Gold prospects glitter to some

Email to a Friend

Tom Winmill, manager of Midas Fund (MIDSX), predicted at press time that by year’s end gold will reach $1,200 an ounce; that’s a downward adjustment from his projection in July that gold would reach $1,300 an ounce by year’s end. He bases his prediction on inflation being higher than the 2-year Treasury yield (a negative real-interest rate is good for gold prices). But international politics pulled Midas Fund into the negative numbers with a year-to-date of 13.59 percent return compared with a 3-year comparison of 35.27 percent.

George Van Dyke of Synergy Financial Group told Consumers Digest he has a different take: “Gold will trade down to roughly $800 per ounce, which represents a shorter term correction in a longer term bull market for gold.”

One thing is certain: The price of gold is highly volatile. It’s soaring at $850 an ounce, up from $450 an ounce in 2005, but that is down from its all-time high of $1,000 an ounce on March 16 of this year.

Victor Matheson, assistant professor of economics at College of the Holy Cross in Worcester, Mass., suggests that no individual invest more than 5 percent of his/her portfolio in gold, noting how gold is a purely speculative commodity in sync with oil prices and that, unlike oil, there’s not a supply-and-demand issue. So, if gold gets expensive, investors can sell it and flood the market.