Gold is dropping because the US Dollar is soaring.
The U.S. Dollar is strong because the Euro is in serious trouble - about to collapse in the opinion of many. Over $1.2 trillion was converted from Euros into Dollars and flew across the Atlantic this weekend alone.
Could be a good buying opportunity.
Dollar fundamentals are terrible!
Try to amortize the U.S. debt using current tax receipts (can't be done). Try to figure out how much Congress would have to cut spending to bring deficit spending under control - about 65% at last count (can't be done). Look at increases in M2 and M3 (breathtaking to say the least). Look at U.S. financial ratios for debt to GDP, debt to tax receipts, etc. (worse than Latin American economies that collapsed into hyperinflation). Then pick up an economic history text and see what has happened to countries in our predicament (it's ugly ... real ugly).
Translating the inflation adjusted price of gold in much milder economic circumstances to today's dollars yields a price in the $3,000 to $5,000 range depending on index used. Calculating the value of gold based on its worth as a U.S. currency substitute for the U.S. Dollar yields a price in the range of $12,000 to $50,000 based on the extent to which it replaces fiat. The same applied to replacement as a world currency yields a price from $75,000 to $500,000 per ounce.
I suggest silver and platinum as slightly more attractive right now than gold.
Platinum, no. It's an industrial metal and the world economy is on the verge of collapse.
Silver, hell yes! It is both a precious and industrial metal and its fundamentals are even better than gold's.
Maybe sovereigns are selling off gold to pay off some fiat debt obligations?
Most are heavily buying at the present time in anticipation of the dollar and euro collapses.
I’m not really an expert on this but I see it this way:
In the US, everything is valued in dollars. So when both the markets AND commodities are falling in price, I figure we are seeing an increase in the perceived value of the dollar. People are going into cash. When the market is up and metals are down, or vice-versa, then I see it as more complicated.
Dollars which, I understand, the Fed created out of thin air. When the dust settles and they convert from euros to dollars, what happens to the newly created "money"? Disappear or go into circulation? I bet on the latter and will hang on to gold.