Monday, July 18, 2005

Merrill Lynch Predicts Gold Price of $725 Due to Chinese Gold Jewellery Consumption

The price of gold may rise to $725 an ounce by 2010 as surging economic growth turns China into the world’s biggest jewellery consumer, said Graham Birch, who manages a Merrill Lynch & Co fund that has grown fivefold since 2000. Birch helps manage $8.5 billion in mining assets for Merrill Lynch in London, including the Gold & General Fund.

“The Chinese are getting richer, and have very high savings rates,” said Birch. “As they earn more money, they will spend more on things like jewellery.” Birch said.

“Chinese jewellery consumption rose more than 11% to 224.1 tons last year, according to London-based research group GFMS. It may increase to as much as 600 tons within five years", Birch says.

“The question is, where is all that gold going to come from?” said Birch.

Source: Merrill Lynch sees gold price at $725

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