, IncAs 2009 gives way to 2010, analyzing current gold prices can be a useful way to determine where the prices are headed for the future. While prices reached an all-time high earlier in 2009, an analytical review not only shows precious metals prices to be somewhat undervalued, but also capable of growing in 2010.
Strictly looking at current gold prices does not give an accurate indication of gold’s potential in the open market. Inflation can give a false impression of how the commodity has performed. In 2008, junior gold was sold off heavily because of de-leveraging; causing many junior miners to lose as much as 80% of their market value, with gold prices only dropping 30%. Such a drastic fall-off in market share indicates that the junior gold market as a whole would need to double just to reach past levels.
While many investors presently feel that gold has reached the cycle's leveling point for the current cycle at $1,100 per ounce, analysts are far less positive. Gold prices in 1980 reached $873 per ounce, which would have been over $2,200 per ounce if adjusted for today’s level of inflation. To place things in a clearer perspective, stocks have risen 800% over the same period of time. This leaves a great deal of optimism when analyzing current gold prices.
As the world economic picture comes into focus for 2010, instability is expected in gold prices, causing swings that could drop below $1,000 or race above $1,300 per ounce. Conservatively analyzing current gold prices suggests this metal will continue to rise and outperform other commodities, making gold an excellent investment going forward into the New Year.
Michael Truman
Senior Staff Writer - GoldPrice.net
