Tuesday, October 5, 2010

Kenneth Rogoff on Gold

Kenneth Rogoff for Project-Syndicate.org here weighs in on the increased interest in gold, adding the not often heard warning that rising interest rates could cause the price to fall as investors invest elsewhere seeking return in the form of cash flows which an American Gold Eagle in your safe simply cannot provide.

He also notes that the long-term inflation adjusted price lags current gold prices:

At $1,300, today’s price is probably more than double very long-term, inflation-adjusted, average gold prices.

Adjusting the price of gold for inflation from its price in 1913 to 2009 would put gold at $462 the ounce last year, so at $1,300 an ounce the price is 2.8 times that already, and climbing.

Are ya feeling lucky? Well are ya?