Is Gold Expensive at $791 an Ounce? Why Gold Will Continue to Soar Much Higher.

November 2, 2007 -

I’m not really sure how all the “Gold at 27-year high” headlines came to be, but my own calculations tell me that gold would have to break at least $2,400 an ounce to break its supposed 27-year high. When discussing the purchase of a 7-series BMW that sells for a MSRP of $90,000 today, no one ever looks at its sales price from 5-years ago at $35,000 and exclaims “BMWs are trading at a 5-year high!” That would be ludicrous. One would have to factor in the effects of inflation and the decreased purchasing power of the dollar before being able to make a reasonable assessment of how expensive BMWs really are today.

At today’s prices of over $790 an ounce, gold is still cheap. If we experience a correction any time soon, and gold breaks back down to the $720 level again before continuing higher, it will just be really cheap. Here’s why. Read more …

3 comments November 2nd, 2007