if one doesn't believe in gold or anything else, just tear off a 4 x 8 sheet of plywood and see if the mortgage company with take it as payment after all, it came off the $1.5 million 2 bedroom 1 bath dump in San Diego that was supposed to be worth $2.5 million next month....
when equities spiral in fear, gold wont benefit in the immediate situation, it benefits from rampant liquidity expansion globally, when central banks pump out to save the world post equity collapse.
This subprime giant seems to have a thousand shoes to drop. $2000.00 gold is a possibility, but the run-up from May '05 has been remarkable and is turning exponential. In context, a quick $100 correction would be normal. East Asians and South Asians love to hoard gold but they've been at it a long time and they're pretty cagey; they won't chase the market.
yeah i remember when gold was 730 on its way up one large US bank (a super aggressive player) bought 1mil ozs gold put strike 700 basis Feb futures this should come due end Jan and its a large position insurance against a large long position? / or a punt on the downside??.......I have no idea but worth considering longer term I like gold as USD will continue its plunge in my opinion but in any market when it overheated and joe public gets involved its signals to the pro's its time for a correction...
FWIW, I was really surprised that we clipped through 780-800 as easily as we did - it was really like butter, wasn't it? I agree with thriftybob that this is pretty much trading off the USD, so that's how I am playing it. Had we bounced at 780, we should have been back to 720 and I would start averaging in again, but after the blowup to mid 800's, now we sit at 780 which is hardly comfortable. I am simply not sure where the bottom is in this thing and easily think longer term we see 650-680 again if we get the dollar down below 1.30 EUR/USD. But who knows if or when - the situation is hardly being moved by technicals or sentiment - this is all fundamentals - unfortunately, the fundamentals are not being disclosed and are largely of a political nature, so we all might as well be stabbing around in the dark. Really wouldn't mind buying again at $620 though! Would be fine by me...
USD is currently a mere 1 cent from its lows vs the Euro. So clearly gold has not been going down because of dollar strength. Now that raises two interesting scenarios. If the dollar falls further, it should help gold put in a low. But if the dollar actually starts to rally, the current decline in gold is going to look like a tiny blip in comparison to what will happen. If the Euro falls 5 cents, gold will be down below $700 before you can sneeze.