Gold surged to $1600 because people with lots of money were scared of losing it in another meltdown and wanted something tangible as a store of wealth. But that doesn't explain the runup from 2002 to 2008 now does it.
For that you can only ascribe inflation, and if we continue to get deflation gold will be happy to sit here or drift a little lower. Unless of course it goes rapidly upward as it was in 1933.
When I was listening to financial sense back in 2004? Jim Puplava and co were talking non-stop about dollar doom and money printing.
Primarily that was the FED lowering the interest rate to 1%.
Gold doesn't yield an income they say, well now neither does the USD. In the US a CD earns half a percent in a year.
Fed bringing down current rates to the same levels as the 1940's, when money was literally destroyed, banks literally destroyed, factories and buildings literally destroyed, and peoples and populations literally wiped out.
Yes, and it proves the point that gold is not just a fear buy. People have many attitudes to buying gold. I think the most obvious one is the response to central bank buying. Astute investors will follow the actions of CB's not necessarily their talk. If the CB is dropping rates through the floor it points to big problems in credit markets and obviously overpriced assets. If they thought gold was overvalued they wouldn't be buying it at these prices.
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
Fed bringing down current rates to the same levels as the 1940's,
At the time the US was producing the vast majority of the worlds oil. They had black gold. Trading black gold for yellow gold they safely locked away half the worlds stock of gold in Fort Knox.
But it didn't last forever.
The next trick of our glorious banks will be to charge us a fee for using net bank!!! You are no longer customer, you are property!!!
The one bright spot for the precious metals market appears to be the physical market as the U.S. Mint reported a 469% increase in July coin sales, compared to last year.
According to the U.S. Mint’s sales data, 202,000 ounces of gold, representing a variety of denominations of American Eagle and Buffalo gold coins, were sold last month, compared to 35,500 ounce of gold sold in July 2014. In fact last month’s sales presented the strong pace for the year.
In total, the U.S. mint has sold 571,500 ounces of gold in the first seven months of this year, up 38% compared to same time period last year.
Commodity analysts from Barclays said in a note published Monday that gold’s recent price drop below $1,100 an ounce encouraged investors to purchase more bullion products.
“This level of retail interest was last seen in early 2013, which suggests this is a price-driven response as 2013 gold also dropped violently,” they said.
The mint also saw a rise in silver bullion sales compared to last year, selling 5.529 million coins in July, up 180% year-over-year. Although July sales were above average, unlike gold it didn’t present the peak for 2015. In January, the mint sold 5.530 million coins.
Total silver sales in the last seven months was 27.315 million coins, up 4.6% from 26.103 million coins sold last year in the same period.
The mint’s silver sales could have been higher but in mid-July it sold out of the popular American Eagle silver coins, being caught off guard by the increased demand after prices dropped below $15 an ounce. Sales of the silver coins, on an allocated basis, only resumed last week.
It is not just the mint that has seen unprecedented demand for bullion as prices significantly dropped last month. In his morning commentary, Peter Hug, global trading director for Kitco.com said that many bullion dealers have been struggling to obtain a supply of silver coins and small gold bars.
However, he added that he does not see this reemergence of physical bullion to help support prices as gold trades under $1,100 an ounce and silver under $15 an ounce.
“This demand is mitigating the wholesale liquidation of the precious metal complex by funds and liquidity needs from margin calls in other investment classes,” he said.
By Neils Christensen of Kitco News; nchristensen@kitco.com
There are some people who seem angry and continuously look for conflict. Walk away, the battle they are fighting isn't with you, it's with themselves.
The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it. The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.
Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
Paper Gold "Dilution" Hits A Record 124 For Every Ounce Of Physical on comex
Over the few days, we got what was merely the latest confirmation that when it comes to sliding gold prices, consumers of physical gold just can't get enough. As the Times of India reported over the weekend, India's gold imports shot up by 61% to 155 tonnes in the first two months of the current fiscal year "due to weak prices globally and the easing of restrictions by the Reserve Bank.In April-May of the last fiscal, gold imports had aggregated about 96 tonnes, an official said. "This follows confirmations previously that with the price of gold sliding, physical demand has been through the roof... "
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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