Will Gold go up? Or are we Guilding the Lilly?

I have spent too much time listening to the pundits. Time for an opinion of my own on Gold.

Gold will go up if and only when war or economic disaster continues to rock our collective boats.

Gold is the ideal hard currency of the scaredy pants! If you are frightened that the Feds got it wrong (like me,) and the dollar looks shaky to you then Gold offers the warm yellow glow of the sun at the most peaceful time of day. Solace for the weary or hope with the new days golden dawn.In short gold is Linus's security blanket.

But be wary those who would buy Gold now, it is moody at this time having been ignored when it should have been climbing and allowed to fall when it was expected to rise.

Gold's wandering away like this from it's "true" path is at least partly due to the usual failed panic attacks in the market that were supposed to shake it to it's roots but failed to cause more than a small flutter. They just did not hit the fear button squarely enough to make an impact on a wide or diverse enough group of scaredy pants to affect the market and shake their tree.

The Stock Exchange remains the great unknown to me, it's width and breadth encompassing the whole human condition. As far as I know Carl Jung couldn't work it out either despite being a great shrink and having lots of understanding of the human condition.I wonder if he would be a gold buyer or seller in this market?

Humans are unfathomable when it comes to greed and fear, the dance of the investor. "Nothing is either right or wrong, but thinking makes it so." can be applied to gold investment as a strategy! If enough people get scared enough gold prices will go out through the roof.Good luck with picking the top!.

Risk takers.

Gold has a history of rewarding the brave at times and I know those who have made fortunes from owning it at the right time. For example if you bought a stack of it last week, you would be sweet at $AU1,500.

I would always have pulled out far too early. One successful guy I know knew nothing about gold he just bought it and ignored all the cries of sell and cleaned up big over 3 years. He only took the money to invest in a new business he had started. Most of his profit from the gold sale had come in one big continuous price rise just before it dropped away, never to reach such heights again. He sold right at the top.

There is a lot of excited talk amongst investors in gold again today with war and financial mis-management splattered all over media.

Gold has been bet up down and sideways last year and this year may see some real margin added if things do not improve in the Middle East and world domestic markets. Some pretty sharp people are buying.

The long term benefit of Gold is, unlike paper it's real value as a rare metal that is used in much high end technology will be useful for a long time because of it's quality as a conductor and for many other high uses due to it's inherent qualities.

The potential for Gold to be a stable currency in a crisis is born of more mystical stuff, a spiritual belief inherent in humans.

In archetypal stories where bounty is to be had, it is Gold that is constant in the mix of riches to be plundered or recovered from the pirates. "Pieces of eight" is the cry of the pirates parrot, not buy Enron.

The way Gold is seen as a last currency to stand in a crisis enables traders to take some handsome margin on the small up and down cycles created by waves of fear in the market. Often based on the days headline and not much else.

If picked when ripe, gold is profitable short term but getting the high and low points far enough apart is where the big money is, and that is too brave for me.

The well heeled punter may do well.

Never an easy call for the very small investor.

Where are gold prices going?

Given a guess? I think it will climb this year, but I'm not depending on it.

Obama along with other world leaders may get it right at some point, although there is no sign of that yet. If they do Gold will not go out through the roof as some are predicting.

If they continue to get it wrong, we could see values return to where they once were at AU$800 dollars, but in today's money.

A figures of AU$3,000 would bring gold back up to around the AU$800 then.

If Obama can get America's economy up and fill a few diplomatic gaps this year Gold may not grow at all. We have enough in world reserves to ensure there is no need to dig up more for quite a while, and if the market survives gold may just trot along under the thousand mark for some time.

It will go up if the economy keeps sliding though.Count on the scaredy pants theory.

Gold. Always fascinating.

In the seventies I met a small gold minor who had invested all his efforts in to his goldmine believing that gold would make AU$1,000 an once before long. Well it was a long wait indeed.

Sometimes Gold prices seem to have wings and fly up without any apparent support. At other times, investors get tired of a Stodgy patch where gold is dormant and opt out lowering the price as they do so like lemmings.

The most annoying thing for small investors is that gold prices move a lot further up and down and quicker than many other investments so when we miss the gold bus it usually goes quite a few blocks before we can get back on at the adjusted fare, at which time it may be the end of the line.