Having been an investment professional since 1979, I?ve experienced the rush of gold prices going from $35/oz to over $800/oz.? My mentors in the business taught me to be cautious when individuals start talking about melting down the family jewelry?
Having said that, the following is from the current issue of Barrons- an interview with Martin Murenbeeld, Chief Economist with DundeeWealth and a 40 plus year observer of the precious metal.? Here is a synopsis of his comments:
1) Gold is an excellent hedge against dollar devaluation.? The printing of new money (QE3) potentially means higher gold prices.
2) Murenbeeld believes gold prices may go higher in the next 12-18 months, with a 40% probability that the price will average $2200/oz next year.
3) He expects a counter downtrend in the price of gold of at least one year in duration before?it continues an upward price cycle for potentially another five years and possibly ten years or more.? He thinks that such a downward price correction is unlikely to occur until 2013.
4) Owning gold bullion instead of gold equities (common shares, mutual funds, or EFTs) performs better in periods of stock market stress when investors avoid equities.? However, he believes gold equities beat gold bullion over the long run. (Disclosure- Murenbeeld helps manage a gold fund.)? All equity gold investors must understand that gold equity funds will exhibit more price volitility than the bullion does.
5) Silver is even more volatile than gold shares or gold bullion.? If gold goes up, silver goes up at a faster pace.? If gold goes down, silver goes down at a faster pace.? He suggests that silver investing should be left to professionals- due to the difficulty of ?average? investors handling the higher level of price volatility.
6) He believes that investing in gold may become less attractive when interest rates rise in relation to inflation- something he sees as unlikely to happen until unemployment rates have fallen to more politically acceptable levels.
In summary, Murenbeeld believes that governments will most likely meet the bulk of their debt obligations by printing money.? This will keep interest in gold at very high levels.? Once confidence in governments to put away?their printing presses returns, gold will become less a part of an investor?s asset mix.
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Source: http://taberasset.net/about-gold-and-silver/
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