Gold - the untarnished metal. 2006-05-27
The fundamentals for gold have never been better.
The last time we saw gold mania was in 1976 through to 1980. During that bull run, gold prices rose eight fold in just five years. Our Current Gold pick is already showing a huge profit, but if you have'nt bought in already, use the recent dip in prices to buy now. There is still plenty of upside in this commodity.
Nowadays, it only takes about 8 barrels of oil to buy one ounce of gold, versus an historical median of about 14. (In the nineties, it took 15 – 20 barrels of oil to buy one ounce of gold.).
We would like to bet that gold will rebound from its depressed levels against oil and the current price of gold will look like a bargain a few years hence.
Inflation has devalued the American dollar by 84% since 1960.
So what are we, as investors, to do? Buy something of real value, a commodity like gold. Gold and gold stocks slid after the Fed's Ben Bernanke’s statements on the 10th May, but not significantly. This strength in the face of what has historically instigated a significant correction for the precious metalis an extremely bullish sign for the sector.
Historically, gold has performed poorly in April. Yet it has risen over $100 per ounce in the last 5 weeks alone. When historical tendencies and long time deterrents (interest rate hikes) no longer hold a sector back, it is a good indicator that a new trend is developing. And this one could be big.
During that bull run of 1976 to 1980, gold prices rose eight fold in just five years.
Using that historical pattern as a model, gold could hit $700, or even $750 by the end of 2006.
Check out our International Aggressive Portfolio to see which is the best way to gain exposure
to the untarnishing metal.