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Re: Spot gold blows through $1,200

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  • Mon, Dec 07, 2009 - 02:10pm

    #29
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: Spot gold blows through $1,200

[quote=janjee]

….. As a regular person trying to protect my nest egg, I am interested in gold and silver.  ….  It would seem that as the price and demand for gold rise, the extraction of gold would  intensify… which would lead to a glut… kinda like Beanie Babies Smile.  Which would drive down the price, no?

[/quote]

Don’t think of gold in terms of supply/demand consumption.  Its recent run up was driven by its “store of value” reputation.  A reputation that was particularly fueled by a limited perception that floating currencies, such as the dollar, won’t survive.  The reversal in price since Friday showed perception has swung the other way.  That’s because positive job growth will give the fed liscence to raise interest rates, which in turn will restore the dollar…

Trying to see out of this looking glass is why gold is regarded as a speculative, not for the faint of heart, investment.  I think its price performance generally shows that it corrects when economic recovery begins.