Gold Fades From Investment Picture

gadgetmind

This is what happens to people who rely on the bigger fool.

http://www.theguardian.com/business/2013/may/24/gold-price-collapse-pawnbroker-profits

EdGasket

IronWolf wrote: »

Lol looks like we still have some gold bugs around.

The problem with gold is that there is no sustained demand, it has no industrial uses, so the price doesn't follow the usual supply/demand cycles like other commodities. It is solely based on investor sentiment, and relying on the 'greater fool' to buy it at a higher price.

Not true. Gold is used in industry:
http://geology.com/minerals/gold/uses-of-gold.shtml

"The consumption of gold produced in the world is about 50% in jewelry, 40% in investments, and 10% in industry.":

http://en.wikipedia.org/wiki/Gold

Please do some basic research before spouting off.

doughnutmachine

EdGasket wrote: »

Not true. Gold is used in industry:
http://geology.com/minerals/gold/uses-of-gold.shtml

"The consumption of gold produced in the world is about 50% in jewelry, 40% in investments, and 10% in industry.":

http://en.wikipedia.org/wiki/Gold

Please do some basic research before spouting off.

So what group of gold consumers do you think is responsible for keeping the gold price high? For all intents and purposes it's the goldbugs jumping in and out of gold that set the gold price.

Linton

EdGasket wrote: »

Not true. Gold is used in industry:
http://geology.com/minerals/gold/uses-of-gold.shtml

"The consumption of gold produced in the world is about 50% in jewelry, 40% in investments, and 10% in industry.":

http://en.wikipedia.org/wiki/Gold

Please do some basic research before spouting off.

10% is pretty small, surely too small to have a significant effect on gold prices particularly as industrial usage is unlikely to vary wildly over time. The amount mined is pretty small compared to the amount of gold in circulation. So, as IronWolf says the gold price is driven by investor sentiment with little connection to supply and demand.

IronWolf

EdGasket wrote: »

Not true. Gold is used in industry:
http://geology.com/minerals/gold/uses-of-gold.shtml

"The consumption of gold produced in the world is about 50% in jewelry, 40% in investments, and 10% in industry.":

http://en.wikipedia.org/wiki/Gold

Please do some basic research before spouting off.

My mistake, I should have said 'limited' industrial uses.

kidmugsy

We're goldbugs if by that you mean we hold some gold and silver ETFs. We did well on some of the gold, partly by a happy fluke of timing, involving selling some to meet an expenditure. We're breaking even on the bit remaining.

We bought the silver several years before we bought the gold, and would realise a large profit if we sold it now.

It seems to me rather odd not to hold some, just as it would seem odd to hold figurative mountains of the stuff. I don't see why pro-gold and anti-gold have become quasi-religious beliefs. It reminds me of pro- and anti- BTLers.

gadgetmind

I agree that it's odd not to hold some gold, and I do. I may even increase my allocation in future, but I doubt that I'd go beyond 20%.

doughnutmachine

If it makes anyone feel any better my collection of early medieval hammered gold coins has went up in value.

sabretoothtigger

They got older, hard to lose that bet

goldbugs jumping in and out of gold that set the gold price.

/o\ If horse races were set by the people who bet on them then I'd agree. Thats the same logic that says issuing debt makes a country rich or further back the sun rotates the earth

If the UK is a nation of debtors and USA and so on, then its not us who set the gold price any more then we set the oil price. Bug out all you like, its the guys with trillions who'll decide long term asset prices like gold
If we exported oil then maybe or if we exported anything in sum total, otherwise we might as well be arguing about red cars are faster

gadgetmind wrote: »

This is what happens to people who rely on the bigger fool.

http://www.theguardian.com/business/2013/may/24/gold-price-collapse-pawnbroker-profits

In a gold rush, sell shovels.
The article just points out excess profits cannot be the norm continually which is fair enough, I think they are closer to shovel sellers then the gold miners or bugs, etc

Perelandra

I would imagine, although I have no proof of this, that the industrial and jeweller demand is fairly static, so any changes in price would be the result of supply versus investment demand. If this were true, then changes to the price of gold would result from changes in supply versus changes in investment demand.

What would happen if we found a way to cost-effectively create gold "alchemically"?