Kenneth Rogoff, professor of economics at the Harvard University, also known for his research on economic crises and state defaults, warns ordinary investors against investing in gold despite its recent run-up. In his opinion, and also in mine, gold is a very risky investment. Its movements are almost impossible to predict in short and mid term horizon. The reason for its recent soaring can be in investors’ inflation fears. Moreover, the low interest rate enviroment plays also a significant role as it bolsters speculation. Rising interest rates could lead to plummeting gold prices.
Via Greg Mankiw’s Blog.