By the title you might have already guessed what I'm thinking about. GOLD!!! It's been a good week for gold, closing at over $1000 after peaking at $1054 an ounce. I've read some "serious speculation" about gold pushing past the $1100 mark before the end of October.
This might sound like good news but basically here is what is happening. Investors are flocking to gold as the save haven of investing. The US dollar is losing strength, something we've been watching for a while, but with more concerns arising every week it is becoming less of the world monetary benchmark that it once was. Some Middle East countries are even making noises about moving away from pricing oil in US $.All of this puts downward pressure on the US dollar, and whether or not the recession if done for good (or not) there isn't enough confidence yet in real estate or equities. As gold is one of the more solid investments, it's value tends to rise with the pressure on cash. I'm not trying to convince anyone to invest in gold, but it's not a bad "hold" for a while. Historically, gold has done a crappy job of even keeping up with inflation, and when things are booming there are plenty of better options available.
This chart shows gold's real value - not much gain since the mid 80's.
Gold can sometimes be a reverse thermometer of how an economy is doing. It will be interesting to watch where it goes in the next year, how the dollar fares, and whether the economy really does recover like we are being told.
I remember year ago people speculating that gold would hit $3000 an ounce. Lately it seems like people would have been better off just hiding their money under their mattress, or better yet, just spend it!
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