I don’t get this one.
Gold doesn’t do anything. Nobody has credit to buy jewelry (where MOST gold demand comes from). When I was in college I bought my girlfriend a gold thingy at the mall and I got so le’ed.
in normal times, the demand comes from jewelry, but in the past couple of years, it is mainly driven by hedging and disgruntled fiat money holders.
Wrong… Go to the world gold council website and see the stats.
virgin, why has gold shot up to over $1000 in the last few months? People have suddenly changed their taste for gold jewlery?
people were buying gold as safe haven…alternative to treasuries (which is crazy IMO).
Gold is volatile. Gold won’t make a meaningful move without jewelry demand going up, too. Just read the statistics on the website. I talked to a gold dealer here in LA. He said when there is hard times and no credit (i.e. NOW!) that gold comes off the shelves, off the neck, out of the ears, out of the teeth … and into him! The last few years we’ve had good times, good credit, etc… driving jewelry demand. No need to raise cash. Now, the consumer needs cash so they’re not buying jewelry, they’re pawning it.
I wouldn’t place too much faith in the gold council…these people want to you to believe there is a stable market for gold, which there is but is not volatile as we have seen. Fact of the matter, shrewd investors have flocked to gold over the last 5 years or so. Check for starters James Turk’s book about gold written, I think back in 2000, The Coming Collapse of the Dollar.
its an adjustment of how people perceive future gold demand. just like the adjustment we had with oil demand. yes, the investment demand has held it up over the past while, but as demand for its ACTUAL uses are diminishing, it makes full sense for it to drop in value for at least the short-to-medium term which will be highly focused on economic indicators and health.
As a former Gold trader I can tell you that gold demand has almost no impact on the price action of Gold. If you said silver you’d be closer to correct because silver is a tighter market and between jewery and industrial uses an uptick in demand can impact the price. Gold on the other hand is a proxy for currency. Like currency it is a holder of value. When people are afraid their respective currency is going to lose value or that there is going to be global inflation or deflation they move to gold.
Re: Why is gold in a free fall? How many of you were hearing that today is the bottom? If that story carried enough momentum then perhaps it dropped as traders switched from Gold to ‘risky’ assets.
I don’t know butbit sure whacked me.
D e f l a t i o n Sell anything you can to raise money… if you need the money (i.e., to fund liabilities, redemptions).
@deflation: hmm,really wonder if these massive liquidity infusions will not revive money velocity even a bit. ?! i think the jury is still out on this
Gold was a safe haven when the dollar was falling. Now that the dollar is rising, people are selling gold.
It’s just disaster for gold. At the very end of the trading day it surpassed its lows of October 6, 2008 (i.e., less than a week ago). It might even reach its September lows. This is one I would chock up to volatility and nobody seems to know where gold should be priced. Maybe Virgin can tell us how to pull gold out of our ears. This would be useful in the upcoming tribulations.
i’d like to hear from those of you who believe in a strong dollar argument i don’t get this nebulous ‘safe haven’ theory (maybe only in the very short run) trade deficit (US is negative, will get worse if dollar is strong) interest rate trend (US will need to ease more from 1.5%) economic growth (shot worse in US than anywhere else in world) what gives?
I am also curious how dollar should get strong? Do you think the 750 billion would just print by the Fed and make more dollar liquidity. Isn’t it suppose to get weak then? Someone correct me if I am wrong.
I am trying to discuss this issue in the thread below, and I’m still puzzled by this action of the dollar: http://www.analystforum.com/phorums/read.php?1,845596
rohufish Wrote: ------------------------------------------------------- > i’d like to hear from those of you who believe in > a strong dollar argument > > i don’t get this nebulous ‘safe haven’ theory > (maybe only in the very short run) > > trade deficit (US is negative, will get worse if > dollar is strong) > interest rate trend (US will need to ease more > from 1.5%) > economic growth (shot worse in US than anywhere > else in world) > > what gives? i am not a believer in the safe haven status of the dollar.but i’ll try to guess what is happening. First political factors: the creditor nations like China,Japan ,Middle east have an incentive in keeping the dollar strong to protect their huge dollar reserves as well as try and keep their export dependent economies alive and well.so they will buy more treasuries and even fannie and freddie (gulp!) debt. Secondly repatriation of dollars from foreign markets in fear of the unknown.That shouldnt be a long term factor To digress a bit Zimbabwe did not owe the world trillions in its own currency and so did not hold its trade partners hostage to cooperate in “unconventional coordinated interventions” and no wonder it is in a hole it cant get out of. Here is what Zimbabwean Central banker Dr Gono says about his counterparts in the West " As Monetary Authorities, we commend those of our peers, the world over, who have now seen the light on the need for the adoption of flexible and practical interventions and support to key sectors of the economy when faced with unusual circumstances. " In conclusion,inflation is not dead yet.Not dead,given the monetary policy choices most of the central bankers have chosen and promised to go ahead with .