Gold is off its record peak of nearly $1,900 per ounce last fall—down to a still staggering $1,794 per ounce.
The price remains so high that there’s a fierce debate over whether gold is no longer a safe haven, but has crossed into the riskier territory of a bubble.
Jeff Clark, senior precious metals analyst at Casey Research, believes that a true bubble in the gold market would have to meet two criteria:
|1.||The price soars in a short time. In 1979, the gold price doubled in six weeks (that was a bubble). The best that gold has done recently (2001 to present) is a 32% rise over the course of the year in 2007.|
|2.||There has to be widespread public participation. Think mania. During the real estate bubble, you couldn’t go to a dinner party or watch TV without hearing about real estate.|
Chances are, your friends and neighbors aren’t chatting about—or even buying—gold. In fact, “most reports say only 1% of North America is invested in gold,” says Clark.
Is gold a good investment? Not if you’re hoping to hit paydirt by buying now and selling for a swift profit. But if you're considering a long-term commitment, it could be a good buy -- especially now that prices have receded.