Gold price to go steady, dips imminent?

DiggerUK

The WGC is a site that any of you interested in gold, needs to research. This is it's most recent report , that has been all over the news today. I haven't studied it all, but it's reports are always a worthwhile read.
Well worth putting in favourites, and registering with.

It is funded by those with a pecuniary interest in gold mining, refining, sales, and fabrication. So you will not find a comment such as 'Gold is a carp investment, don't buy'. Buyer beware, OK.
..._

dqnet

So I should hang on to any gold I got, or is it time to start selling some of it off? I am now making around 300 pounds profit on each ounce I have... what to do...?

Geoff23

dqnet wrote: »

So I should hang on to any gold I got, or is it time to start selling some of it off? I am now making around 300 pounds profit on each ounce I have... what to do...?

Unless you need the money in order buy property, you'd be crazy to sell it now.

dqnet

but wouldnt now be a good time before the price starts to dip again...???

Geoff23

dqnet wrote: »

but wouldnt now be a good time before the price starts to dip again...???

A lot of people keep talking about gold dipping again. Most of those people are would-be buyers, hoping it will.

Unless you need that money for something else then there is no reason to sell your gold. It is going to go much higher in the long run.

IronWolf

Geoff23 wrote: »

Unless you need that money for something else then there is no reason to sell your gold. It is going to go much higher in the long run.

In your opinion

dqnet

so whats yours then IronWolf?

IronWolf

My opinion is that gold is a useless piece of metal only worth what people are willing to pay for it, making it a dangerous investment as humans are fickle creatures whose tastes change on a whim.

I prefer to invest in things that have value and create returns.

Geoff23

IronWolf wrote: »

In your opinion

Yes, in my opinion.

What circumstances can you imagine where the price of gold passes a top and starts a long path downwards?

I can't imagine any at all, but perhaps this is a failure of my imagination.

Geoff23

IronWolf wrote: »

My opinion is that gold is a useless piece of metal only worth what people are willing to pay for it, making it a dangerous investment as humans are fickle creatures whose tastes change on a whim.

I prefer to invest in things that have value and create returns.

That's an explanation for why you don't want to "invest" in gold, but not an opinion about what is going to happen to the price, or why.

Humans are indeed fickle, but I don't think the people who are currently driving the price of gold ever-higher are being fickle. I think they are scared about what is happening to the global monetary/economic system. It doesn't have anything to do with "taste." Nobody is buying gold because they think it is pretty - jewelry sales are going through the floor right now because the people who normally buy gold jewelry think it is too expensive.

You are right to say that gold, like pretty much anything else, is worth what people are willing to pay for it. So you have to ask yourself why it is that right now people are willing to pay more and more for gold, and whether or not the factors that are influencing their decision are likely to persist in the forseeable future, diminish or increase.

What are these factors?

(a) Fear of inflation (or in some cases deflation followed by hyperinflation).
(b) Near-zero interest rates making cash savings accounts and ISAs almost useless.
(c) Fear of a stockmarket crash.
(d) Fear of eurozone member states defaulting, or being forced to leave the euro.
(e) Fear that politicians in both the US and Europe are not in control of what is happening and unable to reach agreement on how to proceed. Fear of political paralysis.
(f) Fear of another recession, both in the US and Europe.

I personally can't see any of these factors going away any time soon. There might be a major stock market crash which could "reset" those markets and eliminate (c). Similarly, the Euro might break up and eliminate (d). But either of these things happening would just intensify the other factors (e.g. both would be likely to cause further recession).

If my analysis is correct then it is very hard to see how the price of gold can go in any long-term direction apart from upwards. I'm very interested in hearing any theories as to what is more likely to happen than I've suggested.

Finally...gold isn't useless. Every piece of complex electronics contains gold. It is true that compared to certain other metals (notably silver) it isn't all that useful, but that just means that it is even more useful as a monetary metal. The primary function gold serves in human civilisations, certainly the more modern varieties, is as a store of wealth. Along with land and certain types of property it has repeatedly proven itself to be the best store of wealth through good times and bad times. Why should this (bad) time be any different?