Gold is at an all time high, almost 5x the price of 10 years ago.
Why do people invest in gold, it's not like it pays interest nor earns
the investor any income. People buy gold because they are worried about the collapse in the financial system (where those pieces of paper become worthless), or as protection against rampant inflation. I can't see either happening.Australia (or the US) is not going bankrupt, nor will inflation run wild. Maybe there's a shortage of gold, scarcity value much like truffles or rhino's horns. Again, I don't think so. As prices increase, the less efficient producers start mining, supply increases.
How about irrational exurberance? The price of gold has been rising for almost 10 years, hence mums and dads rationalise, gold prices can't fall! Maybe that's the reason.
So is gold overpriced? Is the bubble about to burst? Gold in Aussie dollars is almost $1,300 per oz but when adjusted for inflation, the price is only matching the mid-1980 levels.
But Australia did have rampant inflation then, it does not now. Countries are currently more likely to suffer a recession rather than runaway inflation.
So is gold going up and will it keep going up, I don't think so.
5 comments:
Not a likely good time to buy it, agree with you, probably within 10% of its high.
Inflation worries are legitimate though over the next few years - we are in a depression and eventually the Fed is going to have to print more money to pay for all the things that now are essentially bankrupt and/or in dire need with political clout behind them.
The problem is with all this turmoil and uncertainty, where can one squirrel away one's nuts?
Land... long-term if you can pick the right neighborhood.
I would love to invest in property in US but it appears too difficult for a non-resident.
Hmmm... will do some investigation and maybe subject of the next blog :)
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