When I read this kind of stuff, I ask “How much gold does the author own?”
The author is trying to talk up the price of gold. There has been a lot of talk lately, and the price is now at roughly $1200. Hard to see how they can improve on the fear that we have now. In the US, we obviously don’t have the inflation which would justify the high prices that are prevailing. The only things that might lead to a higher price in my mind are 1) US inflation, and 2) foreign inflation. There is little evidence of US inflation at this point, but the gold market is a world market, and inflation certainly is possible in some of the other countries of the world. Even so, at this point, there is not much evidence of it.
I don’t imagine there is much risk in owning a small portion of your portfolio in gold, but I would certainly not want to bet the farm, as some have done or advised others to do.
I am also suspicious that at some point, it will become apparent that some of the gold suppliers are just as fraudulent as Madoff. It is easy for the criminal element to sell fake gold, as demonstrated by the discovery of gold plated tungsten bars of late. Some of these outlets don’t actually deliver the gold. They claim they are holding it for you, but who knows? Some of them are simply selling you paper that represents gold. Maybe they own gold to back their obligations, maybe they don’t. If not, then how do you know they will make good on their paper obligations? And if you do take delivery, then you have the risk not only of fake gold, but also the storage and theft risks. Another factor not often appreciated is that the fees for selling gold can be substantial—much more than the fees for purchasing it.
Very easy. One or more of the PIIGS countries will go into default. The EU will fragment and the Euro collapse. China will refuse to accept any more dollars in payment for exports. Lots of things to be fearful about.