Gold is gleaming again for investors. Earlier this week the price of the precious metal broke through the $1,500 (�907) an ounce mark for the first time as investors sought a safe haven in the wake of Standard & Poor?s warning on the United States? credit rating and the continuing debt crisis in the eurozone.
But before you rush out to buy precious metals, remember that not everyone expects their bull run to continue. Goldman Sachs recently advised investors to sell its profitable ?CCCP? basket of commodities ? crude oil, copper, cotton, platinum and soybeans. If the bank has called the market correctly, gold and silver are unlikely to be immune from a wider fall among commodities.
Gold bears ? a rare breed in recent years ? are also starting to emerge. Peter Lawery, co-manager of the Jupiter Merlin Income fund, told The Telegraph: ?I think the gold price may soon suffer vertigo.?
Meanwhile, Joung Park of Morningstar, the investment analyst, wrote in a report this week: ?Central banks are major swing players in the gold market, and we?ve recently seen them switch from being net sellers of bullion to net buyers, thereby benefiting gold prices.
?If central banks decide to resume selling their gold reserves, such a move could be extremely detrimental for gold prices, given that current total central bank holdings (at about 30,000 tons) amount to roughly 12 years of current mine supply.
The report concluded: ?Our analysis of the main drivers of rising gold prices during the last decade shows that many of these positive catalysts cannot be sustained indefinitely.?
Christopher Aldous of Evercore Pan Asset admitted that his decision not to invest in gold meant he had missed out on some handsome gains as a result. But he has no plans to invest now.
?With hindsight, gold and precious metals, particularly silver, would also have been a fantastic investment,? he said. ?Both now look very overextended and we feel it is too late to jump on the inflation worries bandwagon.?
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