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Motley Fool: Gold is overvalued

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Motley Fool says Gold is so overvalued

Savvy investors have been advised not to make a money transfer into gold by The Motley Fool, with the group warning that it is overvalued.

The investing advice and stock research website said that people are piling money into gold, distorting its value and making it difficult to judge similar precious metals.

"There is a close linkage between gold and silver. Many people are saying that silver is undervalued when if you have a look at the long-term trend between the two metals, silver is lagging [behind] gold right now, because everybody is piling into gold," commented director David Kuo.

"But that assumes that gold is not overvalued. On a historical basis silver looks as though it is lagging [behind] gold, but does it mean gold is overvalued or silver is undervalued? Investors have to make their own minds up about that."

Mr Kuo said that he personally believed gold was overvalued, with some people reporting that it could reach £1,318 an ounce, which is only £188 more than its current level.

This means that people putting their money into the metal can only a see a further 17 per cent improvement, however, they risk a slump of over 30 per cent.

"A couple of years ago, it was worthwhile buying gold because nobody was buying gold at the time," he added.

"Now that everybody is buying gold, then lots of people are piling into gold, but that therefore means you have missed the best gain for gold now."

Investors were warned that jumping on the bandwagon now could leave them as the last person holding gold while everyone else is pulling out.

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