In 2001 when gold price was $280 and it was a trend those days to buy 4 or 5 of these gold biscuits to take them to India. I now regret that I missed almost 4 times (400%) of returns. Currently gold price is hovering around $930 (per ounce price) and is still below the inflation adjusted (the money that was worth in 1980 say $800 if adjusted to inflation would be somewhere equivalent NOW to $2000) all time 1980 peak price of gold which was $2000 plus.
If we irrationally go by this statistic then there is chance for gold price to cross $1000 and $2000 very soon. Of course that depends lot on other factors like deteriorating economic conditions. When economic conditions are bad people tend to lose confidence on currency and flock to heavenly gold investments. If you see historic prices gold did drop from its peak of 1980 $847 to $250 in 1999. The downside of investing in gold is risk of drastic price drop.Gold bugs (referred to people who is bullish on Gold and they advocate heavily to spur up the demand of gold) don’t agree with the cons of gold investing citing rising oil prices and the unwillingness of China to significantly de-couple the value of its own currency from the US dollar.
Why I think price of gold will cross $1000 in February ? Valentines day . Demand for gold is historically high in the month of Feb as either increase in valentines gold gifts or proposals of marriage with rings on valentines day.For years the jewelry industry has done their best to provide shoppers with an all in one opportunity to select gifts for the special people in their life.It seems as though regardless of the individual or their personality there is something for them in the vast network of jewelry shops.
Buying the same gifts year after year can get monotonous, however, and jewelry stores have to constantly fight to stay on top of the market. They are consistently coming up with popular new products created out of gold to attract in the needy consumer.
To sum up, I predict gold prices will hit $1000 unless there is total economic turn over from recession to expansion.
Gold Stool (Image courtesy – Bornrich.org)