Image via Wikipedia
So, what’s going on with the price of gold again? It is $1830 as I write this… and depending on who you talk to, gold is either in a huge bubble (which the same people have been saying since it broke $1000) or it is drastically underpriced (which another group of people have been saying since the last bubble broke back in the early 80s).
Who’s right? I don’t know, but there is some merit to the idea that gold is simply tracking the growth in debt since the 70s and 80s. In the long run it really doesn’t make sense for gold to drastically outperform a market index (which it hasn’t if you’ve been tracking since the end of Bretton Woods), but outperform other currencies? Sure, why not. I’m still comfortable with a 10% allocation in precious metals, since I”m actually a little under at the moment.
What do you think? Here are some of my previous posts on gold:
- Gold as an Investment: Performance over Time
- How to Profit in Gold
- The Great Credit Contraction And How To Use Gold As Money
- How Gold Can Provide Stratospheric Returns to Your Investment Portfolio… if You Can Avoid the Bubbles!
- Gold, Revisited: Is $1500 Near?
Posts of the week
- How Canadians Can Avoid Getting Ripped off by Paypal Foreign Exchange Fees
- How Much Should I Save, and Why?
- My Top 7 Posts
- On the Yakezie: Don’t Let Time Pass You By
Now on to the weekend reading!
Weekend Reading
7 links projects
- My 7 Links Project (Beating the Index)
- My Own Advisor – 7 Links Project (My Own Advisor)
- My Top 7 Posts (DIY Investor)
- The 7 Links Project (101 Centavos)
Investing
- Predicting Which Way the Markets are Headed – Part 1 (Invest in the Markets)
Miscellaneous
- Dutch PlantLab Revolutionizes Farming: No Sunlight, No Windows, Less Water, Better Food (Singularity Hub)
- F is for Fake … Why we fall for scams? (Wealth Informatics)
- Generation Y in the Workplace (youngandthrifty.ca)
- Thoughts For Thursday: Borrowing Wifi, Working In An Office, and A Strange Sighting on the Freeway (Everyday Tips and Thoughts)
- Uncle’s Story Part 2: Digging out of Poverty (First Gen American)
Personal Finance
- Are You a Spendster? (Little House)
- How Have I Increased My Net Worth 50% This Year (My Journey to Millions)
- Money Pirates Part 1 (Wealth Artisan)
Carnivals
- Carnival of Financial Planning – Edition #197 – August 12, 2011 (The Skilled Investor)
- YAKEZIE CARNIVAL – THE DOW JONES INDUSTRIAL AVERAGE EDITION (Frugal Confessions)
- Totally Money Carnival #32 – A Flood of Great Articles (Free From Broke)
I thought gold was overpriced at 1400, so I obviously dont know what I am talking about.
Welcome back, and thank you for the link. Have a great weeked.
Thanks for the link…. I’m not buying any more physical gold at the moment, but I might spring for a little more CEF on a correction.
Thanks for the link Kevin,
At this point I doubt anyone knows what’s going on, fear breeds irrationality and can end up trigger the recession everyone is talking about…
Where will gold top out? I don’t know. I prefer to look at ratios and general trends. The DOW:gold ratio should end up bottoming out at a lower ratio than it is currently. I am looking for somewhere in the neighborhood of 1 to 3. That might mean gold at $2000 and DOW at 6,000. I think that is a likely scenario. Also look at the dollar policy. It has been a weak dollar policy for the last decade. As long as that remains, gold will have support.
I invested in a precious metals mutual fund a few months back and it’s doing quite well, thanks to the price of gold!
Thanks for including my link in your round up!
Thanks for the mention, Kevin!
I bought some silver ETF a few months ago, but don’t own any gold 🙂
Thanks for the mention!
No direct ownership in gold for me, although my XIU holds a few companies which is pretty nice 🙂
I’m done with gold. It is definitely in bubble status. It may go higher in the short term, but medium to long term will see it plummet.
Thanks for all of the comments, guys! It’s always interesting to read different opinions. Maybe in hindsight everything is a bubble since we never really enter into a static economy with final prices. Everything moves relative to each other.
It will be interesting to see where things go from here!