In the past several months, gold has enjoyed an incredible "bid" underneath its price. I believe the bid is coming from a mountain of money controlled by central banks and large institutional investors.
India, for example, made major headlines last year when it bought 200 tonnes of gold to diversify its currency reserves. China has more than doubled its gold holdings since 2003. It's also one of the largest owners of the big gold bullion fund (GLD). John Paulson, one of the world's biggest and best money managers, owns more than $3 billion of that same fund. He also owns more than $1.5 billion worth of gold miner AngloGold Ashanti... and several other huge mining positions.
Money is flowing into gold because big money managers know they shouldn't park their money in the euro anymore. It's a piece of garbage. And Obama & Co. are promising free lunches to everyone who can help reelect them... This is harmful to the U.S. dollar's long-term value.
Gold is now reasserting itself as a viable place to park wealth. After all, with interest rates so low, you're not missing out on fat interest payments by owning gold, which pays no interest. The Western debt problems will take a long time to play out. I believe they could send gold to $2,000... even $3,000 an ounce in the coming years.
For pure "wealth insurance" purposes, the best route here is to own physical gold. Buy it from a reputable dealer with low fees and store it in a safe place.
Remember, as I've written before, physical gold isn't an investment, it's a form of savings.
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