For those interested in gold, my fair value of gold for 2008 was $763 an ounce. Using the average of 2008 and 2009's inflation rates for the US dollar, and gold's inflation rate for 2008, I come up with an approximate average value for gold of $815 for 2009. Please note that this is an estimate of the average value for the year, and not a year-end estimate.

Clearly the gold price is well above $815 an ounce, and has been so for quite some time. The macro economic environment has probably never been so obviously in favor of gold and it is my belief that the market has already priced much of this into the gold price. While I fully recognize gold's lure at these times, and the probability that the gold price could still increase quite substantially, I remain cautious about gold. Recall that investors who bought gold when it was grossly over-priced during 1979 and 1980 and then forgot to sell, suffered severe losses.

I would personally prefer gold to sell down to around $800 an ounce, where I know it represents good value, than buy gold at over-valued prices and hope that it keeps going up.

Paul van Eeden

every time i hear paul van eeden's name mentioned, all i can ever think of is hitler screaming, "paul van eeden!? when has he ever been right? about anything??" van eeden is a very smart man, but his opinion on the fair value of gold is way, way off.