Quote:
Originally Posted by eskercurve
At the end of the day, gold is just another commodity.
Ergo, it will have ups, and it will have downs.
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You also just described currencies.
To paraphrase;
At the end of the day, gold is just another currency.
Ergo, it will have ups, and it will have downs.
It
is a commodity, but
not just another commodity.
The new supply of oil every year is essentially used up and gone forever.
The new supply of copper is used and can be recovered years later, but
copper deteriorates and, like oil, is used up.
The gold "
supply" has almost nothing to do with new "supply" from mines and recycling.
The gold "
supply" is almost all the gold that has ever been mined since the beginning of time.
Gold mines supply around 80 M ounces a year or so, but the supply
that could possibly show up at any given time is around 5 B ounces.
If you assume that gold is money, one can say that the true value should be
what it would take to back all currencies of all nations for all their transactions.
That number divided by the available ounces would do it.
For gold to be used to back money, it would have be "priced" ( in dollar terms ) in the tens of
thousands of dollars per ounce. Just this fact alone might prevent it from ever happening.
If you assume that gold is
not money and never will be then it is essentially worthless.
Note that the Chinese, Indians, Mexicans, Koreans, and many other nations are actively "buying"
or exchanging gold for their fiat money reserves such as dollars and euro. -- just a note.
Such activity is called putting your money where your mouth is.
Quote:
Originally Posted by eskercurve
... it's been up for a VERY, VERY long time. IMHO, it's due for a MAJOR correction.
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Everything corrects. Gold topped out recently on Aug 22. Is
that the correction ( to where it is now )?
Back when Apple went past $200/share you could have said the same thing.
What was the true value of a share of Apple?
If the true "value" of gold is $10k/ounce then if/when it attains $20k/ounce
( or more or less ), then it would probably correct to $5k and so on.
OTOH, Aug 22 might have been the all time high for gold for the next ten years.
Note that the ultimate price for a dollar is going to be zero some day.
In mathmatics, when you divide by zero, you get infinity.
Gold's dollar "price" will always go up over time. What you can buy with those dollars will go down.
Rememer that the last real big blowoff in price was $850 in 1980. That's about $2,400 in today's dollars.
The dollar is a depreciating asset. I used to be able to go in and buy an ounce of Au for a $500 bill. No more.
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I am not a trader by nature.
