So You Think Gold Will Hit 1,000?

May 24th, 2007

As gold continues to rise, many people see it hitting $1,000 an ounce within the next 12 months. While we don’t pretend to know what the price of gold will be in the future, we also believe it is headed north. There are many factors at play.

One of the main elements is the US dollar losing value. As the US government continues to spend far more than it brings in, it must continue to print more of the greenbacks to pay off debts and the hefty interest payments. If you’ve ever heard about the power of compound interest, imagine it backwards. That is what the US government is currently doing. In the short run it might help secure oil, cull security threats and even create jobs, but in the long run it may hurt. Through spending so much money, the US dollar is losing value. Gold can therefore be expected to rise (for the forseeable future).

Mining seems to have peaked for the time being. Fewer discoveries are being made. As China and other parts of the world industrialize and generate more wealth, they will undoubtedly want to hold some of it in gold and other currencies. So will many of the rich. This will drive the price of gold up (in relation to the US$). Yes, in the future, it is inevitable that large gold discoveries will be unearthed. But we are only looking at the next year or so and the factors at play that could cause the price of gold to rise. Any large mining discoveries will still take years to become operational.

Political chaos, natural disasters, etc. We can’t do much about them. But in this day and age, anything is possible. When disaster’s strike, economies become unstable. Gold is one of the ways wealth can be protected when disaster strikes. We all pray they never happen. That doesn’t mean we have to be blind and not prepare.

Will the price of gold hit $1,000 an ounce? If the world continues as it has been for the past five years, gold will rise. How high? How long will it take to rise? We don’t know. But we can predict the direction… up!

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