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<b>Robby's Article Choice:</b><br>
Analysts: Gold will be strong in 2008<br>
It's used to insulate portfolios and as hedge against inflation
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DOW JONES
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Analysts expect gold investment to be strong in 2008 for many of the same reasons it was robust during latter 2007 - a soft dollar  fears of inflation and flight-to-safety amid credit-market worries.
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Some said that the high price - with spot metal last month hitting $845 an ounce for the first time since 1980 - could curb enthusiasm for consumer purchases such as jewelry. Demand may still be less affected by higher prices than in the past because of rising incomes in emerging economies observers say.
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"Next year should be a very good year on the investment-demand side of things," said Bill O’Neill, a principal with LOGIC Advisors. “There is enough going on in outside areas, with potential pitfalls, that flight-to-quality demand is going to be there for hard assets.”
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In particular  he cited continuing subprime and credit-market problems.
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JPMorgan strategist Michael Jansen said that buying of gold to insulate portfolios from dollar weakness and as a hedge against potential inflation will strengthen investment.
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“Gold historically has been a place to hold value, and that will continue to appeal to investors,” Jansen said.
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Bart Melek, a global-commodity strategist with BMO Capital Markets, said that total gold demand in the second half of 2007 is expected rise around 11 percent, including fabrication, bar holdings and implied net investment. He looks for strength to continue in 2008.
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“I continue to see the U.S. dollar being fairly anemic,” he said. Although it may not weaken materially against major currencies such as the euro or Canadian dollar, the sizable U.S. trade and current-account deficits may remain a drain on the dollar, he said. Since gold tends to move inversely to the greenback, further dollar weakness means potential upward pressure for gold, he said.
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Furthermore, as other currencies rise versus the dollar, central bankers in other countries may try to moderate that activity, Melek said. So while he looks for the Federal Reserve keep easing, other nations also may cut interest rates to keep muscular currencies from hurting their export economy. Already, the Bank of England and Bank of Canada trimmed rates in recent weeks.
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Any worldwide easing of monetary policy could increase inflationary pressures at a time when commodities, such as food and energy, are already high, Melek said.
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“Gold investors will look at that (easing) and like gold because not only will it be a hedge against a (soft) U.S. dollar, but it will be a hedge against inflation,” Melek said.
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Frank Holmes, the chief executive and chief investment officer of U.S. Global Investors, said that the global money supply may grow and support gold as governments try to rescue credit markets hurt by “toxic debt” because of subprime issues. This especially may be the case in the U.S., since 2008 is a presidential-election year.<br>

Investment demand for gold accelerated in the second half of 2007, Jansen said, “making up” for a lackluster first half.