Interesting perspective. And I think it has some validity. But manipulation by central banks is still another significant factor.
Fact is, when the fiat currencies hit the (real) skids, *anything* tangible in commodities will become much more valuable.
If you had a garage full of 22LR and 5.56, you’d have a very barter-able commodity. Assuming you were dumb or desperate enough to trade them.
The real question folks ought to be asking themselves is, is it going to be a severe worldwide depression, or Mad Max scenario? None of the TV pundits are saying it out loud because it WILL be one or the other. And they are either stupid and/or frightened. Don’t talk about it and it will go away on its own.
Thanks to improved work methods and technology, there's almost a perfect balance between near bankruptcy and actual extraction costs on the part of the miners.
Since modern industry has real uses for gold and the national treasuries are never bought and sold publicly, industrial demand ~ though small ~ is matched by new production.
We’e still in a deflationary economy and the value of gold is based entirely on psychology and psychiatry, and not on economics or physics. Caveat emptor.....
I have a simpler explanation. Gold has gone up 5x in a few years. Although the Fed has printed a lot of money in the same time, they haven’t nearly quintupled the number of dollars in circulation. Hence, fundamentally, gold may not “worth” five times as much as it was.
There are two reasons that the price of gold has stabilized. 1) European governments and the IMF have sold huge amounts over the past year to fund bailouts, provide liquidity for debt ridden European banks and to continue to fund ongoing deficit spending and debt service.2)Supply has increased. Miners are working at almost full capacity in response to near record high prices. Europeans and Americans have melted large amounts of jewelry to obtain cash. Demand especially in China, the Mideast and India remains constant and strong. Would not bet against gold.
But between now and then, gold prices will continue to drift, because the markets don’t really know whose gold is real, and whose is worthless paper.
FWIW.
I hope prices stay low - I’m buying
You really have to be thinking that ETFs are operating more like fractional reserve bankers; inventing gold paper out of thin air.
Goldbug ping.
Why do I need to wade through TWO click thru sites to get to the rather sophomoric theory being touted here?
Really?
I can’t figure out gold. I bought 20 ounces of gold right after 9/11—I’d been watching the spot price for a few years and it was below the cost of extraction. 9/11 goaded me into buying.
So I got in at the right time. Today, I don’t know. Is gold a store of value? When I took my first job out of college in 1967, I was paid three ounces of gold a week. That translated to $105 a week back then, entry-level salary. Gold was $35/oz.
I’d sure settle for three ounces of gold per week today—let’s see, that’s about $5,000 a week at today’s spot price.
Something is out of whack.
I think my theory is sound. Gold isn’t rising as all disposable income is being spent on lead right now.
The reason that gold is not climbing is that those intelligent enough to want to buy gold recognize the parallel danger of a rapid deflation when reality kicks in and all the low/no information zombies go non-monetary (violent).
Like many, the writer is Amerocentric. He places the force driving the price of gold on American market devices and forces.
In so doing, he failed to consider a major force driving the market, people in Asia, be they traders or just people. That component is apparently now missing. Why? I have no clue.
There is a fallacy or perhaps fallacies present in Free Republic gold threads.
The first is that lead and brass are superior to gold. The fallacy is single mindedness. A wise investor would diversify into both or even better into a mix of hard assets.
The second is the SHTF mentality, the thought that hyperinflation will destroy the world. While the hyperinflation is possible, it is not likely. A far more likely condition is inflation at an elevated rate but never approaching the hyper level.
Finally, I must tell you that when I hit 70, the onset of true wisdom occurred. The above is a manifestation of that phenomena,
Preppers, a word of warning:
I have a friend who, apparently, took physical possession of PMs. I’m not sure how much since my friend keeps her mouth shut.
One fine morning, her hubby walked out of his front door and was met by a man with a ski mask and a pistol.
She and he would be DEAD except that hubby is an incredibly brave and incredibly strong old man. After the struggle, both she and hubby were bloodied but alive as the robber escaped.
Who talked? The gold seller? The UPS driver who delivered the PMs? A close friend?
All I know is that if you have PMs or cash or a lot of firearms, you need to live your life in constant awareness of danger.
BTW, hubby did NOT have a weapon on his person. He SHOULD have been armed!
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