Thursday, February 18, 2010

Gold! Gold! Gold!

The gold superbull market took off in 2002 at the price level of US$200 per ounce. Malaysian investors sadly missed the bull because there were no instruments available in the market for investment in gold. I asked around, only to be told to go to foreign markets (Hong Kong, Australia, etc.) to buy gold certificates.

After a few years, some local commercial banks pushed out to the market Gold Investment Account, much to my delight.

The international gold price now hovers around US$1,100 per ounce. When you compare it with the start-off level, it represents a whopping 450% jump. At this price, is gold still a buy?

Let's take a look at the following report by Forrest Jones of Moneynews:

Investors should buy gold even if the price continues to dip, because the precious metal is merely in a correction phase of an upward trend, says investment guru Marc Faber.Gold could fall to as low as $950 an ounce from current levels of around $1,089 an ounce, Faber says.But prices will rise again as governments continue to print money to narrow deficits in moves that will ultimately pump up inflation rates, the building blocks of higher gold prices.The present correction, Faber says, is due to a temporary surge in the dollar's value.“The weakness that gold has shown recently is no reason for investors to get out of gold investments,” he tells Commodity Online.“I still believe gold should continue to be part of every investor’s wise investment portfolio.”Concerns about Greece's budget deficit woes have sent the euro on a roller-coaster ride and have some investors running to gold as a safe haven.

Last year when the gold price reached US$850 per ounce, my friend asked me where the precious metal was a good buy at that level. I asked him to go in with no hesitation. If he had taken it up, he would be laughing his way to bank now!
We posed for a group photo in front of Dewan Undangan Negeri Complex. Snapping for us was a policeman stationing at the entrance check-point. Our visit to DUN Complex was a memorable one. The courtesy of the policeguard who guided us around deeply impressed us. The photo shows (L to R) Tiong, Michael, me and Ngui.

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