How high can the price of gold go?
What do you think of when you think of buying gold? Are you intimidated at the thought? Is it confusing to know if you should sell all your gold jewelry or start buying gold coins? We’re living in a very strange time, indeed, with the price of gold escalating to new heights weekly. You can keep track of the current price of gold, and silver, at Kitco.com.
How high will the price of gold go? Expert Chris Slife, President of Howling Coyote Silver Company, had this to say:
I hear more and more people saying that “Gold is getting high and can’t go much higher” or “Gold is in a bubble”. In my opinion, ‘rubbish’!!!
To begin with, we are seeing tons of people coming into the store selling all their gold and silver jewelry. Question: “If gold and silver were a bubble, why aren’t people lined up to BUY gold?” Answer: “Gold is not a bubble but is STILL climbing a steep ‘wall of worry’. When Joe and Jane Sixpack come in and start buying gold because their neighbor told them it was the thing to do, THEN I will start looking at gold as a ‘bubble’.
How high can gold go? Answer: Hypothetically speaking, “To infinity and beyond”, to quote Pixar’s Buzz Lightyear. Who knows where gold will end up in real terms, but in nominal terms, theoretically, gold could go to numbers that feel like infinity.
Take a look at this chart that Chris shared with his customers.
In January of 1919, 170 German Marks were required to purchase one ounce of gold; however, by the time the hyperinflationary episode subsided, it took 87 trillion marks to purchase that same amount of gold. Did gold all of the sudden become more valuable. Of course not. In real terms, gold’s VALUE remained steady; yet, in nominal terms, the price of gold approached the theoretical level of infinity before the German government finally pulled the plug on the defunct currency.
None of America’s financial problems have been solved or realistically addressed. The price of gold can certainly continue to climb as our nation’s leaders dither over political positioning and, incredibly, the Federal Reserve begins to make plans to print even more dollars in a QE3 (Quantitative Easing). As the value of the dollar declines, gold prices rise.
If you’ve thought about buying gold and haven’t known where to start, start small. Literally! You can purchase gold coins in the amount of one-tenth of an ounce. Not only do these smaller purchases make it easier on the budget, but if you ever need to sell them or use them as currency, they’re more practical than one-ounce gold coins.
Visit one or two coin stores in your area and start asking questions. Be aware that the dealer will add a premium (his/her profit) to the spot price of the coin. For more information on buying gold and silver, read my interviews with Chris Slife listed below and download an instructional article written by Chris here. If you want a steady stream of information, be sure to sign up for his emails, and NO, I don’t get a commission for promoting him! I just like his honesty and common sense approach to something that used to intimidate me.
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