GOLD

Gold May Pass $2,000, but Consumers Warned Against Scams

Susanna Kim

As more business leaders express concern over the possibility of a year-end fiscal cliff, safe haven investments like gold appear more enticing. But experts also warn against jumping into the gold rush.

Raymond Key, head of metals trading at Deutsche Bank, says he expects gold to surpass $2,000 an ounce next year. Peter Schiff, CEO of Euro Pacific Precious Metals, said gold could rise even further.

Schiff said the reason why gold isn’t over $2,000 now is that many people don't have a full grasp of the country's current economic challenges. He’s referring to worries about inflation and the fiscal cliff, a package of tax increases and spending cuts that are expected to take place in January unless Congress agrees on a budget before then.

Many reports show that most taxpayers will have higher tax rates next year, including payroll taxes and taxes for high earners, if the federal government fails to reach an agreement.

Even if the fiscal cliff is avoided, there are other concerns. Schiff fears inflation is devaluing the US dollar because the Fed is preserving near-zero interest rates through mid-2015 in the hope of stimulating the economy, especially the country's struggling labour market.

“You can own dollars and watch your savings evaporate,” he said. “The alternative is to own gold.”

Known as a safe haven investment, bullion is expected to reach its 12th annual gain as investors worry about further economic fallout in the Eurozone and a volatile post-election economy.

Experts warn consumers against gold-related scams; Schiff has published a report about classic gold scams and how to avoid them that is available for free download online.

source: abcnews