Gold: The New Frontier For the Small Investor

There is very little middle emotional ground when it comes to advising a small investor whether or not to spread bet on gold. Gold is either passionately advocated or it warned against in an equally passionate manner. The truth of the matter is that gold can be a great investment for one who understands and accepts the volatility of the gold market. If one is comfortable with the volatility surrounding gold futures, then for certain small spread traders, gold can even prove to be the best market investment.

So why do some advocate gold as the best market investment? According to the Arden Forecast, the reason is the dollar has become unstable in the world as military incursions into the Middle East led to soaring debt that undermined the dollar. When this forecast was first published in November of 2003, gold had hit a three year high so there was credibility to the argument that gold was possibly the best market investment. This forecast turned out to be prophetic as gold prices shocked the world when in April of 2006, gold hit a high mark of $600.00 an ounce. Today, there are those who predict that gold may actually hit $1,000.00 an ounce easily making it the best market investment. Most analysts, however, believe that such a figure is wishful thinking.

In a published study, Standard and Poor noted there should be skepticism as to whether or not gold is the best market investment due to the relationship between the price of oil and the price of gold. When oil prices rise, so do gold prices. Conversely, when the price of oil starts to plummet, then gold’s price will also decline regardless of the value of the dollar. There is a feeling that while the current situation in the Middle East is driving oil prices up, it will not be a permanent situation.  When the price of oil crashes, gold’s price will minimize and take with it any claim gold may have to the mantle of best market investment. This is, of course, a speculative belief and not a hard science based fact. Gold is gold. Oil is oil. The paths their investment values follow are not necessarily related to one another.

While gold spread betting is not for everyone, there are those small investors out there who may have dreams of being the next Auric Goldfinger and absorbing the speculative risks inherent with gold may provide the financial windfall possible with aggressive futures.