What is up with gold?

Discussion in 'Economics' started by cybtropic, Nov 25, 2008.

  1. Gold is very unique commodity, unlike others it is very rare and doesn't renew or disperse.

    It is the job of IMF (CBs) to gather up every last ounce of gold to its vault in exchange for the right of issuing paper currency.

    Gold price should be inverted to US interest rate. At first sight of raising fed rate, gold price might raise even further up to chase against "fearing of inflation". However if Fed rate keeps going up, at certain points (maybe 10%), paper money became more valuable therefore crushing gold price.

    Currently, Fed rate is going down, why is the gold price isn't exploding upside? The other tool of CBs is limiting the money supply. if CBs seems to uphold paper currency value, they can cut the supply of paper money (no more loans), and cause its legal status, you can't trade your good or services in gold, therefore gold price is stay within CB's predetermined range. Of course; every government can use force to kill and jail others who purposely against its paper money. LOL

    On the other hand, individual should have some physical gold in their personal safekeeping. Because you don't know when a unforeseeable and unfortunate event gonna happen to your country.
     
    #21     Nov 26, 2008
  2. Wasn't that James Bond in "Goldfinger" ?? "NO Mr. BOND, I EXPECT YOU TO DIE!!!!"
     
    #22     Nov 26, 2008
  3. fader

    fader

    <a href="http://tinypic.com" target="_blank"><img src="http://i37.tinypic.com/20urj0k.gif" border="0" alt="Image and video hosting by TinyPic"></a>

    **commodities index vs. gold

    <a href="http://tinypic.com" target="_blank"><img src="http://i33.tinypic.com/9kyq9t.gif" border="0" alt="Image and video hosting by TinyPic"></a>

    **oil vs. gold

    Commodities have been going down vs gold for decades. Oil has gone up vs gold since the 80s. The physical supply/demand mechanism at work. Paper money prices obfuscate real dynamics.
     
    #23     Nov 26, 2008