2009 Gold Price

THE ONLY certainty about the gold price in 2009 will be volatility. The financial crisis has seen daily swings in the gold price widen five times over for US-Dollar investors.

So whatever the longer-term price trend in 2009, anyone making a gold investment should expect gut-wrenching moves on a daily basis. But that doesn't mean the 2009 gold price will cause more sleepless nights than owning stocks, bonds or currencies.

Price volatility in the S&P 500 index has leapt almost 8-fold this year. Going into 2009, the Euro – when valued in US dollars – has become over four times as volatile from Aug. '07. Even Treasury bonds have gone wild, becoming more vicious than even the gold price or the daily change in currencies.

Block out the "noise" of daily volatility, however, and the gold price will begin 2009 significantly higher against all major currencies bar the US Dollar.

The gold price starts 2009 with a double and better for Australian and British investors since 2005. It has risen by 75% and more for European and Canadian buyers.

Even amid the financial crisis, which saw the gold price slip back by one-fifth from the "Bear Stearns top" of $1,000 an ounce, gold remains 75% higher from 2005 for US investors.

The 2009 outlook? Gold has already shielded UK investors from a collapse in the Pound. It's soothed the sharp loss of purchasing power for "commodity currency" investors in Canada and Australia.

Nothing is certain, of course. But given that the gold price pushed higher on huge Dollar deficits and negative interest rates after inflation, the flood of money coming from the Fed and Washington in 2009 may only drive gold higher once more for US buyers.