Three commodities are foundational to human life: food, energy, and water. And they are closely inte...
Don’t Sell Your Gold
04/24/2012 10:15 am EST
Big developed-country debts and strong demand from emerging markets argue for new highs above $3,000 an ounce, says Mary Anne Aden, editor and publisher of The Aden Forecast.
Mary Anne, gold has had quite a ride in the last few years.
So do you think it still has room to grow?
Well, I do, yes. And it sounds…well; it’s funny because some people either believe it or they don’t. Some people think it’s way too expensive already, and others are just kind of unaware of it, so it’s an interesting investment per se.
But it has gone up consistently every year for the past 11 years, and it’s gone up 660% during that time. And so there are few investments that you can compare that to.
Stocks, for example, have kind of gone sideways during that time. Bonds haven’t done this well. Nothing has done as well as gold. So then that leads the other camp to think, well, it’s too late now. It’s in a bubble.
But really, it looks like it’s far from a bubble. It doesn’t have any kind of symptoms of being in a bubble where everybody is talking about it.
Say, if you’ll remember, the tech bubble. That’s all you heard anywhere. I mean, everybody was quitting their jobs to day trade. And even if they didn’t go that extreme, everybody was talking about it.
You don’t see that kind of an environment at all with gold. In fact, it’s still a bit of disbelief.
What do you think the fundamentals are that will keep driving the growth?
There are two very important ones. There are a lot of them, but if you take the general uncertainty and volatility, all of the things like the political tensions, those are kind of the backdrop…but those are not the two most important reasons.
One is the growing demand by central banks and the emerging countries. China, India, countries like that, that are just very, very much into gold. They’re buying. They’re encouraging their citizens to buy.
The Indians don’t need any encouragement. That’s a tradition of gold in their culture. But the Chinese for years have been telling their citizens to buy gold. They have ATMs where you can buy gold.
Yes. That’s what I’ve heard. I haven’t seen them, but anyway, it’s just very easy to buy there. And it’s a wanted commodity. So that’s one factor, and that’s in a lot of so-called emerging nations.
The other factor is the monetary situation. The massive debt built up. The fact that so many countries are having financial problems in the developed world. That’s the other main reason.
Just sort of a flight to safety, still.
Yes. So that keeps upward pressure on the gold price.
Lastly, do you have a forecast for how high you think it can go? You know, investors all want to know that.
That’s easy. That’s always dangerous. But really, $2,500 would be like normal. That would be equivalent to where it got to in 1980, if you adjusted for inflation. So that really wouldn’t even be hitting a new high.
Wow. That’s a lot of room to grow.
No. Well, it’s at about $1,700 or so now. It’s a little over. But that’s decent. That’s a decent move.
But the thing is that the financial situation is so much more intense now than it was in the 1970s. The debt is so much bigger. Everything is bigger, and more countries are involved. Just Europe alone, with what’s happening there.
You take all of this and you realize that the potential is higher, which would push you up into the $3,000 area. And that’s really, I mean, it’s hard to say, because we’ve kind of been taking it one step at a time. So for now, it looks like, you know, once it gets above its latest high, it could keep on running.
Related Articles on COMMODITIES
Gold is a central theme of our portfolio and there are plenty of quality precious metals stocks in o...
Unlike previous market downturns, say 2008 for example, the economy remains strong and all preferred...
I’ve been in this business for more than two decades. During that time, I’ve been incred...