Having risen by a third since the beginning of 2011 and nearly fivefold since 2004, one analyst believes the precious metal is now in bubble territory and an “absurdity”.
“Gold is not money and has no investment yield and in fact incurs carrying/storage costs. With the 10 year US treasury rate at 2 percent and storage cost of 1-1.5 percent this implies an annual opportunity cost of 3-3.5 percent,” said John Wadle, the head of regional banks research at Mirae Asset in Hong Kong in a research note sent to CNBC on Tuesday.
It will go up until it stops going up………..
I came across this old bugger that appears to disagree:
—————–
Greenspan also said that he did not think gold, which reached a record above US$1,900 an ounce this week, was in a bubble.
“Gold, unlike all other commodities, is a currency,” he said. “And the major thrust in the demand for gold is not for jewellery. It’s not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating.”
—————–
http://business.financialpost.com/2011/08/23/the-euro-is-breaking-down-greenspan/
Finally Greenspan seems to be getting it. It’s a bit late though
Gold (and Silver) are money. When the US Govt has finished debasing the US Dollar try and find anyone who would prefer the paper lie over the shiny monetary truth
Funny thing though…he “got it” in the Sixties:
http://www.thefinancialpanner.com/wp-content/uploads/2009/11/AlanGreenspan-GoldEconomicFreedom.pdf
Then forgot it during the Nineties, only to remember it again now.
Shame his successor doesn’t get it, as he has quite happily stated that “gold is not money”. When pressed why Central Banks hold gold then, his most excellent punch line was “I guess for historic reasons”. Think Uncle Ben…could that historic reason be because gold is money 😉