I've always been told the price of PMs are tied to the strength of the dollar. If the dollar gets weaker, the price goes up. So, if by any chance our dollar becomes strong again, would that make the price go down?
That would be only one factor to take into consideration, but my opinion is yes for the most part when the dollar value has dropped PM value goes up and visa versa.
All other factors unchanged ( no civil wars, nuclear holocausts, etc) ~Yes, as gold is denominated on the USD. But only for those who currency is the USD. For foreigners the price would reflect the cost of their currency exchanged for the USD. So with a stronger dollar, the price per ounce in US would tend to go down, but it might increase in Japan, as the yen might be weaker, and more needed to convert to the price of cold in USD. Same for other currencies, Same for other commodities marked on USD. Remember, this is a general rule, exceptions happen all of the time for a while due to external world events. IMO. Jim
So theoretically speaking, could the price of gold ever go back under $1,000 an ounce or the price of silver under $15?
Absolutely could! although not likely. Supply and demand theory all the goberment would have to do is release the surplus of Gold their sitting on and timber!!!! Because silver consumption has grown and there is a minimal surplus <getting smaller everyday, I don't think it is as much likely and call me crazy but I think in my lifetime the price of silver will pass the price of gold.
I think silver could go to $15 again and gold to $1000 under recessionary conditions. If the economy goes back under then traders would see sharp ( and quick) losses in stocks and other investments. They would sell off their precious metals to cover their losses in other positions which would put a lot of downside pressure on precious metals and could get those lower prices. Another thing to consider is if the government with its QE operations, enormous debt , and a European debt crisis all going at the same time, more and more money will be printed and cause the value of the dollar only to decrease (especially in a soft default). I think precious metals have a good chance to sustain a bill market until interest rates go up (2015 at the earliest according to the fed) or until some groundbreaking event occurs (defaults/reccession) that could stop precious metal gains.
In theoretical and practical terms, absolutely not. They have crossed the event horizon that one sees towards the end of fiat currency so it doesn't matter what they say, they will continue to create ever increasing amounts of debt in futile attempts to mitigate the issues already caused by the debt they have created. You will never see $1000 gold again. (denominated in current FRNs)
Short term is could. Longer term it would take a reduction in the cost of production and there are a lot of variables.
Normally, PM prices are not inversely related to the value of the dollar. That idea just started within the past couple years. Now that's not to say everytime silver goes up the dollar goes down. But when the dollar drops drastically, PM's are now starting to go up. We saw a huge example of this when the American government was voting on raising the debt ceiling last year (or this year, I can't remember what year it was). People were afraid the value of the dollar was going to drop, so there was a heavy push on buying non-US type of investments. They could buy foreign stocks and bonds, but it's easiest to buy precious metals. And around that time, PM prices shot up.
