Buying Gold

Has the Price of Gold gone as Far up as it will? Are you Getting Out?

The price of gold, that has had a confident march up for at least a decade now, may finally be up against a bear market; which might actually be a surprising thing to say considering that the price of gold saw an amazing 25% rise over the last year alone. What with the crisis in Japan and the trouble in the Middle East, the price of gold has seen some pretty impressive rates of inflation this year as well. But could the golden run that has taken gold from being a metal that sold for a mere $250 10 years ago to something that goes for $1400 an ounce today actually be over?

Certainly, inflation does remain an issue; but investors who have been really loyal to gold, will probably, this year, liquidate their holdings and look to equities and other investments that have performed far better. Investors in search of dependable and secure investments, have, in the past few years, routinely picked gold over treasuries and other such. Today though, even the most optimistic bulls in gold investing have been warning about how the price of gold has gone far too high already and how the market is probably set for a correction any time now.

Should American investors begin to look away from gold right about now?

Once the problems in the Middle East and Japan correct themselves, experts believe that the price of gold is heading south. In about two years, they believe that gold will be retailing at about $1100 an ounce. That’s a pretty terrible loss of capital for anyone who has his money in the yellow metal. There are other signs that point to how gold will be falling soon. Exchange traded funds that invest in new gold have not been doing that as much of recent. In fact, demand from this quarter has fallen by about 3% this year; demand for gold in the US in general has fallen by about 10%.

If you are still trying to consider an investment in gold and are trying to research how demand is around the world to try to predict which way the price of gold will turn in the near future, demand has traditionally had nothing to do with higher gold prices. Certainly, the market for gold in China and India have been pretty vigorous; but there have been other times in the past when Vigor in demand hasn’t translated to raised prices. Gold is funny that way. But you might tend to go with the opposing view that gold, while it will fall over the next couple of years, won’t slip much as the alarmists seem to think. Some experts seem to believe that it will fall by no more than $100 an ounce. But even so, there simply is no way that an investment in gold could translate into healthy returns at this time.