Gyroscopic Investing

With 18% annual return for 10 years, GOLD can surpass $10,000 by 2020. What do you think?

2011: $2,000
2012: $3,000
2013: $4,000
2014: $5,000
2015: $6,000
2016: $7,000
2017: $8,000
2018: $9,000
2019: $10,000
2020: ?

I hope not. That will mean inflation is quite bad. As in the dollar is about to go kaput bad.

But we never know. However I doubt it personally.

I have no idea.

I tend to think that the current secular bull market in gold will top out somewhere between $3,000 and $5,000 per ounce, but I don't know when.

Gold is a strange asset to try to predict.  No earnings, no dividends...nothing but a bunch of dental fillings, jewelry, niche industrial applications and people who want to stockpile it for reasons no one quite understands, other than it is shiny and heavy and doesn't corrode.

I find GOLD honorable because it does not corrupt like some people.

Odysseusa wrote: With 18% annual return for 10 years, GOLD can surpass $10,000 by 2020. What do you think?

Definitely possible, but impossible to tell how probable at this point.  It depends on future decision making and is a moving target.  For instance, if the Fed Funds rate was jacked up to 5 or 6% from the current 0%, it would be dollar bullish--real rates would be positive.  That would squelch the gold advance (Volker 79-81).  Of course, we'd most likely see Dow 4000 in such a scenario so I doubt it.  In a credit collapse, devaluation is the preferred means of resetting the system.  My best guess is $5,000-$8,000 and life won't be terrible relative to 1933.

I think it's much more likely gold will hit $500 an ounce by 2020 than $10k.

If you look back to the 70s, the inflation-adjusted price of gold is similar to what it is today around $1800/ounce. Then 20 years later it was trading at $300 an ounce.

It's hard to think things will be good again when we are living in such a poor economy, but they probably will be. And when that happens gold will fall. And stocks will be doing 20% to 30% annual returns, and 30 year Bonds will be yielding 6%.

None of that matters because the PP will continue to provide 3% to 7% "real" return regardless of whether gold goes to $10k or falls to $500 as I predict. That's why I like the PP. I'll get a reasonable return regardless of what happens.

One interesting thing to keep in mind is that gold is a much more global phenomenon now — especially since everyone in Asia is trying to hoard more and more of it. I don't think Asia had any significant interest in attaining gold in the 70s.

Gumby wrote: One interesting thing to keep in mind is that gold is a much more global phenomenon now — especially since everyone in Asia is trying to hoard more and more of it. I don't think Asia had any significant interest in attaining gold in the 70s.

Cumulatively speaking as groups, Asians will accumulate more gold than Americans and Europeans combined.