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Got Gold? It's hot, shrouded in conspiracy and some think its price could continue to soar



By Dian Vujovich

Right around this time last year, an ounce of gold had just passed the $1000 threshold. It seemed like everyone then was on a gold high. After all, one decade earlier it was selling for a fraction of that: $291.35 an ounce.

Today that gold rush is still on. Friday (10/8/10) it closed at $1,344.20 an ounce while the DJIA revisited a close above 11,000. Hum, two highs from opposing investment categories. That can’t be good, can it?

Before gong there, year-to-date ending Sept. 30, the average precious metals fund had moved up 25.5 percent and had enjoyed an average annual total return of over 9 percent for the past 15 years, according to Lipper. Dig deeper into Lipper’s numbers and Dynamic Gold & Precious Metals fund was up over 50 percent year-to-date through Oct. 7, ProShares II: Ultimate Gold fund up 46 and Tocquevills’s Gold fund up over 39 percent. Silver, BTW, outperformed them all: ProShares II Ultimate Silver fund was up 67.8 percent over that same period. But that’s a story for another day.

Back to gold.

During an interview with Adele Kahn last year, she speculated that gold could easily rise to $2000 or more an ounce. She and her husband are proprietors of the House of Kahn Estate Jewelers and have been in business for over 50 years. So she ought a know. Right?

Turns out Adele’s not alone in her thinking. During interviews this week, Jim Rogers, chairman of Rogers Holdings in NYC, told his audiences not to confuse “strength in such “risk” assets with an improving economy.” He thinks the economy is in a horrible state and that gold has room to grow. “Gold could correct for a few months [but] the bull market in gold is not over – far from it,” he said.

Then there are those who think that the price of gold is being totally manipulated by all sorts of folks like central banks, dealers, heck even between governments in the US, Canada and England.

A couple of conspiracy theories William Baldwin wrote about in a blog for Forbes on September 30, (http://blogs.forbes.com/baldwin/2010/09/30/is-your-gold-bullion-safe-in-an-etf/?partner=alerts) included the following:

• Many of the gold bars in vaults are fake.

• A large amount of gold the US had is missing.

• And, the custodians of our gold—i.e., the banks—can’t be trusted. (I can certainly understand that last point given the behavior of our banks lately.)

Even Tobian Kahn, vice president of House of Kahn, is commenting. In an email sent the other day she wrote about how President Roosevelt, in 1933, issued a “Gold Confiscation Act” giving our Uncle the right to confiscate the stuff from ordinary folk. Apparently that Act is still on the books.” Historically,” she wrote, “the government has banned the ownership of gold when citizens have lost confidence in the government…”

Don’t know if that’s ever really happened but if any of you do, please let me know.

Until then, the scared— for whatever reasons— think that gold could rise to $3,000 or even $5000 an ounce. Whatever you think, don’t forget that the prices on precious metals have a long history of dramatically rising and falling. Remember, only 11 years ago it was trading under $300 an ounce.


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