I am so confused! LOL I am new to coin collecting (rare coins) and have also accumulated some gold and silver bullion. One end of the spectrum says "the price of gold and silver is gonna continue to sky rocket!!" (though i take that with a heavy grain of salt given those people are usually trying to sell me something! LOL).. On the otherhand, you have others who believe that it will sink back once this "inflated demand" wears out... I try to study it as objectively as possible, and historically when the dollar drops in value, the gold and silver rise.. With all the spending that has and is going into the stimulus and other programs and with the trillions in debt we owe to the china, how is the dollar to hold its value and gold/silver NOT to rise...? Obviously no one has a crystal ball... but you may have and likely are following this market much closer and for longer than i have... I am really interested in hearing everyone's views...
Well it just happens that other countries are having trouble too. That has made the dollar retain some value in comparison and at the same time demand for gold has gone up. At least that's my feable attempt to justify how we have bucked the trend.
That's a great question and goldbugs rarely think about it very much and only see the rise in gold as inevitable. The answer to your question is deflation. There is a lot of debt in the economic system that may have to be liquidated if it cannot be rolled-over. In that case, there will be a tremendous demand for dollars since they are the only acceptable payment for the debt. This is the normal outcome at the end of many credit booms. Now many people believe that the Fed and US Treasury will print massive amounts of currency to enable every debtor to inflate away their liability. But what if they don't? Then you will have massive asset liquidation sales to satisfy the debt obligations, including gold sales. That said, I'm in the inflation camp, but constantly keeping an eye out for signs that the current credit bubble will end in deflation. Nobody can say for sure which way it will end -- but many people will tell you they can. Just keep doing what you are doing. You are asking the right questions. :thumb:
