Global Investing

Gold offers double-edged shine

April 29, 2009

It was Goldman Sachs who famously predicted oil prices to reach $200 a barrel last year, but there are a school of bullish investors who forecast a substantial rally in gold.

Take Gold and Energy Advisor, which predicts gold will soon reach $2,500 an ounce (from today’s $895) then to $5,000. The Florida-based firm argues that gold is the only asset class that’s not only private (as opposed to state-owned), but also liquid, portable, fungible, divisible, and valuable enough that a small amount can store a massive amount of wealth.

It also argues that of $11.5 trillion stored in offshore accounts and other assets, if one percent were transferred into gold, that would be almost four times the entire annual investment demand for gold.

Perhaps not as bullish, but Investec Asset Management also reckons that gold could perform well in either an inflationary or deflationary environment.

Investec also argues the potential areas of concern for gold investors: an increasing supply of recycled gold and the potential return of the “Goldilocks” scenario, where the economy sustains moderate growth and inflation in a “not too hot, not too cold” environment.

“This Goldilocks economy would completely remove the safe-haven investment case for gold as a form of insurance against inflation or as an alternative currency. Real yields could once again be obtained in cash and bonds, and equities could begin discounting economic growth,” it says.

Comments
2 comments so far | RSS Comments RSS

This article is right on, you can see the real impact of expansionary monetary policy on the value of our currency in the fall in the relative value of the dollar since the US left the gold standard. See the current gold dollar price and real inflation rate at :

http://www.brettonwoodsdollar.com

Cheerio,

N

Posted by Nick Field | Report as abusive
 

yep, I agree with that, but in this kind of Economy, gold is much better safe place that Bank stocks.

Questrade Blog
http://questrade-coupons.blogspot.com/

 

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