Ramble On Ron

Diamonds, Music and other Facets of Life

Gold Spot Prices At 1000, What’s Next?

Posted on | September 21, 2009 | 1 Comment

Gold has been floating around $1000 per ounce lately, reaching as high as $1034 and now dipping a little below $1000.  So the big question is where will it go?  Of course I don’t have a crystal ball and neither does Wall Street.  The weaker the dollar, the stronger gold will get.

Here’s what some of the experts are saying from this Wall Street Journal Article:

Bud Conrad, chief economist at Casey Research and a leading gold bug, says it’s worth far more. Based on long-term analyses of macroeconomic trends such as the money supply, he says, “a lot of ratios… get you into the $4,000 to $5,000 level without any problem.”

Of course the WSJ has no idea just like the rest of us:

And although gold looks bullish in dollars, that specifically reflects the greenback’s weakness gold remains well below last winter’s peaks when priced in pounds, euros, yen, or Swiss francs.

Despite gold’s rise, the market is not, yet signaling any great concern about inflation. On the contrary, when you compare the yields on regular 10-year Treasury bonds and the yields on inflation-protected bonds, the market right now thinks inflation is likely to be about 2% a year for the next decade. That’s well below the levels seen before the 2008 crisis.

In short: Stay tuned. Gold may boom from here, or it may not. At this juncture dry powder may prove a better investment than yellow metal.

What do I think?  I don’t think $4-5000 per ounce is realistic any time soon, but $1200 – $1500 is possible in the next year.  I definitely do not think that gold will go back to $500-600 per ounce as it was not too long ago.

I will say that DIAMONDS are a better investment and will hold strong, especially when this economy comes back.  I also think that platinum will go up to $2000 per ounce in the next year (where it was a year ago) once people start buying cars again.

Who are you gonna listen to – The Wall Street Journal or Ramble On Ron?