What about gold trend?

Question

What about gold trend?

Answer 1

The trend is good because . . . .

        Gold counter the inflation.

        Gold always moves up when stock & commodity goes down.

        1$ investment in gold during 18th century is less than 32$ now, but 1$ investment in stock during 18th century worth millions.

         During 1970, gold was less than 25$ and it increased to 200$ in 1975, then had a correction for almost 50% in 1976 - 77 and rose again to 800$ in 1980's.

BUT . . . . . . .

        Gold was only 300$ in 2000 and it reached almost 1000$ in 2008.

        No investment reaches sky with out some painful corrections.

So in 2008 - 2009, gold can drop down to 600$ to 700$ level before the next bull run.

[e-mail]

Answer 2

Gold is traditionally used as a way to counter inflation. And historically it moves in opposite direction to Stock market indices. The widely regaurded reason for this counter-cyclical relationship is that the total Wealth of an investor is constant at a point of time and its allocation has to be redistributed in various asset classes. When an investor doesn't see good returns in the equity class (the best return yielding asset class), then the equities come under selling pressure and the stock indices fall. Now, a part of these funds are parked in other asset classes such as bonds and gold. Based on this, we may be led to think that Gold may have a very good future in the shor-term as the Stok indices are clearly not performing well. But, a re-look at the gold prices from 2003 onwards shows that the price of Gold / Gm was hovering around Rs 550 in 2003. And today it is at Rs 1150 odd. In 4 years, the price has actually doubled (or it yielded an average return of 18% over 5 years). The Sensex yielded a return of 261% over the same period. And interestingly, the period from 2003-2007 had a very low inflation. So, in a period of low inflation the Sensex has delivered its life time best results and the Gold has also delivered historically high returns. And this is the case with all asset classes such as Real Estate, commodities etc. In effect, we have seen a tremendous bull run fuelled by increasing prosperity of indian consumer. As his prosperity increased, his demand for various assets increased. Assets performed well and now a situation has come where in the consumer feels that things are very costly and he can't afford them. So, I foresee a period of strong inflation in the short-term and then a deflationary phae where in every asset class actualyl comes down to much lower levels.

Answer 3

I agree with Steve B.

Short term, prices have fallen.

Longer term, will require research!

Answer 4

What about it ?

Plainly the overall trend for the next few years can be expected to be 'up'  ..

About 30 tons of new gold got dropped into the market place last month and that plus investors profit taking pushed the price down from about $1,000 to about $800 ... however the price is floating up again .. so some people might see that as a buying opportunity..