How high can gold go in the next five years? How volatile will it be? What is the best investment strategy?
Alan Hershey
Feb. 18, 2007

Gold is giving signs that it is ready to challenge the last years high. The analytics point to the undervalued commodity that is also used to hedge against financial meltdown and inflation. Gold is still undervalued compared to long-term inflation. It has just started to catch up in the last few years.

There is a gold cycle. The cycle bottomed around year 2000. Dollar peaked and gold bottomed. The biggest problem in trading gold is that it trades against dollar for US investors. It has an inverse relationship with the dollar index. Sometime, however, gold does go up with the dollar.

The next five years will experience most volatile financial markets. First, the inflation will officially change into deflation. Real estate will collapse and mortgage defaults, manufacturing weakness, higher energy, and food prices will sink the economies all over the world into negative territories.

It is very likely that the dollar will collapse first and strengthen like never before. As the financial meltdown happens, dollar will collapse. Gold will skyrocket to levels never seen before. Then the financial markets will realize the root cause of these problems is the stealth deflation that started twenty years back when stock market crashed in 1987.

At that point of time gold will collapse and dollar will rise like never before. By 2012 the world will be very different. US trade surplus will be remarkable. Global trade will collapse. China and India will be in deep depression and US economy will be the strong next to Canada and Russia.

Gold will rise very sharply and fall very rapidly signaling massive volatility in the financial markets. How far can it go? Based on inflation adjustments, it can reach $2000 an ounce. But then it can also fall below $300 an ounce very quickly.

Ideal strategy will be going long in gold futures with out of the money put options as insurance.

The two sectors that will prosper even with deflation and economic recession – biotech and aerospace
Peter Oberois
The first one is Aerospace. We are not just talking about Boeing and Airbus. We are talking about industry that supports space technologies. The other one is of course biotechnologies.
READ MORE>>

How high can gold go in the next five years? How volatile will it be? What is the best investment strategy?
Alan Hershey
The biggest problem in trading gold is that it trades against dollar for US investors. It has an inverse relationship with the dollar index. Sometime, however, gold does go up with the dollar.
READ MORE>>

The imminent sign of deflation and future depression in the economy - Daimler Chrysler is planning to auction off the embattled U.S. unit in the coming months.
Sam Adelton
They lost their pricing power when under employment started – in late eighties. The legacy cost is killing Ford and GM. Toyota, Honda, and Nissan cannot raise prices either. But they lack the legacy cost.
READ MORE>>

Option backdating scandals can be the cause for stock a market crash – actions of Mercury Interactive executives, based on a court document, sends alarm
Karen Gonzalves
The scandal is reaching enormous proportion. The regulatory bodies are swamped with work to unveil the real depth of the problem.
READ MORE>>

MORE ARTICLES >>