GBX sees more gold upside

Globlex Holding Management Plc (GBX) expects gold prices to continue rising to reach 19,800 per baht weight or US$1,250 per ounce by the end of the year on weakening dollar, according to managing director Phakphum Phakwisan.

Mr Phakphum said world gold prices had shot up by more than 30% since the beginning of this year from the 2008 year-end closing of $878 an ounce.

The major reason behind the spike has been the decline of the downward trend of the dollar, leading investors tend to see gold as a safe place to park their money at a time when stock markets are falling or volatile.

Data over the last 10 years show that gold prices between November and January rose by about 3% a month as it is the high season for jewellery demand.The rising prices indicate that the market is based on profit speculation regardless of good or bad news. The relationship between factors that influence gold prices has also become different from what it was in the past, Mr Phakphum said.

For example, world gold prices today tend to move in line with the US stock market; in the past they had tended to move in opposite directions.

However, investment in gold currently is mainly for speculation, accounting for 20-30% of a portfolio. Long-term investment should await a fundamental gold market adjustment, which Mr Phakphum forecasts will occur around the middle of next year.

Shares of GBX closed on Friday on the Stock Exchange of Thailand at 1.94 baht, up eight satang, in trade worth 35.52 million baht.