Skip to comments.A controversial theory explains why gold is no longer rising
Posted on 01/24/2013 6:29:46 PM PST by arthurus
Why isn't gold higher?
Two of the three reserve currencies of the world the dollar and the yen are on a relentless race to the bottom, and only recently have the Europeans figured out that they'd better start kicking the euro down, before they price themselves out of the global markets.
With this general fiat currency devaluation, you would think that gold would be much, much higher than it is now.
But gold isn't higher it's drifting...
Gold was on a relentless climb after the 2008 Global Financial Crisis with good reason: The markets collectively deduced that the central banks of the world would devalue their currencies, in order to get out from under the mountain of private, consumer, and sovereign debt.
(Excerpt) Read more at thedailycrux.com ...
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.
I will be using your paper money for toilet paper....
“The real question folks ought to be asking themselves is, is it going to be a severe worldwide depression, or Mad Max scenario?”
Neither.... people have been preaching crash and burn for some time, and you see no indication that it’s going to happen. What is the next bubble? Government debt or Student loans, neither of which I think will cause a meltdown - just alot of pain.
The people who made money off gold did it. If you look at history gold does the same thing stocks, bonds and commodities do - it goes up and it goes down in value. Inflation adjusted, gold was more expensive in 1980 than it is now.
The Feds can push their paper money onto the banks, but the banks just sit on it EARNING interest from the feds. It is crazy. The Feds haven’t figured out a good way to get the fiat money to the masses - yet. The PPT does a good job but it only goes so far.
But between now and then, gold prices will continue to drift, because the markets dont really know whose gold is real, and whose is worthless paper.
That means that demand for the small percentage in private hands as well as the price asked by miners for new quantities gives us the trading price ~ just like everything else.
One more time ~ gold has two markets ~ government and they ain't selling, and private sector, where there's actually an industrial need for it.
The private market is tiny compared to the total quantity held or controlled by governments (or their proxies). There's no there there!
Both Chinese and Indians are big personal buyers of gold.
Are they both in a bit of a slump recently? Add the increased effeciency of microscopic gold mining, often tied in with other metals like copper and the “cost” contimues to be relatively low.
Miners are unlikely to slow down production just to bump the price as they all are also interested in recovering mine development and infastructure costs, even at lowered margins.
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.
Why do I need to wade through TWO click thru sites to get to the rather sophomoric theory being touted here?
Except that gold was probably undervalued in the first place, plus, gold prices are often reactionary (to market expectations) and that can cause a lag time in price fluctuations, especially upswings.
If I’m going to be into metals, it’s going to be brass, copper, and lead, not gold.
Three days a week I think that too. Three days I think major economic depression. And one day a week Mad Max.
Making me crazy.