Message:

<p>[QUOTE=&quot;Morgan1878, post: 731600, member: 17869&quot;]The dialogue on what and what does not affect the price of gold has continued for decades. What seems to be true is that gold is a &quot;store of value&quot; that is used to hedge uncertainty. It is a form of insurance.</p><p><br /></p><p>Whether that uncertainty comes in the form of a catastrophic natural disaster, war, plunging currency, inflation or a combination of these is generally not completely known before the event actually occurs.</p><p><br /></p><p>At this point in time, it&#039;s generally agreed that primarily the price of gold is going up as a hedge against a dollar that is losing purchasing power vis a vis other currencies.</p><p><br /></p><p>Rising gold prices are also a result of increased buying by individuals, investors </p><p>and as of this last week, the Central bank of India. What isn&#039;t often mentioned is that it doesn&#039;t take much of a spike in demand to create a shortage of gold and hence a big spike in prices. There simply is not that big of a supply.&nbsp; </p><p><br /></p><p>Another reason for the rise in gold prices is the expectation that inflation, although not a problem now <i>may</i>&nbsp; be a significant problem 1 to 3 years from now due to all of the excess money the fed has put in the system. A lot of that cash is sitting in banks doing nothing. If it starts to circulate before the Fed can pull it out of the system, inflation is a real possibility.</p><p><br /></p><p>In closing, I can tell you that my day job is at an investment firm. Very few portfolios hold any precious metal investments. More common are investment vehicles that hold broad commodities (usually in the form of a mutual fund) which have also risen along with gold since they are also defined as &quot;real assets&quot;.&nbsp; </p><p><br /></p><p>The point here is that at some point if the price of precious metals continues its march upwards, there will all of a sudden be a stampede by financial advisors and their clients to get into precious metal related investments. There are a lot of financial advisors who while being great salespeople are not so hot at recognizing market trends until the trend is slapping them in the face. When this feverish activity occurs, I will start paring my positions, because the top of the gold market will be near.[/QUOTE]</p><p><br /></p>

Your name or email address:

Do you already have an account?

• No, create an account now.
• Yes, my password is:
• Forgot your password?

Stay logged in