With Gold prices trading around a spot price of $1120 per ounce, up about $60 in the last month. Many naysayers have been saying that the demand for Gold cannot be sustained. Frank Holmes, CEO and CIO of US Global Investors, a long time gold bull sees no reason for the bull trend to end.

In a recent interview with Tech Ticker Frank Holmes says, “There are many compelling factors both from a supply side and then from the demand side that looks like gold will trade higher.”

Holmes, however, does have a few words of caution for those looking to get rich on gold. He recommends a 10% allocation in gold that would be divided evenly between bullion and stocks.

Holmes’ reasons to bullish on gold:

– Massive federal deficits and low interest rates in the United States and elsewhere will raise inflation risks and keep downward pressure on currencies.

– Rising incomes in Asia, where affinity for gold runs deep, will have a sizable positive impact on demand; China is now the largest producer of gold in the world but that won’t drive down prices because the government is “using it as a reserve currency for themselves.” However, bulls should note China’s chief for exchange official has said that China will limit their purchases.

– Peak Gold? Gold production from mines is not adequate to meet demand. Production is dropping around the world. Holmes notes worldwide production fell 10% in 2008 and is especially dramatic in South Africa – the world’s largest producer.

If you would like to know more about allocating a portion of your portfolio to Gold, contact one of our experience Gold experts for more information.

Tags: Gold Investment Advice, Gold Investment Options, Gold Investment Recommendations

This entry was posted on Thursday, March 18th, 2010 at 10:03 am and is filed under Gold Investments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.