Gold may climb to $1,650 an ounce by early 2011 on demand for an alternative investment to the dollar and other currencies, said James Sinclair, a commodity investor and the head of Tanzanian Royalty Exploration Corp. “The carry trade has dropped the dollar as a currency of choice,” Sinclair, the chief executive officer of Surrey, British Columbia-based Tanzanian Royalty, said today in an interview on Bloomberg Radio. “Gold is competition to currencies.” Wednesday, gold futures in New York climbed to $1,049.70, reaching a record for a second straight day. The spot price is heading for the ninth annual gain amid rising demand for a hedge against inflation and a slumping dollar. Some investors buy the metal on concern that ballooning U.S. debt will continue to drive down the dollar. There is an “extreme amount of liquidity that has been injected in the financial system, not just in the U.S., but around the globe,” Sinclair said. The dollar has been undermined by major trading partners suggesting an alternative to the greenback and by China’s attempts to “internationalize” its currency by issuing more debt, Sinclair said.
