Aug182011
How high can the price of gold go?
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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.
Chris explains,
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.
The Basics of Precious Metals, Part 1
The Basics of Precious Metals, Part 2
© 2011, thesurvivalmom. All rights reserved.
(18) Readers Comments
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Space-Saving and Effective Sub-Irrigated Planters (SIPS)
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MasterPo
I’ve read guestimstes ranging from $2,000 to $5,000. Some say even before years’ end!
Richard
I just read an article from a gold CEO on CNN saying that he thinks gold will go closer to $10,000/oz in the next 5-10 years. This, due to real or imagined shortages, the top 14 countries with big monetary problems are going to have their “loans” called in during the next 2-1/2 years, and the fact that so many places are buying up gold as fast as they can, leads me to believe that there will be a shortage of gold for jewelry, industrial usage, and coinage. Why are so many places buying gold? They’re not buying because they think they’ll lose money on it, I guarantee you. I’ve split my buying between gold and silver. Most of what I’m reading that says stocks, ETF’s, bank accounts, CD’s… pretty much anything on paper isn’t going to be worth the paper it’s written on if the economy tanks. The best defense is to have things you can put your hands on: Cash, gold, silver. Currency might be worthless, but you’ll still have to have it to buy things. Checks won’t do any good, neither will bankrupt IRA’s or 401″s. Am I a little paranoid about what I read? YEAH. If it happens, I’ll be ready, If it doesn’t happen, I’ll still be ready. It’s like having a first aid kit – better to have it and not need it, than need it and not have it. One last thing: pay off everything you can.
thesurvivalmom
My friend, Chris Slife, who is a coin dealer mentioned the 10K mark for gold, but then he said, “It doesn’t really matter if gold goes to 50K because you won’t be able to cash it in. No precious metals dealer has that kind of cash to pay out if a bunch of customers come in with, say, just 10 ounces of gold each and they want 100K for it! In a way, those huge predicted numbers are meaningless because if you can’t cash it in or exchange it for something of the same value, what good is it?” (or words to that effect) Just some food for thought.
Chris
I would always encourage people to look at the real value of gold and stop trying to guess what gold will be priced in fiat (dollars, euros, et cetera)
Go to http://www.stockcharts.com and do some comparisons. $indu:$gold (Dow to gold) $usd:$gold (Dollar to gold) $wtic:$gold (Oil to gold), et cetera
Right now, gold is rising in both 'real' and 'nominal' terms. In addition, Zerohedge showed a great chart comparing housing to gold (see web address below)….
http://www.zerohedge.com/news/homes-have-never-be…
We all need to get in the habit of valuing gold in terms of real 'purchasing power' and not 'dollar amount'…..
MasterPo
IMO the only thing that can stop gold's stellar rise is a sharp rise in interest rates. Then people are likely to sell gold which, for all it's rise, is still seen as risky and buy bonds and CDs which are perceived (real or not) as being nearly risk-free.
Even under that scenario I don't thik gold will crash however. There's still too much uncertainty and gold is seen as safety during uncertanty.
Sierra Dave
If you have the money , buy Gold. If money is tight, buy Silver.
Two reasons to buy Silver. One, it's selling below it's historical ratio to Gold. One Sixteenth I think, but don't quote me on that. Two, the metal markets are paper trading something like 10 times or more of actually existing Silver. IMHO, it's one of the hugest scams/bubbles going on right now. If people started taking possession of Silver there'd be a run and then crash as not enough exists.
Post a SHTF, trade will be difficult with Gold also. Unless it's a big ticket item.
MasterPo
I disagree somewhat about silver.
Back when gold was around $1200/oz I went to a We Buy Gold kiosk in my local mall to sell a few small pieces just for some pocket cash. I got a decent deal.
But when I asked the guy about silver (it was around $25 at the time) he said it isn't worth him buying it.
So *maybe* for trade but I dunno about exchanging silver for whatever currency is post-SHTF.
Dave, RN
That guy was a fool!
MasterPo
That's a pretty harsh stance.
Most of these companies that buy gold (and silver) are buying for melt value. IOW, they buy intending to melt it to base metal for use in someother way. Or to turn around and sell it to someone who does.
Silver may be up in the spot market but if people like this aren't buying that means the real value isn't nearly as much as you think it is.
Ann
I didn't realize this until a few months ago, but you can buy a gram of gold MUCH cheaper. It's very small but it's better than having none. If you can spend $35 on an ounce of silver, you can spend $55 on a gram of gold.
goldtracker
I think we're definitely going to see 2000 real soon.
You're definitely right that none of our financial problems have been solved and not just ours but the global market is under some serious pressure. And our government officials and those in other countries really don't have any desire to solve the debt issues.
And it's debt that is driving this thing. Gold is rising because of debt.
MasterPo
And because Gold is being valued in USD which is falling in value. So gold is up because it takes more devalued dollars to buy it.
Paul at PFP
Chavez just nationalized the gold companies. Chavez and Chinese leaders are buying gold in metric tonnes.
PatTheCat
Don't sell that necklace. Hold onto it. If Gold becomes a "currency" after TEOTWAWKI, a couple links of that necklace could buy you "Life Support", in the form of rice, water, gasoline…
Just hold onto it. You might need it.
Dan
I would invest in myself over gold. Skills are going to be worth more than a piece of metal.
mark reinoso
There is no "price" of Gold. Gold is the price.
I may be arguing semantics, but I dont like it when people say "gold is going up". Gold/ Silver dont go up, their value stays the same. Its the currency that goes down. It simply takes more USD or fiat currency to buy that gold.
With a few variations, 1oz of gold has always been enough to buy a custom tailored mens suit. 2oz of silver has always been enough to fill up the average gas tank.
gold and silver are stable, everything else goes up or down.
but I do think that PM's wont be that valuable in times of anarchy or civil unrest. Other things are more valuable, most important a personal skill set. ITs only after society and civility has been restored that metals will become valuable again
Luis D
Silver is one of the last precious metals that will be on (possibly) an even keel with Gold or close to. The ratio between gold & silver will get tighter as more fiat currency is printed and consumer confidence erodes over the fiscal policy in government. Gold and Silver are hedges against this corrupt government that keeps kicking the can on spending and avoiding the inevitable which is a collapse of the dollar. We don’t like to hear this but the reality is that the more government creates money (printing) out of thin air the more real currency like Silver & Gold appreciate in value. It is never too late to set aside a certain amount for gold and silver. Watch cool video on youtube called “precious metals and the economy”
All I know is that I don’t wanna be 60 (I’m 43) years old turn on the TV one morning and see that Silver is trading over $400 an oz and I could have purchased some when it was @ $25,30 or even $40+. That will kill me. I will be trying to pull out whatever hair I have left at the time. Your young take advantage and protect your families assets.
mike
doomsday is just around the corner ? Are you ready?