In its final issue of 2005, Barron's recommends gold. Key points from the article:
- "With the economy awash in liquidity following several years of low interest rates, gold holds clear appeal as a place to stash cash...".
- The introduction of the gold ETFs (GLD) (IAU) have made it easier for institutional investors to buy gold. That has resulted in inflows into the ETFs and increased demand for gold.
- "Commodity cycles are typically long -- from 45 to 60 years", and thus the recent rise in the price of gold over the last few years should continue as a long term trend.
- Trey Reik, who runs Clapboard Hill Partners, a long/short equity fund that focuses on mining shares, believes that the price of gold has been bid-up by speculators in the short term, and could therefore pull back to perhaps $480 per ounce.
- James Turk, founder of GoldMoney.com, an Internet site for buying and selling gold, believes that gold's move above $500 is "an international buy signal" that confirms for investors that "this move is for real."
- Other factors that could lead to continuing increases in the gold price: inflation, fueled by the US budget deficit, and international tensions.
- Hong Kong based fund manager Marc Faber believes that gold will reach $3,000 per ounce due to the US Government eventually defaulting on its debt.
Full article here (paid sub req'd).