Current price of Gold

 

 

Will the price of gold hit $2,000 an ounce by the end of 2009?

 

The honest answer to that is that I don’t know. Nor, for that matter, does anyone else.

 

The web is awash with speculation on this topic right now. The reasons are understandable. The last 12 months have seen a massive upheaval among the world’s economies. Trillions of dollars have been lost, and trillions more have been printed and passed back into the system.

 

In many ways, the deep recession we find ourselves in right now is the perfect seed bed for a huge increase in the price of gold.

 

Central banks, investors, speculators and individuals all buy gold during times of uncertainty, when their faith in the economy and in fiat currencies takes a blow.

 

But a funny thing has happened.

 

Right now (early May, 2009), the price of gold is pretty much as it was a year ago. How can that be?

 

According to traditional thinking, gold should be at a much higher price than it was a year ago.

 

Millions of jobs have been lost. Foreclosure notices have been pinned to the doors of millions of homes. Companies large and small have closed their doors. Trillions of dollars have been swept away.

 

Imagine locking some gold experts in a room one year ago, keeping them separate from all the news and events of the last 12 months. Then today, give them the full picture of what happened. Finally ask them, “What do you think the price of gold is today?”

 

I bet not one of them would answer, “It’s the same as it was a year ago.”

 

So why isn’t everyone buying gold? Why hasn’t the price doubled, tripled or more?

 

You’ll find plenty of answers if you do a little searching through Google. No end of experts will show you charts, diagrams and statistics that will explain everything. Unfortunately, even while using the same figures, they don’t all arrive at the same conclusion. Far from it.

 

Which brings us to an enduring truth about predicting the future. It can’t be done. Even if you trot out a perfect set of models based on what happened yesterday, last week or fifty years ago, they cannot accurately be applied to what is going to happen next week. Why not? Because the environment that had a hand in creating those models from the past will never be repeated. Each new day creates a new and unique set of variables. It’s never the same.

 

But I do think gold prices are going to increase. Not because I have been studying graphs and charts. Quite the opposite. I have been trying to look down on the situation from a viewpoint at 30,000 feet. I have been trying to see the big picture.

 

And when I look at the last year, and everything that has happened, I cannot believe in the optimism we see on Wall Street right now. I cannot believe that the economy, companies, communities and individuals can sustain so much damage and injury without long-term impact. I cannot believe that everything is now “OK” and that we are on the brink of a recovery. I think we are on the brink of a deepening recession or depression.

 

You can’t injure a system so severely and then expect it to stand up and keep walking as if nothing has happened.

 

Yes, I would buy gold now. Yes, I think it will reach $2,000. Maybe this year, maybe next year. I don’t know when, but I think it will get there.