| ETF Profit Strategy |
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| $1,000/oz Gold - A Good Time To Buy? |
For the third time in 18 months, gold has broken through the magic $1,000/oz mark. Some goldbugs believe that gold prices will soon pass $1,500/oz on their way to $2,000/oz and more.
This price spike is supposed to be caused by fears of inflation. This is the same fear of inflation that carried gold to $1,028/oz in March of 2008. However, where is inflation? There is no evidence of inflation right now and even if there was, gold has a lousy record of protecting against inflation.
Here are some of the things you should know before buying gold: After reaching $850/oz in January 1980, gold’s price fell over 40% in two months. It didn’t revisit the $850 level again until January 2008, meaning it was flat, while inflation rose 175% over nearly three decades. If gold would have done its job of protecting investors against inflation, it should trade at $2,206/oz today (based on the inflation adjusted 1980 price of gold) not at $1,000.
Nevertheless, after the recent run in prices, one has to wonder whether gold could actually be the next bubble. We’ve seen a tech bubble, real estate bubble and financial bubble burst within the past ten years. Another limited resource commodity everyone expected to rise in value, dropped over 70% last year –oil. Could gold be next?
The October issue of the ETF Profit Strategy Newsletter takes a detailed look at the future of gold. The analysis examines gold from an angle largely forgotten by Wall Street and the media. The outlook is surprising which makes it all the more valuable. |
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