The Reason Gold is at its Current Price.

One word: Fear.

We the people are worried as hell.

We're learning the painful truth that the dollar is weak (has been) and sadly, won't be getting better.

US Govt. Spends spends spends and takes debt debt and more debt from China and other countries.

As we saw the bullish rise in '07 begin in Gold, we the people realized that gold may be our safest bet. People are hoarding gold at this current time because they know something's seriously wrong with the dollar and they lost confidence in it a long while back. I believe now it's just a matter of time..

I hope you find this argument sound as to why gold is at the price it's at and will continue higher the more people realize the downfall of the U.S dollar compared to other world currencies.

Sad realization, buy gold.

 

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Not a bad time to be sitting on silver either. Silver has much room to appreciate. Yep...the dollar's headed for the potty, and nobody we've elected seems to care. They'll intentionally debase the dollar and create inflation to make the debt cheap....and we the people....as always....will bear the brunt of it.

Nightowl

 

How? Who? You? Me?

Why?

Why? / How? / Which? / Proove It

Why?

What People? What is Wrong?

Why?

Before?

I don't

 

I think fear is the wrong answer. I doubt that most gold bullion buyers think of gold the same way they think about other investment assets. You have to remember that the handful of internet gold gurus pushing gold as the only way to survive the "inevitable" collapse of the dollar are a small minority who have been around fairly continuously for decades. They have their followings, but 99% of the money going into bullion is controlled by central banks and institutions using completely different analytical methods.

 

maybe i am wrong but is it not china and other countries that buys
debt from the us
dave

 

According to the World Gold Council, the increase in demand has not come from jewelry or industry but from "identifiable investment demand", e.g. coins and the like.

This is what you'd expect of a fear-driven rally.

The anomaly is that dollar-denominated assets have been holding their own or going up, which is not what you'd expect of a market that's given up on the dollar. Also there hasn't been much of a premium for inflation-adjusted Treasuries, as there would be if there were expectations of inflation.

I don't know what the heck is going on.

 

The fear is "looking ahead" at what the current class of "potheads" that are now in control of government MAY do next. These are the "Age of Aquarius" idiots...the "Summer of Love" folks that are sitting in our hallowed halls. Communism was embraced by these dopers. It's fear of what they intend to do at any cost to the dollar or to the taxpayer that's driving people to precious metals.

Things may seem OK "today"...but there's a stench in the air as to what the next few years are going to bring that has everybody bracing for the worst. They have about 67 new taxes on the horizon.....from twinkies right down to the air we breathe (cap and trade).

Social justice....not social equality....is what they seek. That means that there was an "injustice" and there will be punishment.

Nightowl

 

I'm not sure if you know this, but you're coming off as a real jerk with that reply.. Sorry to be the one to say it.. I hate when people dissect each of my words like that. It's very rude.

Just my opinion. Anyway, next!

 

We absolutely borrow from them.

 

It's absolutely fear buying..

Why else would people be buying gold this much?

 

no the the us sells the debt and china buys but how long that goes on for is anybody guess
but china needs the us for to buy there products
so what comes around goes around
dave

 

If you want something to think over, consider the 1933 Gold Confiscation.

Gold was hyperinflated. The biggest byproduct of the situation was the damage to the US dollar. Once the prices soared, gold was called in under penalty of jail and fine. Shortly thereafter, the export of gold from the US was killed by Roosevelt via Executive Order No. 6073. Small banks scrambled to collect on debts owed, but ultimately went belly up.

There's a lot more information about the subject if you check into it.

-Shaun

 

Gold is going to go down as long as the economy improves.

As I said in other post, I expect it to be around $1000 in less than three months.

If the hedge funds have bought a lot of paper gold, there could even be a sell off like oil ($150 down to $40).

It happen to gold before in 1980 and will happen again.

 

I think that if honesty abounded among gold hoarders, Greed might be a larger factor than Fear of the dollar's position in the economy. Gold is the housing boom all over again. Everyone thinks it will only go up. Greed! IMO.

Jim

 

Did you buy your gold out of fear? I hope not. It would make an interesting poll. I think this is the wrong answer for 99% of buyers. People and institutions are buying gold for a variety of reasons:

1. A number of studies have been published indicating that adding gold to a diversified portfolio that is rebalanced periodically increases returns and reduces volitility.

2. Buying gold is a way to participate in the commodities supercycle.

3. Until very recently, gold was selling close to or below the cost of production.

4. Once gold started to move up, momentum investors joined in and bought gold.

5. Investors who consider large short positions a sign of eventual price increase are attracted to take the opposite side of the short positions in the futures market.

6. Central banks purchase gold as a matter of policy as a monetary reserve and to diversify those reserves.

7. It is used in jewelry and electronics.

8. It is considered undervalued in inflation adjusted terms.

9. Several high profile investors have recommended gold, and their buying has attracted investors who follow the smart money.

10. The AGE, buffalo, and spouse programs in the US and programs in other countries have attracted more collectors.

11. Some governments around the world have permitted citizens to buy gold for the first time in many years, spurring new demand.

12. Mine production is steadily decreasing, which will push up the price assuming even constant demand.

13. The opportunity cost to hold gold is very low due to low interest rates making it an attractive alternative to cash and bonds.

14. Speculators expect gold to rise when the recent large budget deficits manifest themselves as inflation.

15. Large gold holders can make more risk free interest by basis trading in the futures market than they can with US Treasuries.

16. Many companies have begun marketing gold as the latest and greatest investment. If they believed their own hype they would never trade metal for paper. The fact that they do should tell you something.

17. ETFs such as GLD enable many institutions to purchase gold for the first time because their charters prevent them from owning commodities directly. This created a brand new, and large customer base for gold.

I'm sure there are many more reasons, but you get the idea.

 

Short answer, this stuff has been going on ever since Franklin D took us off the gold standard. The world thrives on Keyensian economics......

 

We know there was a big demand spike from individual investors too, because last year coin premiums went up, fractionals disappeared from inventory, and machinery for making retail-sized investment products was running full tilt (source: goldchat.blogspot.com, by a mint employee).

 

I agree that individuals make up a significant part of current demand, but that is a small percentage [I believe about 1-2%] of the total amount of gold already held in the vaults of banks and institutions. Keep in mind that a year's worth of mine production is nothing compared to gold inventories.

 

I agree with this. Imo gold goes up when the economy takes a hit, and people think the dollar is going to die. People have been saying it forever, "the dollar is going to die", but then the economy gets better and amazingly the majority of people suddenly have new found faith in the dollar .

I know a lot of people have said this before but I'll repeat it.

If your buying gold because you have this dooms day idea, and think the dollar is going to completely fall apart, and where going to rely on precious metals as a form of currency, you should be investing in Bullets and armor, rather then gold and silver.

 

I already have bullets and armor. :rocketwho

Nightowl