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<p>[QUOTE=&quot;Cloudsweeper99, post: 754463, member: 3011&quot;]Did you buy your gold out of fear?&nbsp; I hope not.&nbsp; It would make an interesting poll.&nbsp; I think this is the wrong answer for 99% of buyers.&nbsp; People and institutions are buying gold for a variety of reasons:</p><p><br /></p><p>1. A number of studies have been published indicating that adding gold to a diversified portfolio that is rebalanced periodically increases returns and reduces volitility.</p><p><br /></p><p>2. Buying gold is a way to participate in the commodities supercycle.</p><p><br /></p><p>3. Until very recently, gold was selling close to or below the cost of production.</p><p><br /></p><p>4.&nbsp; Once gold started to move up, momentum investors joined in and bought gold.</p><p><br /></p><p>5.&nbsp; Investors who consider large short positions a sign of eventual price increase are attracted to take the opposite side of the short positions in the futures market.</p><p><br /></p><p>6.&nbsp; Central banks purchase gold as a matter of policy as a monetary reserve and to diversify those reserves.</p><p><br /></p><p>7. It is used in jewelry and electronics.</p><p><br /></p><p>8.&nbsp; It is considered undervalued in inflation adjusted terms.</p><p><br /></p><p>9.&nbsp; Several high profile investors have recommended gold, and their buying has attracted investors who follow the smart money.</p><p><br /></p><p>10.&nbsp; The AGE, buffalo, and spouse programs in the US and programs in other countries have attracted more collectors.</p><p><br /></p><p>&nbsp;11. Some governments around the world have permitted citizens to buy gold for the first time in many years, spurring new demand.</p><p><br /></p><p>12.&nbsp; Mine production is steadily decreasing, which will push up the price assuming even constant demand.</p><p><br /></p><p>13.&nbsp; The opportunity cost to hold gold is very low due to low interest rates making it an attractive alternative to cash and bonds.</p><p><br /></p><p>14.&nbsp; Speculators expect gold to rise when the recent large budget deficits manifest themselves as inflation.</p><p><br /></p><p>15.&nbsp; Large gold holders can make more risk free interest by basis trading in the futures market than they can with US Treasuries.</p><p><br /></p><p>16. Many companies have begun marketing gold as the latest and greatest investment.&nbsp; If they believed their own hype they would never trade metal for paper.&nbsp; The fact that they do should tell you something.</p><p><br /></p><p>17. ETFs such as GLD enable many institutions to purchase gold for the first time because their charters prevent them from owning commodities directly.&nbsp; This created a brand new, and large customer base for gold.</p><p><br /></p><p>I&#039;m sure there are many more reasons, but you get the idea.[/QUOTE]</p><p><br /></p>

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