Id there is a global run on Gold coins, the tells me that there is a huge demand for gold. If so, can someone please explain to me why the price of GOLD itself is stuck in the low $700 to $720 range ( 30% off its 2008 high ) for the past 3 months ?
I just read an article on that this morning... Lemme see if I can find it.
I think the 700 billion $ given to Goldman Sachs is being used to manipulate the PMs and short the miners.
I can’t find the article I wanted, but this one touches on some of the reasons:
http://www.kitco.com/ind/saville/nov182008.html
............Excerpt..........
...In the short-term, prices are moved by factors such as sentiment changes and margin calls; and these factors are often unpredictable. For example, there is no way of knowing the financial situations of the large speculators that dominate the trading of COMEX gold futures, and, consequently, no way of quantifying the risk that these speculators will be forced sellers of gold in the near-term. It is therefore possible that an extension of the de-leveraging trend will push the gold price to new lows for the year over the coming days, although the Commitments of Traders data suggest that a lot of de-leveraging has already taken place and that a move to new lows would be short-lived.
When considering the outlook for the next 6 months or longer, the only gold-bearish argument that currently holds any water is the deflation-related one. If the forces of deflation overwhelmed the efforts of central banks such that the total supply of money began to contract, then gold would probably keep performing well in terms of most other commodities but would perform poorly in terms of the deflating currencies. As a result, we would not be intermediate-term bullish on gold if we thought that genuine deflation (a contraction in the money supply) was a likely outcome.
It could also be argued that even if the money supply continues to grow at a robust rate, the outward signs of inflation will become less evident over the year ahead and this will lead to weaker investment demand for gold.
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I (not that I am an expert on the commodities markets by any means) also think that the low price of gasoline / oil is a contributing factor.
Plus there are lots of really crazy things going on in all the markets, and I think even a lot of the people that normally know what they are doing in trading, are kind of scared to make any big moves. They are sitting on cash until SOMETHING stabilizes.
Just to point out the craziness: Platinum is UP over the last couple of days, DESPITE predictions indicating that there is going to be a 20%-30% reduction in demand for it over the next year or so, leading to a surplus.
Another thing that could be keeping gold prices low is reports that there is a big new gold find in Mexico.
Somebodies with more gold than is being demanded are selling into the demand. After they sell they're just going to wait till it goes lower so it can come back to its rightful owner.
Big industrial consumption down.
Puny consumer consumption up.
Sure.
Gold can be several types of investments for people. Some buy it to speculate on the price going up. Some buy it as a hedge against inflation. Some buy it because it is a commodity with an ability to barter with, when paper money is worthless.
Part of the increase in the price of gold earlier was the fear of inflation.That fear abated because the inflation we had was not traditional inflation, but commoditized inflation. The commodity that caused the inflation was oil. When oil rises, the cost of everything else inflates, because you need to use oil to produce things or transport them. The oil bubble burst, and the inflationary fear faded.
Gold is also used as a hedge against currencies. The US Dollar was much weaker earlier in the year, and is peaking now. Less worry about a weak dollar makes gold less attractive as a hedge against it.
Ironically, it is the stronger Dollar that has caused the price of oil to plunge. OPEC has always priced crude in US Dollars. If the Dollar is weak, you need more dollars to buy a barrel of oil. If the dollar is stronger, you need less to buy that barrel of oil. The price of oil peaked exactly when the dollar started climbing, and has fallen ever since.
In reality, gold is holding up pretty well considering what other commodities have done with the stronger dollar, and this is is because Obama won the election. People may want to use real gold bullion at some point in the future, for one reason or another....
And I happen to think that....gold stocks are near a bottom.
I could be wrong.
because the big boys are selling their bulk gold (not the USA though) and that is deflating the price of gold. Think hedge funds, think countries. (then again it is what glen beck said)