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Capital Markets

Gold’s bubble won’t burst soon

Fears surrounding US will bolster demand; Gold ETFs boom, hedge funds also jump in

Gold was the big investment success story of 2009. But those claiming that the gold bubble will burst soon are wrong, say some experts. "There is a gold bubble but it is a long-term bubble," says Robert Wiedemer, president and chief executive of risk assessment firm the Foresight Group and co-author of Aftershock.

Gold closed 2009 at $1,097 an ounce – up 23.95% on the year, and up 149.32% over five years. In November, gold hit an historic high of $1,227 but some analysts are saying that in 2010 it might go as high as $1,500 or higher.

Gold surges in 2009

Price of gold in $ per ounce

Source: The Gold Council


"Fear drives gold upwards and next year fear might well grow," Wiedemer says. He claims that unless the US government can successfully convince the world that there is no need to be concerned about its debt levels or about inflationary pressure, fear is likely to grow next year, pushing investors further into gold.


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