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Will Gold Bullion Pricing Reach $5,000 Per Ounce?

Could it really be true that gold bullion pricing will soar to over $5,000 by the year 2020?

A view taken by long-term forecasters is that one ounce of gold should be equivalent to the price of a high-end man’s suit. This is a tale that seems to be linked to Ancient Rome where they believed that an ounce of gold bullion could buy the finest toga on the market.

This tidbit of wise knowledge may not be too helpful these days. You can walk into Saks Avenue and buy a Hugo Boss suit for about $795.

Perhaps a comical debate but this is a core issue that a number of investors face when considering the market pricing for gold bullion.

When you are dealing in stocks, you make conclusions on returns based on the price-to-earnings ratio and the dividend yield. Similarly, with bonds, you can view the yield to maturity which includes coupons and capital gains.

Gold bullion, on the other hand, generates no income. It can essentially be likened to a perpetual zero coupon bond. In that case, pricing it is no easy task. You can, at the very minimum, establish threshold pricing. Any reasonable person would refrain from buying an ounce of gold bullion for $1,600 today unless the person was extremely confident that it would increase in value to at least $4,000 after a span of ten years or so.

There is a huge likelihood, although uncertain, for gold bullion to reach a level of pricing much higher. Started by the Federal Reserve, central banks globally have saturated financial markets with copious amounts of money. Those strategies have risked devaluing the dollar along with a number of other fiat currencies. Gold bullion and other items in rare supply may well benefit as a result.

Bullish news for gold bullion investors is that the public hasn’t gone crazy over it yet. Worldwide demand for gold bullion and gold coins has certainly increased over previous levels but we are still short of speculative pricing mania.

Despite the rise in gold bullion pricing the market is not yet signalling great concern over inflation. Comparatively, when you look at yields on a consistent 10-year Treasury bonds and the returns on inflation-protected bonds, the current market believes that inflation is likely to hover around 2% per year for the next decade. This is a value well below that which was seen before the crisis in 2008.

In summary, stay tuned. Gold bullion pricing could boom from here, or it may not.

About the Author

Visit GoldBullionPricing.com to find current gold bullion pricing, facts, figures, and research or to buy gold bullion online.

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