Gold Going Past $3000/Oz?

Even more interesting, silver was @ $42.

badthad

i agree..

i know there are a lot of what ifs.. I mean a lot.. but like you said, based on global economics, what other countries are doing with gold, what the dollar is doing, I mean the guy who wrote this article is not illiterate... I think he knows a little about what he is talking about...

Thad, what if you bought in 1980 at over $800 and held till now? Less than a total 50% gain over 30 years would not be good at all.

Gold did not get back to 1980 levels until 2007 or so. It has only been a "winner" since 2004.

BadThad,

If you invested $300 and got an 8% rate of return you would have $2200 after 25 years. I haven't done the calculation for the actual 25 years from 1985 until now, but I bet even with the stock market crash you would have made at least 8% annual rate of return. Investing in gold is generally a hedge against a bad economy. It is good to have in your portfolio for that reason, but unless you see a crash coming it is better to have your money in stocks than gold.

Edit: I did a little more research and it looks like for the period of January 1985 to December 2009 the "Compound Annual Growth Rate" for a stock market investment was 10.62%, so that $300 would be worth about $3400 today even with the stock market crash figured in.

Yes the numbers can be twisted any way you like but how about taking out the 1990's "tech bubble" or our current load of 401K money in the markets that will be pulled by baby boomer retirees in the next 10 years?

Currently the equity markets are way overvalued by a 0% Fed Funds rate. Up that rate to 5% and stock valuations fall back 40%. Gold is still being manipulated down while equity markets are manipulated up. If and when the shell game ends, watch the DOW:Gold ratio go to 2:1. Not saying it will happen but it certainly could.

For every smart guy on one side of an issue there's another one on the other side.

This gold debate has been going on for decades. No side is going to change the mind of the other. Once again, look at the bottomline. If we had this discussion 25 years ago (and other people did), today I'd be showing you that chart and you'd have to admit defeat.

The old "stock market return over the same period" is a classic argument. I've heard it a million times. Yea, that's great and I do play the stock market too....I'm a moderator for a stock forum. However, the money one keeps in gold will NEVER be worth zero, a stock can easily be wiped out. Believe me, I've been burned by the market many times. I can definately tell you this..... No fund has produced a 10+% yearly return in the stock market over 25 years unless his name was Madoff.

Anyhow, I hope I'm alive in 25 years so I can bump this thread.

FWIW, here are some basic facts on gold - present, past and potential future.

Currently
South Africa is a WILD card.
It cost the majors around $500 per oz to produce and this cost basis is going up.
Cost basis of new entrants into mining around $800 to $900 ++
Every developed country is printing money not just us here in USA. Ergo this is a futile point as it all zero's out as the currencies will neutralize themselves - NON event and no material impact in the LT.
There is heavy TECHNICAL chart resistance in this area (1150 - 1200). BUT, there is Massive support down below (1050 - 1100) and churning / consolidation has been going on for the last 4 months.

History
Why did gold go up and then collapse down to $300 or so.
Central banks were HEAVY sellers from the 80's into the early 2000's with the former Soviet Union leading the pack doing a massive coordinated dump in the open market (refer to the chart provided by adco and badthad)

Future
Central Banks are diversifying their reserve base and Gold is being added / bought in the open market.
All the Mining CO's have removed their hedges.
Environmental and safety concerns will limit the type of mining in the future.
Gold will crawl up slowly and then only go parabolic AFTER it hits the 2500 to 3000 level. This may take 2 to 3 years.
South Africa is the wild and is being overlooked by the taking heads on TV. Do your own DD as there is way too much politics involved and this is NOT the forum for it (jmo).

Fun Fact
ALL the GOLD ever produced is still sitting around somewhere / non consumable and fill one or 2 Olympic size swimming pools. I forget the number.

Peace

Here's the return for the S&P 500 for the same time period(1985-2010).

January, 1985.....$179.63
April 30, 2010....$1186.69

That's an average annual return of over 7%, without counting the dividend of 2% or more annually.