I wonder how long gold will track the market

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switters's picture
switters
Status: Platinum Member (Offline)
Joined: Jul 19 2008
Posts: 744
I wonder how long gold will track the market

Right now it's equities up, gold up.  Equities down, gold down.  Clearly gold is behaving like a commodity and not the safe haven gold bugs make it out to be.  I feel relatively certain that this will change at some point in the future - I just wonder when, and what it will take to motivate the switch in perception.  Even the mainstream media is admitting that we're in one of the worst - if not the worst - financial crisis in US history.  If there was ever a time for safe haven buying, now would be that time.  So why is gold still only perceived as a commodity?

Are hedge funds still dumping paper gold to cover margin calls?  Are funds dumping it to generate needed cash?  There was some speculation that the deleveraging, and with it gold, had hit bottom.  Today's market performance throws that speculation into considerable doubt.

 

srbarbour's picture
srbarbour
Status: Silver Member (Offline)
Joined: Aug 23 2008
Posts: 148
Re: I wonder how long gold will track the market

Short answer Switters, is because gold is only a commodity. What's more, there is no such thing as a safe haven.

Gold has what can be called 'Prestige Value'. That is, much like a $1000 handbag, its value is high because someone can wank off to having something other people don't. Thus this value is in general, directly proportional to the number of disgustingly rich bastards that want to feel better than everyone else. (Likewise for most other grossly overvalued objects favored by the elite)

(I'll add that gold does have 'utility value' too -- e.g. direct and meaningful use for humans. However this has only minor to moderate impact in gold's pricing).

So, the question of gold going up largely is:

1) Do you think there will be a price bubble driven by the nonsensical pursuit of the mystical 'safe haven'?

2) Do you think that there will be more or less disgustingly rich people in the future? (The financial collapse says no, the governments response to said collapse says yes.)

3) Do you think commodities in general will rise in nominal value (e.g. Inflation)?

The only thing particularly good about gold over other commodities, is that its value is dense, making it easy to store large values in your living room. Admittedly, if you just want to plop your money into inflation resistant commodities, thats a rather favorable aspect.

(That and having several dozen barrels of oil in your living room makes you look insane, while having a bar of gold makes you look rich Tongue out).

 

A gander for thought:

 

--

Steve

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: I wonder how long gold will track the market

I agree.  We have no gold, no cash.  Hoarding wealth will make you prone to being robbed, or worse, tortured to divulge where you've hidden the stuff!   End of story.

We've spent all our 'wealth' on fertile land, a cheap to run house, water self sufficiency, some solar panels, and.......  that's IT.  We don't lock the house at night, and we park the car outside with the keys in the ignition.  If you saw it, you wouldn't want to steal it either.

When will gold stop tracking the market?  When COMEX collapses.... 

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