Bullish On Bullion
Gold has been on a long-term upswing, tripling in value since 2001 to well over $800 an ounce currently - and flirting with its all-time high of $850 an ounce, set in 1980. The surge has ignited a rally in mining stocks as well, with many of them near yearly highs.
Longer term, gold prices will fall if we enter a global recession, depressing personal incomes and industrial uses of gold, or if the dollar rebounds and inflation doesn't.
If the global boom continues, and if inflation ticks up and the dollar ticks down, the long-term rally could keep going. For now, a test of the $850-an-ounce historic high seems inevitable because consumption of gold has been growing almost twice as fast as its production.
NOTE: Gold reached that $850 peak price in 1980 so it would take a move to $1,700 per ounce to restore it to the same purchasing power.
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Longer term, gold prices will fall if we enter a global recession, depressing personal incomes and industrial uses of gold, or if the dollar rebounds and inflation doesn't.
If the global boom continues, and if inflation ticks up and the dollar ticks down, the long-term rally could keep going. For now, a test of the $850-an-ounce historic high seems inevitable because consumption of gold has been growing almost twice as fast as its production.
NOTE: Gold reached that $850 peak price in 1980 so it would take a move to $1,700 per ounce to restore it to the same purchasing power.
* * * * *
posted by Bob Moser at
4:44 PM
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