Earlier this month I took a look at gold prices, and said we could be looking at a modern day gold rush. Well, consultants over at GFMS Ltd. seem to agree, and are now predicting that $1,000 gold is on the way.I, for one, have no problem agreeing with GFMS, and believe that the only question is how fast will $1,000 gold be upon us. Right now we just seem to have the perfect set of economic conditions present that are needed to keep gold charging ahead.
The main factors that are at play are a weak dollar and high oil prices. Add on top of that the fact that the housing market has sparked widespread fear that a recession is on the horizon, and what you have as a result is a bunch of people looking for somewhere safe to keep their money, and you guessed it ... gold typically equals safety.
Gold is true money, no matter what the fiat U.S. dollar does, gold will always have value. In a market where people are becoming more and more concerned about the future, gold starts to creep back into everyone's mind as a place to store away a little "safe" cash. And lately, it seems like a modern-day gold rush with prices sky rocketing.
Is it too late to get into the rush? As I discussed earlier in the month, no, it is not too late to get in on the action. In fact, we could see a nice opportunity in the weeks to come, as gold could be poised to pull back a bit before making its charge to $1,000 an ounce.
Gold is currently trading up around $888 an ounce. Given just how strong prices have moved lately, it is not outside the boundary of reason to expect to see the market pulling back just a bit in the weeks ahead. It wasn't too long ago that gold had been up at $900, so we have already seen a slight pullback and GFMS has taken this into account and predicted that the first half of 2008 will see gold prices average at around $840 an ounce, and then see prices make their move up towards $1,000 after the middle of the year.
What are your thoughts? Would you be willing to be in gold at these levels? Where do you see the precious metal trading come this summer?
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer
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Reader Comments (Page 1 of 1)
1-20-2008 @ 4:43PM
Craig Moore said...
Yes gold has always been a good investment, however if gold reaches $1000 an ounce you would have to sell it far below value because there would be no good incentive to buy at the top. Why would anyone buy gold at $1000 if there is no further room for investment growth? The banks will not take it since there is no longer any gold or silver standard. Buyers charge commissions to take it from you.
This is why I prefer to buy the Euro. The value of the Euro can go as high as possible against the dollar without hurting my opportunity to exchange it for dollars again. Gold is not a unit of exchange in most parts of the world and so there is no guarentee that you can use it as purchasing power. You pay too much for gold when you buy and you must accept far less than its value when you sell. Remember, the house always wins!