The yellow metal has risen steadily since the start of 2009, when it was trading at a bit less than $900 an ounce.
And gold's advance has accelerated of late. The price of gold increased 21% in the year's first half. And even with the decline to $1,587.30 yesterday (Tuesday), the yellow metal is up 7% since July 1.
Many investors and investment pundits are claiming this gold-plated party is destined to end: When the Eurozone gets its house in order and our elected leaders in Washington finally reach a federal budget accord, these gloom-and-doomers say the price of gold will plummet.
But I say they're wrong.
Gold isn't going to crash. In fact, it isn't even going to hold steady at current levels.
The price of gold is destined to soar during the next six months to nine months.
And I'm going to show you the best way to hitch a ride on this rocket.
The Bright Side to Global Debt FearsI've been analyzing gold miners and other natural-resources investments for a long time. Now, when I'm analyzing precious-metals-related investments for a Money Morning column, or for the subscribers of my "Global Resource Alert" trading service, there are certain financial indices that I like to study. And I especially like to see how each of these indices behaves against one another.
One of the most valuable - and telling - of these relationships is the one that compares the price of gold to the U.S. Standard & Poor's 500 Index. To make this comparison, I use two exchange-traded funds (ETFs) as "proxies" - stand-ins - for each of these investments. The SPDR Gold Trust (NYSE: GLD) represents the price of gold and the SPDR S&P 500 (NYSE: SPY) serves as a proxy for the broad stock market.
If we look at what has happened over the past six years, the trend is undeniable: Thanks to the U.S. Federal Reserve - first because of aggressive rate-cutting by former Fed Chairman Alan Greenspan, and then due to the massive debt expansion engineered by successor and current Fed honcho Ben S. Bernanke - gold is in a clear uptrend.