Jump to content
House Price Crash Forum
Grunff

Gold - Trying To Understand Current Prices

Recommended Posts

Many bearish people seem to like gold. I'm trying to understand the reason behind this, and to decide whether I should be putting some funds in gold.

Everything I've read about bubbles defines a bubble as a rapid increase in the value of stock which has little or nothing to do with potential returns, and is simply in anticipation of continued increase of that stock's value. Is this not what is happening in gold and silver at the moment? If so, the price could drop sharply at any time, right? What am I missing? Why is gold a good bet at the moment?

Thanks for your patience.

Share this post


Link to post
Share on other sites

Many bearish people seem to like gold. I'm trying to understand the reason behind this, and to decide whether I should be putting some funds in gold.

Everything I've read about bubbles defines a bubble as a rapid increase in the value of stock which has little or nothing to do with potential returns, and is simply in anticipation of continued increase of that stock's value. Is this not what is happening in gold and silver at the moment? If so, the price could drop sharply at any time, right? What am I missing? Why is gold a good bet at the moment?

Thanks for your patience.

If you trust the governments, then dont buy gold.

Share this post


Link to post
Share on other sites

I'm trying to understand the reason behind this, and to decide whether I should be putting some funds in gold.

I think you need to disentangle two reasons that gold is regarded highly.

Firstly, there seems to be a degree to which this is a commodity that was genuinely underpriced. Commodities tend to do well in times of uncertainty, such as the current time, and people see gold as a safe asset, so there is an increase in value which may or may not continue. Not all price increases are followed by falls - the question is whether or not the rise in gold prices is justified as a correction, or an overshoot. If the latter there is nothing to stop the price falling in future (and there have been some serious falls in gold prices in the past).

But secondly I think there is a tendency to ascribe mystical powers to gold. The fact that it once underpinned currencies gives it a spurious appeal as more "real" than money. (Personally I see gold as having been a mere token like any other - money has value because people will exchange it for goods - the same was true when gold backed the currency or was the currency. Fiat money or speculative capital is not in itself a problem, but people tend to mix up the concept of fiat money with current irreponsible money creation and lax central banking practises and compare this unfavorably to the old days of gold-backed currency...) This creates a demand for gold as a safe hedge against uncertain times, but it also leads to a slightly hysterical devotion to gold, and to the feeling that only gold is safe and that it will always go up.

When people are betting on gold for the first reason, and when they retain the sense to spread their investment across a variety of areas, they are probably being sensible. When a touch of the second reason, the mystical faith in gold, creeps in, it may affect their judgment and blind them to the possibility of gold ever falling. We're probably nowhere near a gold bubble at this stage, but it's not inconceivable. Like property, gold will never collapse completely, so it's safe in that respect. Beyond that it's a matter of personal judgment.

There was some interesting, if slightly irritable debate about this on the thread below:

http://www.housepricecrash.co.uk/forum/ind...topic=27005&hl=

Share this post


Link to post
Share on other sites

"Do not forget, somebody is going to lose if you win with gold. When the potential losers take a position opposite gold they want to be the winner and you the loser. It’s that simple. This group will do almost anything to disparage gold and enhance their positions. Since they are the news controllers, expect the majority of news to be wrong footed nonsense."

Share this post


Link to post
Share on other sites

If you have never touched one, go and buy a one ounce bullion coin. It will cost you approximately £350. Hold the coin in your hand. There are good chances that the gold it's made of was mined centuries or even millennia ago. Compare it to the pieces of funny paper in your other hand. You'll hopefully understand why gold has been, is and will always be money.

Then read http://www.gold-eagle.com/editorials_04/evans061304pv.html

And eventually you'll know what you have to do to protect yourself and your family.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.