Gold May Jump to $2,000 as Dollar Declines, Foxhall Capital Says

June 22 (Bloomberg) -- Gold may surge 29 percent to a record as easing concern over Greece's fiscal crisis spurs the dollar to slide amid higher U.S. debt, said Paul Dietrich, chief executive officer of Foxhall Capital Management Inc.

Gold may reach $2,000 an ounce or higher in the next 12 months, Dietrich, who manages $950 million, said yesterday in an interview in New York. The precious metal touched a record $1,577.40 on May 2 amid record-low U.S. borrowing costs and rising government debt.

Prices declined 1.3 percent last month as investors bought the dollar on increased demand for a haven as Greece's budget woes escalated. Before today, the greenback dropped 13 percent against a six-currency basket in the past year.

"I am shorting politicians, and the way you short politicians in Washington is to buy gold," Dietrich said. "When Europeans stop buying the dollar out of fear, people will come to the underlying reality of the dollar, which is we're printing more and more money. The deficits are just going to continue to grow, and the dollar must go down. I can't think of any reason why gold will not go up."

Yesterday, gold futures for August delivery gained $4.40, or 0.3 percent, to $1,546.60 on the Comex in New York. The metal traded at $1,555.80 at 12:31 p.m. today.

Increased Holdings

Last month, Foxhall increased holdings in raw materials and commodity-related securities to 16 percent from 10 percent. Crude-oil prices will climb to $120 a barrel in the next year from about $95 now as rising car sales in China and India boost demand, he said.

The Thomson Reuters/Jefferies CRB Index of 19 raw materials dropped 5.5 percent in May, the first monthly loss since August. The greenback rose 2.3 percent against the six-currency basket, the first gain in six months.

"The fall in commodity prices last month was a good buying opportunity," said Dietrich, who has been an investor since 1986. "At the moment, the dollar is getting some support as people are worried about Greece."

European leaders will discuss Greece's needs at a two-day summit in Brussels starting tomorrow, and finance chiefs will decide on July 3 whether Greece has met conditions for the next aid payment.

China's annual automobile sales may rise to 30 million vehicles in 2015 from 18 million last year, Xinhua News Agency reported last month, citing Dong Yang, deputy executive director of the China Association of Automobile Manufacturers.

--Editors: Millie Munshi, Steve Stroth

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