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-- Posted Tuesday, 9 March 2010 | | Source: GoldSeek.com

Lost in the headlines over the dollar's resurgence in 2010 is the fact gold is still rising in most worldwide currencies. It is also still faring well in dollar terms. Gold is trading at around $1,120 per ounce, up about $60 in the last month.

Frank Holmes, CEO and CIO of U.S. Global Investors, a long time gold bull sees no reason for this trend to end.

He tells Aaron in the accompanying clip, "there are many compelling factors both from a supply side and then from the demand side that looks like gold will trade higher."

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; Holmes tells Aaron that 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 said this morning they would 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 ell 10% in 2008 and is especially dramatic in South Africa - the world's largest producer.

Holmes, however, does have a few words of caution for those looking to get rich on gold. He only recommends a 10% allocation in gold that would be divided evenly between bullion and stocks. Among his favorite gold stocks is Randgold Resources Limited, a stock he owns and has recommended here in the past for its strong management.

-- Posted Tuesday, 9 March 2010 | Digg This Article | Source: GoldSeek.com

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