Business

Thursday AM February 17th, 2011

Gold is trading at more than $1370 per ounce. As Andrew Schneider reports, though, the gold market may be due for a correction.

Swiss goldA decade ago, an ounce of gold sold for less than $260. Two recessions later, that price has quadrupled. Many investors are treating it as a hedge against inflation, encouraged by voices ranging from conservative commentator Glenn Beck to World Bank President Robert Zoellick.

“Waves of popularity or unpopularity are classic cases of greed and fear.”

Richard Leader is president of First Houston Capital. He says gold’s very popularity makes it a poor investment.

“In most financial assets, there’s a means of determining value. There’s some income being generated by a real estate property. There’s a dividend being generated by a stock or a coupon generated by a bond. But in the case of most commodities, and gold is the epitome of that, there’s no income generated, and the valuation is simply dependent upon finding another person who is willing to buy the gold at a higher price someday.”

Leader says that trend can’t continue indefinitely.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas delegations in the U.S. House and Senate, as well as the Texas governorship, the state legislature, and county and city governments. Before taking up his current post, Andrew...

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