When gold breaks above $1,000, then what?

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By Frank Tang and Steve James

NEW YORK (Reuters) - Should the the price of gold burst through the $1,000-per-ounce barrier, which it nearly did on Wednesday, experts predict it could reach higher records and even double this year.

"We could see gold spike this year and hit $1,500," said Jay Taylor, who produces an investor newsletter, Gold & Technology Stocks.

"Gold has a shot at $1,200 or even $1,500 this year and ultimately will go a lot higher," said Peter Schiff, chief executive of Euro Pacific Capital in Darien, Connecticut.

Peter Spina, who runs goldseek.com, a gold investor web site, said of the surge: "It's mostly institutional investors now, but we are seeing more enthusiasm and $1,500-$2,000 gold in the next 12 months is definitely possible."

On Wednesday, gold rose to a record high $995.20 an ounce in the April futures contract. Inflation fears due to sharply higher crude oil prices and a government report showing a rise in labor costs fueled the advance before profit taking cut into values. The contract settled at $988.50, a gain of $22.20 on the day.

It was less than two years ago, in April 2006, that gold bullion nudged above $600 for the first time in a quarter century. It had hit $850 in 1980, which if adjusted for inflation would be approximately $2,000 now.

"Gold is an investment alternative to hedge against the financial stress," said Joseph Foster, portfolio manager of Van Eck International Investors Gold Fund in New York, which has $770 million in assets under management.

"And the credit markets are now creating a tremendous amount of stress across the entire economy. That's the big driver for gold right now," he added. "Obviously, it's a big number. So, it will gain a lot more attention and bring more visibility to gold. Continued...