Gold’s a bubble, sure, but that doesn’t mean the precious metal is about to fall off from its torrid ascent, says Macquarie Bank interest rate strategist Rory Robertson.
At this point, investors are buying gold just because it’s already risen sharply, he wrote in a report obtained by The Sydney Morning Herald.
The metal recently hit a record high above $1,260 an ounce.
''It is the very nature of bubbles that drives prices well beyond what most observers see as reasonable. Accordingly, the price of gold over time could jump to multiples of its current elevated price, before reversing,'' Robertson wrote.
Since gold doesn’t pay interest, it’s difficult to determine an intrinsic value for the asset, he notes.
''The price will be whatever investors are prepared to pay. How long is a piece of string?''
Robertson mocks many gold bugs.
''For some anticipating extraordinary financial and societal turmoil down the track, gold fits into a portfolio rather nicely alongside automatic rifles, cases of ammo and beans, and hilltop bunkers.''
Of course, those same people have seen their investment rise 400 percent from gold’s 1999 low of about $250, while stocks have dipped a bit during that period.
Not surprisingly, many investors now want physical gold rather than a paper exposure to the metal.
"People are attracted to hard assets outside the banking system,” Jonathan Spall, precious metals manager at Barclays, told The Wall Street Journal.
© 2017 Newsmax Finance. All rights reserved.