, 18 months from now or even further out.

Gold stocks have generally underperformed the price of gold, so they could be re-rated. Many have fallen heavily as gold came off its highs of close to US$1800 an ounce in February this year, and fell to below US$1,550 in May. Gold is currently trading around US$1,770 an ounce.

Source: www.kitco.com

If you believe in the forecasts and you're interested in getting some 'golden' exposure, Silver Lake Resources (ASX: SLR), Northern Star Resources (ASX: NST), Troy Resources (ASX: TRY), Red 5 Limited (ASX: RED) or Kingsrose Mining Limited (ASX: KRM), could all be worth a closer look.

If you're in the market for some high yielding ASX shares, look no further than our "Secure Your Future with 3 Rock-Solid Dividend Stocks" report. In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Motley Fool writer/analyst Mike King owns shares in Silver Lake. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »