Investors in gold need to keep both eyes open

THE old market adage of “be greedy when others are fearful and fearful when others are greedy” goes to the heart of the fact that not all assets move in the same way.

One asset that has shown the most remarkable growth in value over the last number of years is gold. From approximately US$300 per ounce in 2000 gold has shown a steady increase in value, reaching US$600 per ounce in 2007 and subsequently having moved close to US$2,000 per ounce.

When one considers the performance of stock markets in particular over the last four years this simultaneously inspires greed and fear. The greed element comes from the natural human desire to be in on a winning thing, and the fear is that this is yet another asset bubble.