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<p>[QUOTE="InfleXion, post: 1324008, member: 29012"]All true, but what makes gold unique is that its primary function is a measure of currency value. Homes don't have to rise with inflation because that market is more determined by supply and demand which depends on jobs, income, and other factors. Where as gold price is driven by whether banks expand or contract the money supply. Sure there is the occaisonal swing one way or the other based on sentiment or currency strength relative to other currencies, but neither of those do much to sway the longterm trend based on money supply. If money supply contracts then I would expect gold to cool off under normal circumstances, but since gold never really took off in the same manner that the money supply has I don't know how well these rules will hold true until paper trading doesn't dominate physical price.[/QUOTE]</p><p><br /></p>
[QUOTE="InfleXion, post: 1324008, member: 29012"]All true, but what makes gold unique is that its primary function is a measure of currency value. Homes don't have to rise with inflation because that market is more determined by supply and demand which depends on jobs, income, and other factors. Where as gold price is driven by whether banks expand or contract the money supply. Sure there is the occaisonal swing one way or the other based on sentiment or currency strength relative to other currencies, but neither of those do much to sway the longterm trend based on money supply. If money supply contracts then I would expect gold to cool off under normal circumstances, but since gold never really took off in the same manner that the money supply has I don't know how well these rules will hold true until paper trading doesn't dominate physical price.[/QUOTE]
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