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May 31, 2010 - The dominant upward trend in gold prices – it broke the 1000 euro mark for the first time in May, and topped out at a record $1438.95 that same month – has launched commentators from major news outlets into the fray of declaring whether gold investment is wise. Interestingly, even skeptics concede that the market is strong and will continue to be bullish in months and years to come, and there is a general consensus that gold investment is one of the best safe-havens during financially and politically uncertain times.

At the Financial Times, James Mackintosh, who worries about a “gold bubble,” nevertheless estimates that the bubble is far from its peak, and that prices may rise steadily for the next six years. Brett Arends, a like-minded commentator at the Wall Street Journal, concurs: “I am not saying gold is going into the stratosphere,” he says. “I am saying there is a good case for saying that it might.”

Arends quotes Dylan Grice, a London-based strategist, who believes that conditions might be ripe for a gold-boom like there was in the late 1970s, when the price of gold rose so far that it backed more than 100% of the U.S. monetary base. If that were to happen again, Arends notes, the price of gold would exceed $6000 an ounce.

Also at the Wall Street Journal, Shefali Anand stresses the safe-haven aspects of gold investment. Laying out opposing views of gold´s money-making potential, Anand affirms that gold “becomes extremely valuable when some major event happens because it can be resold even in time of disaster. In other words, you may not make money on it but it will help you get some money even if there's a war or there's a breakdown in government.”

Such thinking is at the heart of gold investment and is doubtless responsible for the recent surge in demand.

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Stewart Lawson

Senior Staff Writer - Gold-Investment.info