gold amd gold stocks

Discussion in 'Stocks' started by freewilly, Oct 21, 2008.

  1. don't understand why gold price is dropping when FED puts in 7000B in the market. People has all sorts of explanations. One is dollar is getting stronger relative to Euro.

    Now, even more confusing for me is that gold price (check GLD) falls to 2007 level, but gold miners, like ABX, AUY, etc have dropped a lot more. They are back to 2.5 year back level. Why?

    Please help me to understand this.

  2. My guess is that
    1.) No one buys gold in a recession because they are broke. Gold price is supply and demand just like everything else.

    2.) Central Banks and IMF have been selling gold to raise money.

    3.) Strength of US dollar

    4.) Hedge funds selling gold for redemptions
  3. Commodity stocks tend to lead their underlying commodities. If the stocks are trading down to 2006 level then Gold futures (in the mind of the stock investors) will follow down to 2006 levels in the coming months.