All That Glitters Is Not ... Botox?

What weighs more, an ounce of gold or an ounce of Botox? Well, kudos to you if you know they both weigh the same, but did you also know that Botox could be weighing on the performance of gold-jewelry makers? That’s right. In fact, Prudential analyst John Tumazos sees the threat so much that he’s lowered

What weighs more, an ounce of gold or an ounce of Botox?

Well, kudos to you if you know they both weigh the same, but did you also know that Botox could be weighing on the performance of gold-jewelry makers?

That’s right. In fact, Prudential analyst John Tumazos sees the threat so much that he’s lowered his supply-demand model to reflect zero, rather than 3 percent, annual growth for gold jewelry demand through 2010, measured in tonnage volume.

“The past five years’ gold increases, technology advances in beauty products (like Botox), technology goods, prescription drugs and other healthcare involve competition for consumer dollars, eroding jewelry penetration,” he said.

Allergan, the company that manufactures Botox, estimates that about 65 percent of Botox sales and 45 percent of breast augmentations are in the U.S., Tumazos said. But he found more than 3 million botox web-search hits in Asia, and more than 3 million cosmetic surgery web-search hits in Asia.

“These included 750,000 botox hits and 1.16 million cosmetic surgery hits in India alone, the largest gold jewelry market,” with nearly 26 percent of world total, he said.

Tumazos noted that the U.S. budget and trade deficits, the expense of the war, and the declining position of the U.S. manufacturing economy in the world bode well for the price of gold, while recent lower oil prices represent a near-term threat for the precious metal.

He estimates gold’s long-term average price at $575 per ounce.

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