Investopedia reports that gold, for the first time ever, has surpassed the closely watched $4,000 per ounce during this week. This comes after gold had a tight trading range during the beginning of September. Since then, the price has been rising with few retractions, and based on predictions, it is expected that the price of gold could reach as high as $4160.
According to the article, more people have been investing in gold as they worry about the government shutdown, face uncertainty in the economy, and expect that there will be cut interest rates from the Federal Reserve.
The spot market price for gold, which is a little more than $4,000 per ounce, has also increased this year by 54%. The reason behind this is because of factors such as central bank buying, lost of faith in the U.S. dollar, and geopolitical issues.
Rob West of "Faith & Finance" on American Family Radio (AFR) said that gold has been on a remarkable run.
"We're up nearly 50% this year, but history shows us that gold moves in cycles. It gets hot, then it cools off. The difference here is that today's surge and the recent surge has been driven by real fundamentals. You have central banks buying, you have currency fears, you have geopolitical tension, but that momentum won't last forever," says West.
West adds that people should keep in mind that "gold is not a productive asset." It doesn't earn profits. It doesn't pay dividends.
"It's a store of value, not a source of growth. So, I think we enjoy the run we've had. I don't see a bust because of the surge being driven by real fundamentals, and I think we need to stay with our reasonable allocation of 5% to 10%, at the most, of a diversified portfolio," says West.
