Gold does not always shines, but you wouldn’t know that from surging worldwide interest that has turned the yellow metal red-hot.
Gold has become highly prized bling, as anxious and astute buyers alike, from hedge-fund players to central bankers, flock to the “currency of fear.”
Gold’s feverish run has made a lot of people a lot of money, and though the rally has taken a breather in the last few months, there’s no shortage of flag-waving supporters who claim gold is on a march to US$2,000 and beyond. After all, gold is still well below its 1980 peak, when it was worth around US$2,300 an ounce in today’s dollars.
Certainly there are reasons to own gold in a diversified portfolio. Yet gold isn’t like a stock or a bond. It offers no income, no dividend, and no earnings. It is considered a store of value, an alternative currency that’s safe beyond reproach, but it is not cash in the bank, or even the mattress. Gold has no untapped intrinsic value; it is worth only what people are willing to pay for it. And lately, many people have been only too willing.