According to Frank Holmes, chief executive and chief investment officer of commodities firm U.S. Global Investors, growing economies in especially China and India will drive commodities such as gold to double in five years. In a more recent forecast, Holmes predicts that gold will rally in the second half of 2011.
“[Holmes] believes that economic growth in emerging markets, especially China and India, will boost the countries’ middle class and translate into purchases of cars and homes which will drive oil and commodities demand.
“‘In the next five years, oil can double and I think gold can double because 50 percent of the world’s population is growing their money supply by more than 15 percent a year,’ Holmes said.
“‘That doesn’t mean you are not going to get big corrections, but the odds favor it unless there is a complete slowdown in the world.’
“He expected gold, which hit a record of $1,447.40 an ounce last month, to rally in the second half of the year.
“‘Gold bottoms in the summer and has a big run going on from August to February,’ Holmes said.”