I read an article saying that gold prices are dropping because people don’t feel the need for the safe haven now that the economy appears to be rebounding. In the very next next paragraph, however, the author talks about how the Fed buying up treasuries, etc. Now, I look at an article like this and see a resounding contradiction. The article advises people to get out of gold and back into equities, yet it also refers to the reasons why we should expect high inflation (making gold a decent investment right now).
Is there something I’m missing here? Or is it the rest of the world that’s missing something?
Maybe prices fall because central banks are dumping old?
Maybe investors are afraid of that central banks might start dumping gold?
Maybe investors rather wait for evidence of the newly created excess reserve of the banks being put in circulation, inflating the purchasing power of the dollar? It could take days or years. Some stocks have doubled in the last few weeks. Stock markets overall was a great bull during March. There might be better short term alternatives in this bull run, than to hedge a future price inflation.
I bought more of a precious metals mutual fund in response to this “rally”. Keep in mind that the stock market loves inflation. Stocks reflect corporate earnings and as the value of a currency falls, it is easier to acheive the same earnings. Zimbabwe has a very well performing stock market (Up 300000% since the current regime took over.) in a nominal sense. In the wealth sense, inflation is a disaster as it is much easier to create currency and create distortions in the economy than it is to actually make something.
I suppose it is easy to get emotional when you’re looking at the numbers and thinking, “Holy Shit! That’s exactly what they did in 1922 in Germany!!” for example. Fight or flight (into gold) mechanism kicks in.
I read that just before the mark exploded in 1923, Germany enjoyed a huge boom where people were getting rich overnight and pissing away capital like it was no tomorrow. It’s quite possible that, before things get bad, they could go really well.
I just wish I knew more, so I could get a clearer idea of what is actually happening THIS TIME.
right, we’re in deflation right now so people with capital are getting “richer”. the prudent will invest this windfall into long term real assets such as property, commodities, and consumables.
Yes, pay them cash if you can to avoid cheques, bank transfers and credit card, store them in a safe place and tell only a few relatives you can trust completely, just in case. Personally I don’t believe they’ll come for our gold in the immediate future but with Socialists at the helm you cannot be completely sure.
At the moment we are in a time of great financial volatility: expect both stock and commodity (including gold) prices to swing widly. Do not allow this situation to put you of: gold is not short time “speculation”, it’s a long time insurance against inflation. Repetita juvant.
The safest way to hide gold is to form it into something like a spare part for a car or a pipe in the toilett. One can melt tin on the kitchen stove to cover it with a layer deeper than a knife can cut, then paint it. Gold is difficult to melt and mold, but pure gold is soft and can be hammered flat and cut and bent.
It could be revealed by its high density. No other material humans ever get in contact with (outside of laboratories), is that heavy. It’s even heavier than uranium. Its density is about 150% higher than that of tin, and 50% higher than that of lead. So you’d have to mix it with a lot of tin to fool people into believing that it is a solid tin object. (I do not recommend melting lead, even though that too can be done on the kitchen stove, since it is toxic).
Well here in the UK we’re certainly not “in deflation”. Prices are rocketing upwards almost everywhere I look, and this is caused by the inflation in the money supply which has surpassed records with “quantative easing”.
EDIT: Is gold actually down? If so I’m going to buy.
Well, right after G-20, Gordon Brown said that IMF would sell part of their gold -to help the poor, he said ¡¡¡. I don’t think that they have sold more than 100 billion, what it is not that much for moving the market so much. I think the current trend is more related to speculation, but it will resume the upward path sooner or later. That doesn’t mean that central banks are not trying to do everything they can for not letting gold price to go that high that becomes first page news.