Why does gold offer an exceptional investment opportunity right now?
*Barron's, by Robin Goldwyn Blumenthal, October 20, 2008
“Shining Through the Rubble
How to play gold, which bulls think could hit $7,000 an ounce eventually.
WITH FINANCIAL MARKETS AROUND THE WORLD COLLAPSING, about the only thing that still glitters is gold.
Unlike just about every other asset, gold has risen in the past year. Though it fell markedly last week, to $785.10, it’s still up 3% from a year ago.
Gold has ‘shown its stripes as something investors will turn to,’ says Leanne Baker, founder of Investor Resources, a metals and mining advisory based in Mill Valley, Calif.
Now, the market may start to shine. The yellow metal, which breached $1,000 an ounce in March during the Bear Stearns debacle, could well return to that level and head toward $2,500 as investors scramble for safety, according to many fans.
‘It is premature to declare an end to the bull market in gold and the bear market in paper,’ John Hathaway, portfolio manager of Tocqueville Asset Management, wrote recently. ‘It is more likely that this massive shakeout has set the stage for a dynamic advance.’ Barron’s Roundtable member Mark Faber puts it more succinctly: ‘Gold will go up because everything else is in deep s–t.’
INVESTORS CAN PARTICIPATE in the gold market in a variety of ways, such as purchasing mining stocks or mutual funds that hold them. But right now, those shares are vulnerable to heavy selling by hedge funds and others trying to raise cash. That’s why many pros recommend that investors acquire the metal itself.”
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