Correction:45x35=$1575 ounce is our current approximate rate. Problem is no one really knows what our gold reserves are and how much printed currency we have in circulation today.
Why oh why does it keep going up? Whine.. I just don't understand - cry. It doesn't make any sense and I can't accept that a brilliant analyst like myself could have missed out - sniffle. The bubble must crash when I say so - BAAAAAAAAAAAAWWWWWWWWWW!!!!! Spend a little more time studying rather than trying to convince yourself of what you'd like to believe - maybe then you'll understand it someday.
"I wish I could make money off this..." Thanks OP! lol About the "electronic age" subject...okay, that's it, you're right, gold is now worth nothing because now we are in the highly liquid electronic age. Guess everything we trade is now a bubble. So much for free markets and price discovery. Keep telling yourself what you want, you may not be able to say, "I told you so" for five years. And since you admit you can't make money in the gold market, at least in the end you can say, "See, gold WAS a bubble! I was right! Hallelujah, I was RIGHT!"
Yeah, I monologued, because the only non-irrelevant argument I've seen so far is 'look at history', which is an argument so powerful it could be applied equally to buggy whips, chalkboards, and asbestos insulation. It's fantastic to watch the flamebait replies come rolling in, both from those who purposefully misrepresent what I said and from the pseudo-wise who serenely shake their heads and repeat that the mystical power of gold will reveal itself to me all in due time. If there was any plausible fundamental (i.e. non-speculative) justification, the gold bugs would be happily beating me around the head with it. Instead, not a single reply has demonstrated even Macroecon 101 level sophistication. I didn't expect my suspicions to be confirmed so thoroughly. Nice. Have fun. You've been warned.
It would help if you had a better grasp of the history of money/currencies/gold and the rise and fall of empires. You can arrogantly laugh off history if you want but its at your own peril. Macroecon 101? That's going to help you spot a bubble? Don't make me laugh. Bernanke has forgotten more mainstream econ than you'll ever learn. He thought the worst of housing/sub-prime was over in the summer of 2007. He had no idea what was about to happen and it's clear he has no idea what's going on now. The same type of crowd laughed at gold bugs in the early 70s and couldn't explain its run-up over the next 5-10 years. They couldn't even explain 70s stagflation--it didn't fit their models.
No doubt, you just can't reason with a turnip! Especially a turnip with a huge ego that puts themself on a pedestal and ignores history...which always repeats itself...which is an essential conceptual part of any trader's understanding of how to make money in markets. If you're going to haughtily denounce everyone in this thread as stupid and uneducated, at least you openly admit that you can't make money in the gold market...bwahahahaha! Gotta love frickin' know-it-alls!
People and central banks are buying it to preserve their wealth through the transition period of currency depreciation/failures. Following from this is a conclusion that many ETers have said before: Gold acts like a commodity *AND* like a currency. And as a currency, the net increase in total gold world-wide is 1.) well known and 2.) already at maximum rate. No other world currency compares even close on feature #2. We can expect (entirely rationally) that all world currencies except gold will be racing each other to the bottom due to corrupt incompetent politicians and their whiny entitled populace. So far a lot of responders have attempted to explain this to you and your counter-argument to all of them thus far has been variants of "lolwut?!?! that not how you play!!1!" So I guess you want to know *WHY* does gold act like a currency while other commodities do not. The answer is 1.) thousands of years of tradition and 2.) value (due to supply) per weight and 3.) shelf life (compared to agricultural commodities) + doesn't oxidize (compared to other metals). I realize you don't think highly of the "tradition" argument for gold being considered valuable, but reality is what it is. The observable evidence is everywhere (example next paragraph). Despite the liquidity feature of gold being obviated by electronic exchanges, the store-of-value feature is still present, going strong, and unmatched by any other currency or commodity. You are right and wrong at the same time. During Argentina's currency crisis, "junk" gold jewelry was used for exchange. Gold bullion not so much. You are correct, but gold demand being "psychological" is only a necessary--but not sufficient--condition for a bubble. Demand for any fiat currency is also psychological through and through, but these currencies could not be said to have been in a bubble for their entire lives. Eventually, currencies won't be seen as risky and valueless as they are today, and demand for gold's safe haven function will decline as you have predicted. But if you can't say when this will happen, how slowly/quickly the gold trade will unwind, and what value gold will settle down to then you don't really have a complete narrative for "omgwtf gold is teh bubble roflcopter!!1one" Your value-investor type arguments give an incomplete working model of gold pricing and thus you underestimate its market price. When people try to fill in the gaps, you dismiss the arguments as illogical and the posters as "off their Ritalin". You are committing the same logical errors as in: Step 1: define 2+2=5 Step 2: various mathematical derivations of #1 leading to #3 Step 3: any damn pre-determined conclusion of your choice Step 4: reality disagrees with #3, so reality must be wrong
I`ll tell you the peak price.It`ll be somewhere around 2017-2054 and then you become counterparty to cover the holes in Chinese budget.