Gold to top $2,000 per oz says fund manager Tom Winnifrith

Gold is set to continue past its latest record high of $1,579 per oz to hit $1,700 by the end of 2011 and over $2,000 in 2012, says UK manager Tom Winnifrith.

Winnifrith, who manages the t1ps Smaller Companies Gold fund, made the comment as the precious metal rose yet again off the back of investor concerns over major currencies.

“The euro is in meltdown. But the dollar is also weak. The worst jobs data since the 1930s means that QE3 is now on the cards while the budget deadlock highlights just how poor the state of US Government finances is. The days of the dollar being seen as the world’s safe reserve currency are drawing to a close,” he said.

Winnifrith added that he thought inflation would rise as paper currencies are debased further, leaving gold as the only generally accepted store of value. Investors without gold exposure in their portfolio would suffer, he warned. Investors should have at least 10% of their portfolio in gold as an inflation hedge, he added.

Although gold equities have underperformed in 2011, he believes incresing M&A activity and a rising gold price will reverse the trend. Winnifrith said that it is possible to buy gold producer stocks on London’s Alternative Investment Market and Toronto’s TSX for less than 3x cashflow. A re-rating of the sector means that such low prices will not last, he said.

“The writing is on the wall for paper currencies and the value is all too apparent in mid cap gold equities. It is foolish in the extreme to have no exposure to the sector but current valuations make right now both a prudent and an attractive entry point for all investors.”

 

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