What's the Safest Bet on Gold? Ignore the Wild Predictions

By Commodity HQ  JAN 21, 2014 12:52 PM

After a 12-year bull run led up to a correction last year, gold is sitting at $1,250 per ounce, and a lot of gold bugs are suddenly adjusting their timelines.

 


After enjoying a relentless bull run that lasted 12 consecutive years, gold finally broke in 2013. Having become a darling of the investing world for most of the prior decade, gold’s almost 30% losses hit especially hard, as the precious metal finally saw a correction. The downward spiral was brought on largely by a massive year for equities, as the S&P 500 (INDEXSP:.INX) saw its best annual return since 1997, prompting many to flee metals markets to try their luck with white-hot equities.

Now that gold is sitting around $1,250 per ounce, the wild and crazy predictions for its future are just around the corner.

Gold to New Highs?

During gold’s historic climb, many wondered just how far it could go, as it seemed like the commodity was set to smash through the $2,000 per ounce barrier. That quickly led to speculation from famed investors and analysts alike calling for gold to hit $5,000, $10,000, and beyond. Now that the asset has seen a correction, it’s only a matter of time before new gold predictions come out of the woodwork and gold again becomes one of the most talked about assets on Wall Street.

Gold

It seems, however, that short-term memory loss is a fad among those who clamor for gold to surge higher, after predicting higher and higher prices only to watch it get slaughtered in 2013. Of course, many came back and quipped that their outlook for gold is for the future. Very few people actually give any kind of hard timeline for their predictions; they simply state that gold will go higher in the future.

Do Your Own Homework

Anyone can call for an asset or benchmark to trend higher over time, but few can do it with a solid analysis behind the prediction. When it comes to gold, it seems that too many investors and analysts become enamored with its potential gains and let that cloud their judgment. Though it may be the case that gold eventually rises to the heavens, it could just as easily find a plateau or simply keep pace with inflation as time goes on.

Determining where gold will go in the future is a tall order, as a number of factors play into its pricing. For those who do still believe in the merits of this precious commodity, we urge you to do your own research and analysis. Everyone seems to have a strong opinion on gold and its future, but your investment opinion should be based on diligence, especially in the case of gold.

Follow us on Twitter @CommodityHQ

Editor's note: This article by Jared Cummans was originally published on Commodity HQ
No positions in stocks mentioned.