Stock Up on Gold—Prices Could Reach $5,000: Market Pro

Gold prices hit record highs above $1,200 an ounce, with funds lengthening positions due to expectations of more dollar weakness and more central bank buying. How should investors be positioned? Lou Grasso, gold trader at Millennium Futures, and Peter Schiff, president of Euro Pacific Capital, shared their outlooks.

“[Gold at] $1,200 is not expensive, considering all the money that we’ve created and all the money we’re going to create—not only the Federal Reserve, but central banks around the world,” Schiff told CNBC.

Schiff said inflation pressures will drive gold prices up to $5,000 an ounce and investors should stock up right now.

“It might not hit $5,000 this year or next year, but it will eventually—maybe before Barack Obama leaves the White House,” he said.

“I don’t think there’s enough gold to meet the new demand that’s coming–because gold is money, it’s not just some other commodity."

"And when central banks makes currencies unattractive with zero interest rates and all this printing, people are going to go back to traditional money—they’re going to save in gold and transact in gold and the demand is going to explode,” he said.

Grasso's Counterpoint:

Grasso said although gold will still rise through the end of 2009, prices will likely pull back later next year.

“What we’re seeing is that gold has been having this big move up in the last year and a half in anticipation of people talking about inflation down the road…But we haven’t seen inflation creep in yet,” he said.

“When inflation starts to show its head, you can get that initial super-spike possibly to $1,500 to $1,800, but from then you’ll see it backing off.”

CNBC Data Pages:

CNBC Slideshows:

More Market Opinion:


Top Gold Miners:

Barrick Gold

AngloGold Ashanti

Newmont Mining

Gold Fields


No immediate information was available for Grasso or Schiff.