Are We In A Gold Bubble? Posted by James Randolph on October 08, 2010
October 8, 2010 – According to the certified gold coin price guide, buyers of coins such as the $20 Saint Gaudens Double Eagle and the $10 Liberty Head aren’t worried about a gold bubble bursting anytime soon. Even though the gold price dropped slightly more than expected yesterday due to profit-taking, certified gold coins held steady and a few of the higher grade coins even gained some ground.
The common date (1908-1926, 1928) MS64 Saint Gaudens gold coin led the way with a 4% gain, and is now listed with a national average retail price of $2190. The gold spot price rebounded about $20 from yesterday’s profit-taking and is currently selling for $1350 per ounce on the COMEX.
Even though the gold price changes based on the strength (or weakness) of US currency, gold’s value also moves up or down in anticipation of future events. The Federal Reserve’s manipulation of interest rates has created artificial deflation, and many household investors fear that rising interest rates could set off a long-term inflationary cycle.
If this happens, it could mean a 40-60% loss in the dollar’s spending power. If that sounds familiar, it should. From 1960 to 1980 interest rates went from 4% to 14% and the dollar lost 65% of its spending power. Gold rose over 1000% during that time period, and many certified gold coin investors believe that a similar cycle is underway.
Since the gold price has risen over 27% in the last 365 days, investing on the top of a gold bubble may be a concern for you. To better understand the market and the Certified Gold Exchange, feel free to request any of our free gold investing guides below.
Senior Staff Writer – Certified Gold Exchange