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Posted on 08/24/2011 1:15:58 PM PDT by NormsRevenge
Gold prices are plunging as investors grow more confident about the global economy.
Gold fell $104, or 5.6 percent, to settle at $1,757 an ounce Wednesday. It's the steepest percentage drop since March 2008. Gold is still is up 24 percent for the year.
Investors have been buying gold because of concerns about economic weakness in the United States and Europe ..
Recent economic news has been more encouraging...
(Excerpt) Read more at finance.yahoo.com ...
Recovery Summer 2 (or is it 3?) isn't over yet!!
$2,000/oz. by years end or Bust!!
SELL!! SELL!! SELL!! It’s past time to GET OUT, the gold bubble is bursting!!
“SELL!! SELL!! SELL!!”
...you forgot your sarcasm tag. Unless you’re serious.
I agree!!!! Just bullets and food. Sell. Gold is crashing. The bubble is burst...gold is down to 1768.85. Oh! Woe is me. You can’t pay your bills with gold coins.
More of the MSM pimping the Obama agenda. A lot of people piled on the gold bandwagon recently. Gold was overbought and the market corrected. The newbies, unsure of their true convictions, bailed, making the sell off worse.
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European Bank Job ‘Bloodbath’ Surpasses 40,000For Europe, and for the United States, which invested billions of dollars of taxpayer money in bailing out European banks, this is an indicator of pending disaster of such a magnitude that the preceding 3 years could be considered only a warmup.
In the last crisis of 08-09 gold went from $1000 all the way down to $700, silver tanked, oil tanked, and every other commodity and stock did too.
This time is looking a lot like 08 where stocks started their move down and then oil and finally gold followed. I would not say that the drop in gold reflects confidence in the economic outlook.
The economic numbers were abysmal this week. Durable goods were up only because of auto and airplanes and this was after a crushing July #. Both Philly Fed and Richmond Fed readings were WAY lower than expectations, and the debt crisis in Europe is going to explode sooner than later. 20% unemployment in Spain is already leading to riots and the UK was just a harbinger of things to come.
Gold may drop below $1500, but that should be the floor and $2000-2500 in the next two years is probably very likely.
Great headline:
Biggest Gold Drop Since December 2008 Sends Metal To... Week Ago Levels.
I like how the journalists are so brilliant to know exactly what caused gold to drop $104 today.
“Gold prices plunge as economic fears ease”
A more accurate reason for the drop is that after advancing $450 in the past six weeks the gold market ran out of buyers and corrected.
Scared money never wins....
Gold may or may not be a bubble, I don’t know...and no one else does either.
I believe the price of any commodity has two components, the cost to produce it and the speculative add on cost of supply & demand / speculation.
I think the simplest way to feel comfortable with any investment is to run different scenarios thru your mind, before and during the investment phase.
So if you are long gold, imagine gold dropping to $500 / oz.
If that thought scares you, or would keep you up at night, then you should consider lightening up your position until a drop to $500 wouldn’t bother you.
I’d suggest the same idea for what you would do if gold runs up to $2,000 or $3,000 an ounce. At what point would you want to sell it? At what point would you personally feels it overvalued.
Once you’ve gone over these scenarios, you can relax knowing you already have a game plan.
Just my two cents.
Scared money never wins....
Gold may or may not be a bubble, I don’t know...and no one else does either.
I believe the price of any commodity has two components, the cost to produce it and the speculative add on cost of supply & demand / speculation.
I think the simplest way to feel comfortable with any investment is to run different scenarios thru your mind, before and during the investment phase.
So if you are long gold, imagine gold dropping to $500 / oz.
If that thought scares you, or would keep you up at night, then you should consider lightening up your position until a drop to $500 wouldn’t bother you.
I’d suggest the same idea for what you would do if gold runs up to $2,000 or $3,000 an ounce. At what point would you want to sell it? At what point would you personally feels it overvalued.
Once you’ve gone over these scenarios, you can relax knowing you already have a game plan.
Just my two cents.
Darn! All those poor gold investors are set back to the record high price set about two weeks ago!
I’m fully prepared for it to fall to the price it was at (horrors!) a month ago - $1600.
Before it marches past $2000 later this year.
LOL. More likely Helicopter Ben has been releasing drafts of his Friday speech announcing QE3 and expanded PPT. Long term, more paper won't depress gold prices.
Unlike oil & diamonds, where production and supply are controlled by a few producers who keep prices artificially high, gold production and sales are operating in a free capitalistic market and prices fluctuate based on demand and supply.
Total average global production costs per oz generally runs between $200 & $400. Marginal mines are now coming online with production costs as high as $700 per oz.
Generally, market theory would hold that the long run price of any good or commodity is the total cost of production, sales, marketing, overhead, etc plus reasonable margin for profit.
Excess profit margins (as we currently have at $1700 per oz), will bring in more production until such time as the marginal cost of production plus nominal profit for risk and use of capital equals the price.
Remember that it was only 9 years ago when gold was $260 per oz and the mines were making money at that price.
So I wouldn't be buying gold at these prices in anticipation that gold was going to double - as it doesn't make sense.
But if you really believe what you say, you'd be crazy not to be buying now..
CME increases gold margin requirements by 27%
Bump, totally agree, if the economy does not collapse gold will drop to well below $1500 my guess would be a floor at around $800.
Really? I kind of needed a laugh today, thanks.
But if you’re serious: do you actually have gold you’re selling now? Are you taking your own advice? Because I’d buy what gold you’re offloading then. Goldman-Sachs, the bank closest to the administration, is predicting gold goes above $2000 an ounce, maybe up to $2500. What do you know that they don’t?
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