Gold has risen from an average price of $271 an ounce in 2001 to an average of $673 last year. While I am writing this now, gold is trending around $690!
Some reckons that gold could post a similarly strong performance in the years to come, rising to more than $1,500 an ounce in the next few years - which would still be no higher than its previous 1980 peak (adjusted for inflation) of around $850 an ounce.
Independent metals research group GFMS reckons we could see an average of $725 in the second half of this year, and $850 next. One thing, Central banks are becoming less keen to sell as the price ticks ever higher, while many nations with massive paper currency reserves, reportedly including China and Russia, are trying to increase their gold reserves.
There are various reasons why the upbeat on gold price - the fragile dollar and ongoing geopolitical tensions are just two key reasons. But one main point is that investment demand, at $14bn, is still tiny in relative terms.
There is huge upside potential should big money decide to move into gold for any reason. Even without any particular trigger, there are long-term investors such as pension funds raising their stake in commodities generally, giving gold a rise up with all the others.
I reckon everyone should hold about 10% of their portfolio in gold, more if you are risk taker. Believe me, there are good reasons for having at least some exposure to the yellow metal in your portfolio.
Even Alan Greenspan - the interest-rate maestro, is a passionate believer in the wealth-protecting powers of gold. The Sunday Times quotes Greenspan‘s reaction to the UK‘s decision to sell gold. In May 1999, he said: “Gold still represents the ultimate form of payment in the world… Germany in 1944 could buy materials during the war only with gold. Fiat money in extremis is accepted by nobody. Gold is always accepted.”
Last week, despite the slowing US economy, core inflation in the US is running at around 2.7%, compared to the Fed’s ‘comfort zone’ of around 2%.
That will make it far harder for investors to rely on a ‘Bernanke put’ just as they relied on the ‘Greenspan put’ to bail them out when hard times loomed. And that’s just another good reason to keep holding onto gold.
Good luck, and Gold luck!
Some reckons that gold could post a similarly strong performance in the years to come, rising to more than $1,500 an ounce in the next few years - which would still be no higher than its previous 1980 peak (adjusted for inflation) of around $850 an ounce.
Independent metals research group GFMS reckons we could see an average of $725 in the second half of this year, and $850 next. One thing, Central banks are becoming less keen to sell as the price ticks ever higher, while many nations with massive paper currency reserves, reportedly including China and Russia, are trying to increase their gold reserves.
There are various reasons why the upbeat on gold price - the fragile dollar and ongoing geopolitical tensions are just two key reasons. But one main point is that investment demand, at $14bn, is still tiny in relative terms.
There is huge upside potential should big money decide to move into gold for any reason. Even without any particular trigger, there are long-term investors such as pension funds raising their stake in commodities generally, giving gold a rise up with all the others.
I reckon everyone should hold about 10% of their portfolio in gold, more if you are risk taker. Believe me, there are good reasons for having at least some exposure to the yellow metal in your portfolio.
Even Alan Greenspan - the interest-rate maestro, is a passionate believer in the wealth-protecting powers of gold. The Sunday Times quotes Greenspan‘s reaction to the UK‘s decision to sell gold. In May 1999, he said: “Gold still represents the ultimate form of payment in the world… Germany in 1944 could buy materials during the war only with gold. Fiat money in extremis is accepted by nobody. Gold is always accepted.”
Last week, despite the slowing US economy, core inflation in the US is running at around 2.7%, compared to the Fed’s ‘comfort zone’ of around 2%.
That will make it far harder for investors to rely on a ‘Bernanke put’ just as they relied on the ‘Greenspan put’ to bail them out when hard times loomed. And that’s just another good reason to keep holding onto gold.
Good luck, and Gold luck!
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