The great Gold Rush
Like any other bubble, Gold is now being touted as the only hedge against inflation and where to put 10% of your money. Prices are at an all-time high -- much more than the metal is actually worth. Brokers are advertising heavily when the smart way to buy is through a spot-metals dealer like
Kitco (and the better investment is in a bag of Junk Silver coins from pre-1965, you can make change from a pile of quarters -- how do you buy a loaf of bread and make change from a bar of gold).
From John F. Wasik writing at
Reuters:
Coming soon: the loud thud of a gold bust
Some time in the future the price of gold will crash and it won�t have a fairy-tale ending for the millions of investors who piled on in recent months.
If I could tell you when gold was going to bust, I�d likely be wrong or bigger than Warren Buffett, so I won�t even try. Just be incredibly cautious now. There are too many signs that gold is frothier than a Starbucks cappuccino.
It�s not that I don�t nod in agreement when gold bugs rant about why their metal holds a special value now. The dollar is in deep trouble as the U.S. sinks deeper into debt. Will Portugal and Spain be the next Ireland on the bailout boulevard? Ben Bernanke may not be able to put a dent in U.S. unemployment or the intractable housing crisis.
And yes, I also know the argument on how gold is nowhere near its inflation-adjusted equivalent of its high in January, 1980. According to the Leuthold Group, gold will have to hit $2,400 an ounce to match the $850 high mark it hit in 1980 in real terms. That doesn�t mean it will, of course.
Yet the back story of the world�s financial insecurity isn�t necessarily about gold being the last or only store of value. It just may be the most popular red herring at the moment.
Much more at the site. That is not to say that you should not keep an ounce or two as a SHTF safeguard but to consider it to be an "investment" along with the rest of your portfolio is pure marketing and not rational investing.
Posted by DaveH at December 4, 2010 10:08 PM