When was the gold market the hottest? When was everyone buying gold? When it went above $600 an ounce, about 23 years ago.
Remember the lines of people buying silver at $38 an ounce? It was going to $100. No, it topped at a little over $38. Silver just hit an 18 year high, at about $8.30 an ounce.
Where will gold go from here? I don't have a clue. But gold sellers sure are anxious to sell to me. If it is going to double, why are they so interested in selling to me?
Gold up $11.50 so far today.
Silver up .24 to above $8.50
Actually, in the 1980 squeeze, things were very interesting.
Gold topped at near $850/oz, while silver, at one point, reached a bit over $50 an ounce. Coming very close to the historical average of a 15-16 to one gold/silver ratio.
The principle of investment companies: Sell High, Buy low.
For that to work, they need their clients to Buy High and Sell Low. I would love to hear from anyone who had their broker tell them in 1999, "Yahoo! has peaked, you had better sell now before it starts down." Brokers will call to tell you, "Yahoo! just broke $100, buy before it goes to $250. If it keeps on like it has been, you can't lose."
That just means that they want to dump their institutional holdings before it drops.
"Remember the lines of people buying silver at $38 an ounce? It was going to $100. No, it topped at a little over $38. Silver just hit an 18 year high, at about $8.30 an ounce."
Gold has value because it is used in high end electronics, jewelry and coinage. It is also very rare. In the last three months the entire world has only mined about 800 tons of gold, the vast majority going into jewelry. Gold also does not tarnish, almost a unique feature.
All the gold ever mined would only form a cube about 64ft to a side.
Silver is not all that rare, it is like diamonds, there is a lot of it. I believe the current price for silver is low, but only by a couple of bucks.
IF, and I do say if, gold begins to be actualy bought in China, where is was only made legal a few months ago, then all bets are off.
Gold is way underpriced. Remember, government cannot simply create more gold as they can paper money.
I believe the price of gold is rising in spite of a growing economy because the worlds currency balance is way out of kilter with the value of the goods and services that back the paper.
Also, all you need is for people to begin questioning the paper stuff (and people can be a government) and the entire house of cards is in jeopardy. Look what happened last year when it looked like the Euro was a good deal against the dollar and this year when the Euro was shown to be way overvalued.
The gold will still be there. The silver will still have value. People do not use iron, nickle or copper coins for serious transactions. No one has a safe deposit box full of zink. The value of most of this stuff is measured in tons, not lbs or ounces. While the raw commodities have value, the value is only to traders, companies and nations. People simply do not use it as a medium of exchange. Gold and silver...yep, people take that, always.