The Reason Gold is at its Current Price.

I can't find it now, but once when I was Googling for information about fundamental analysis for gold, I ran across someone's book which said gold was unusually complicated for a fundamental analyst.

As best I remember, the author's point was that the demand for gold is multifaceted, the supply is a mixture of independent sources, the inventory is uniquely huge, and a lot of it is driven by market psychology. My memory is probably off about the reasons, but the conclusion does fit the facts: at least one person doing respectable fundamental analysis has been way wrong about recent trends.

"Supply and demand" is also not a complete answer for an investor. The future depends on how much of that demand is "strong hands" who intend to hold onto the gold for a long time (e.g. central banks) and how much is from short-term speculators who can and will sell in a heartbeat. One interesting thing that was not at all to be expected is that ETF owners have been "sticky" so far.

IMHO CloudSweeper's list of reasons is the best answer in the thread so far. We should thank him or her.

 

Log in or Sign up to hide this ad.