MUMBAI (Commodity Online): Investors are now acting very cautiously as far as Gold is concerned. They are not certain where is the metal headed for. So, they read almost all literature published in business magazines, newspapers and internet.

But, it seems, even God can’t predict the future of gold. Because, every market analyst has a different opinion as far as gold is concerned. Some of them say the price of gold has risen more than four-fold since 2001 and was up another 24 per cent in 2009, hitting an all-time high of $1,228 last December.

But it has dropped $100 recently, in tandem with a rally in the US dollar. Gold bugs argue that a growing risk of inflation and questions about how the US will pay off its massive debt means gold could be headed to $5,000 or higher, while sceptics see a golden bubble waiting to burst. Is the great gold rush of the past decade about to end?

Given the sharp run-up in prices — from $700 an ounce in late 2008 to $1,200 last month — it looks more like condo option. The various cases for buying gold now are built on straw — and it’s only in fairy tales that one can spin straw into gold, said a report in The Week.

Another section of the market specialists said the most exciting long-term bull market ever will end at some point, but it will take years, and there’s no telling how high the gold price may go between now and then.  There’s overwhelming evidence that Gold is still a good investment, but if some people just hate gold, those of who are smart enough to invest will be laughing all the way to the bank.

Gold has been the media darling for months, but it’s actually one of the worst performing metals over the last year. That’s because the market has been based on speculation, not fundamentals like supply and demand. Gold’s still a reasonable hedge against inflation or the US dollar, but you’d be better off with platinum, which — unlike gold — has surging industrial demand shoring up its lofty prices.

In an interview to The Economic Times, Superfund’s managing director Aaron Smith spoke said: Gold should trade at $2,000 an ounce. Gold will double in rupee terms over the next 3-5 years due to global inflation and potential for hyperinflation in industrial, high-debt countries. However, the best buy for retail investors should be Silver at current levels because silver is still cheaper compared with its all-time high than gold or platinum.

And if you look at the gold-to-silver ratio, it is very high — over the past 5,000 years the ratio was 15:1, but now it is more than 60 — so this may be corrected. Silver should already be trading at $60 per ounce, but it may also hit $70-80 in the next 3-5 years. Silver will have more volatility than gold, but the upside potential is higher.

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