Jeffrey  Nichols, managing director of American Precious Metals Advisors, expects  the price of gold to continue the historic climb of the past two  years.  Nichols wrote in a note, as senior economic advisor for Rosland  Capital, that gold could hit $2,000 an ounce in the next few years,  climbing to $3,000 an ounce and possibly still higher at the metal's  next cyclical peak. He described his "perennially bullish" view on gold  as a long-term view and regularly cautions clients to expect "big  corrections and volatile markets."

He advised that  gold-price declines, however sharp, were  opportunities for investors to establish or add to their holdings of  physical gold. "Price swings of 5 or 10 percent, up and down, are not  sufficient to dull my positive outlook for the metal's price."

There were a number of factors at play in this long-term assessment  such as the bigger than expected U.S.  federal deficit, an overly  optimistic tax-revenue projection, slower than projected economic  activity, and more spending on the horizon in order to  revive the  economy.

The Federal Reserve would again become the "financier of last resort,  monetizing federal debt and printing money, in the hope that massive  monetary creation will get the economy going," according to his  statement. "This will be compounded by the growing reluctance of foreign  central banks and other investors to buy and hold U.S. Treasury  securities.  Already we see the People's Bank of China, the largest  financer of U.S. federal debt, looking for alternative investments,  either directly or indirectly through a variety of government agencies  and state-controlled corporations."

Europe's sovereign debt crisis remains a problem that will resurface  as voters in the weaker overly-indebted nations reject new  belt-tightening economic policies.  "Notwithstanding the recent stress  tests to determine the solvency and viability of Europe's larger banks,  many will face problems when their sovereign debt holdings are again  deemed of questionable value," he wrote.

"Central banks will become increasingly important buyers of gold as  they seek to diversify and diminish their exposure to the U.S. dollar.   In 2009, central banks, as a group, were net buyers of gold for the  first time in two decades.  After average annual sales of some 400 tons a  year, the official sector last year bought more than 425 tons.  Among  the buyers of the past year and a half include China, India, Russia,  Kazakhstan, Sri Lanka, Mauritius, Venezuela, and probably others that  chose not to report increased gold holdings.  We think some of these  countries will acquire more in the years ahead ... while other central  banks join the list of buyers,"  he wrote.