Gold Price Volatility "Threatens Long-Term Gains"

LONG-TIME gold investors risk missing the biggest gains by selling on short-term drops in the Gold Price, says veteran commodities analyst and trader Rick Rule.

Chairman of brokerage Global Resource Investments, and speaking to South African MineWeb's Gold Weekly podcast, Rule predicts that the Gold Price could double from here, but only with spectacular volatility.

In the 1970s the Gold Price "ran in US Dollar terms from $35 an ounce to a high of $850 an ounce," says Rule, but "along comes 1975 in the middle of that run and gold fell by half.

"People don't remember that...[And] paradoxically, people who were right about the secular move in gold, many of them got stopped out by a cyclical decline...despite the fact that they had the right long-term trade."

Warning people Buying Gold today to beware volatility in 2010, "There's plenty of opportunity for gold to fall from the $1200 level to the $800 or $850 level on its way to higher highs," says Rule.

The sharpest Gold Price drop so far in this current bull market – which began a decade ago – came between March and October 2008, when it lost 33% in US Dollar terms.

On a daily basis, Gold Price volatility has risen in recent weeks, a report in the Asian Times notes, but it remains significantly below volatility in the stock market's S&P 500 index.

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