With all the talk of bubbles, be they inflationary, mortgage based, or perhaps even in Dubai, the seemingly unstoppable ascension of gold has raised a lot of eyebrows, but few nay-sayers. According to this morning's journal gold reached a new record setting high at an intraday trading price of just over $1,200 per troy ounce. The world's largest producer of the precious metal, Barrick Gold corp. was also reported to have accelerated its strategy to remove its hedges against gold, fully exposing it to the market. With big name players like John Paulson betting on gold's rise it would seem safe to follow the herd and capitalize on the skyrocketing values of gold.
The rush to gold as a hedge against inflation and general economic instability seems well founded given the fragile state of the domestic and world economy, but one has to consider how much of the skyrocketing value of gold is built on speculation. With both the market and big name companies like Barrick saying yea gold would seem a safe bet in the short run, but if the golden tide turns there is a substantial opportunity for timely investors to ride this big wave up and down. Anyone with both the stones and the timing to bet against gold, or its over-exposed producers stands to make a fortune. Until then investors might just want to catch this gnarly wave, just watch out for when it crashes.
Joey Kryza, Group 2
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1 comment:
I believe that the bigger the financial crisis gets the higher gold will go.
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