The price of gold has been jumping and people have been buying it as a safe haven. There have been predictions that gold will go up as high as $2,500. As long as the markets are volatile gold is likely to remain attractive. Gold was selling so well that in May this year that EBay opened up the “Bullion Center,” a special area for buying and selling bullion.
However, the Chicago Mercantile Exchange (CME) may decide to tighten the margin requirements on gold as it did in silver in May, 2011. When the CME tightened the margin requirements on silver, holders of silver sold allot of silver and the price dropped. No one knows but experts estimate that there is less likelihood that the CME will interfere in gold. It could be that if gold drops under $1650, the bull trend may be broken and the gold price will drop-off and stabilize.
If it seems unlikely that gold could go down, one should remember the experience with crude oil in 2007. Experts were predicting that oil would go up to $150 and even $200 a barrel and would never again be under $100. Last week oil sold for $70. Could the same thing happen to Gold?
In my opinion, Gold will stay high for now, due to high volatility and uncertainty about the European Economy. However, when the market settles, be prepared to sell.
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