I’m not sure what to think of gold.
For one, I’m getting deja vu to the big gold boom of the early ’80’s. Then, like now, the economy was under great stress, and people were scared– so they stampeded to gold. At one point it got up to $1000 an ounce IIRC.
In those days, too, just like today, you had shills pushing gold on the mass media. It seems that whenever it spikes up to a high price, that’s when sleek-talking salesmen and saleswomen come on the TV urging you to buy. Hm, you think they bought it in ’05 at $450 an ounce and are looking to sell….?
However, the peak of the ’80’s didn’t last long, and the price quickly dropped back down. I saw a graph on one of the econ blogs recently which showed the big ’80 spike and the rise we’ve had in the last couple of years. Compared to the prices of gold the rest of the time ($300-400 range for years on end) they both looked like short-term spikes of about equal height.
On the other hand, there is the argument that gold is the item of value of choice when dollars, stocks, etc head south. It is the one item you can be sure that people will always want and buy.
You could also say the rise in the price of gold is an illusion which reflects the fact that the dollar has actually fallen in purchasing power.
I’m inclined to agree with drunkle. Gold seems kind of “bubbled” to me– but passions are high these days, and will drive its price higher in the short term (next year or two), IMO.
