Gold like equities and other commodities such as silver goes up and down. Nothing heads in one direction forever without a correction. Gold has had a pretty good run-up to over $1200. It has settled back somewhat to consolidate its gains. The pundits are all over the place on where they see gold going. Their answers are dependent on what business they are in and cannot be counted upon as necessarily the truth. Moreover, there is no clear cut answer, but signs of an upward trend are clearly evident.
Gold comes in many forms, whether gold bullion, gold coins or even gold jewelry. It is not something that was carried around by a vast number of people during the Great Depression and therefore, people were easily coerced by legal means to turn over their gold to the government. Now the times are quite different. A higher percentage of people hold gold and they will not turn over their gold to the government without a fight, should this confiscation occur again.
What is this commotion about gold portend for the future? To understand why gold hasn’t yet peaked, we just need to survey the vast history of gold. Often, gold is held as a hedge (a spreading of risk) against inflation which will surely come. Whether it will rival the hyperinflation of 1923 in Weimar Germany is open to question.
When this inflation comes, it will be devastating if it is extreme in nature. Inflation is taxation because the dollar loses value and the government can use its cheaper dollars for its unwise programs and spending decisions. This is where gold comes in. Gold will never become worthless like the fiat currencies of the world. Since about 1914, the dollar has lost just about all of its value. Gold will be the last line of defense. You will have something of value in your possession as opposed to cash, which might become worthless.
Our inflation has not heated up yet. As inflation moves up, gold always goes up in price. Gold will most assuredly go up much higher in price. The only question is the height it will reach. Estimates range up to $5000 per troy ounce. It has not neared this point yet because inflation, though higher than false government figures, has not soared.
When inflation takes off due to the vast amounts of currency the government is printing, gold will follow. It might be a great idea to buy as much gold as you can now, before the price reaches epic proportions and decreases the amount you can afford to purchase.
Gold has not peaked yet. It might even drop back close to $1000 (a buying opportunity). It will peak when the public figures out that the government inflation figures are false. This time is fast approaching. In addition, there is no sign of the Federal Reserve changing its plans of “monetizing the debt” (another name for printing money). When there is too much money around (like too many Mickey Mantle baseball cards), the dollar loses its value and purchasing power.
It is recommended to increase the amount of gold in your portfolio and keep most of it on hand. There might very well come a day when you will need to trade a piece of your gold for the necessities of life. It has happened before in other countries and could very well be in our future.