Why is the Price of Gold Falling?

Economics Economics Questions
1

I would have thought that, because of fears of future inflation and a general uneasiness in the economy, people would be rushing to buy gold, and yet gold prices continue to fall. I’ve seen articles that also link it to a general fall in commodities prices, but I still don’t understand why this is occurring. I’ve read articles that predict a massive rise in the price of gold in the near future, but so far, nothing.

Can anyone explain or point me to a source that explain why gold isn’t skyrocketing right now?

2

I can think of three real reasons for this that all point to the trivial answer: Currently marginal consumers of gold are only willing to pay the current price despite the large amounts of fiat money being created by almost all central banks. Here they are:

  1. Suppliers of gold have supplied too much gold or are capable of supplying enough gold to keep the price of gold relative to currency at this range. Or consumers of gold PREDICT suppliers of gold as being able to keep the supply at current prices.

  2. Consumers of gold for alternate uses have found alternative solutions and this is the point where they are indifferent about gold versus the alternate solution. (This is one of the best benefits of the gold standard that keeps price deflation/inflation lower or at least less erratic.)

  3. Consumers of gold want to do other stuff like paying down debts or buying new stuff more than they want gold. This is similar to 2.

This is not a valid answer, but is in line with the current historical thought of most folks: The previous run up in commodities was done based upon debt taken with artificially low interest rates or easy credit and as that dried up the margin buying of gold causing the price fell. This

3

Was way over bought and its price was mainly demand, not true price.

Coming from someone who actually has traded gold and got away from it cause I knew it was way over priced. The fact of the matter is gold price is hype and it still will be until all these gold commercials you hear go away cause it will just turn into a ranging market and you can’t make money in that if your a normal person.