Potential for Inflation Leads Precious Metals Recovery

Sitting at the crossroads between 2009 and 2010, it is a perfect opportunity to look back at the amazing journey that gold has made and where the ride is going in the future. After the bubble year of 2008, gold is once again leading the precious metals recovery that has been a boon for investors.

With the recent strong performance of metals such as gold, silver and platinum, it is hard to imagine the need for a precious metals recovery. Gold is up 125% over the last five years and 380% over the last decade, and other metals have increased as well. In spite of this, gold prices in 2008 barely broke even and some analysts feared 2009 would suffer as well.

2009 showed that the global economic crisis couldn’t hold investment down, when it finished with an increase of 25% for the year and smashed the all-time high price by reaching $1,226 per ounce. Gold led the precious metals recovery in 2009 and looks poised to lead the way in 2010 in spite of a December sell-off that pushed gold below $1,100 an ounce and led some to predict its impending collapse.

After this year-end adjustment, gold appears ready to spur the precious metals recovery to the next level in 2010. With the continued weakness of the US dollar and the billions of federal money that was flushed into the economy, inflation concerns are creeping into the picture. Inflation drives the value of the dollar down, thus pushing the value of gold up, making it worth even more.

2008 proved to be a lean year for metals, but rebounded nicely in 2009 with gold leading the precious metals recovery. After an up and down month of December 2009, the outlook heading into 2010 appears once again to be very bright. 

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Danny Burns

Senior Staff Writer - Precious-Metal.org