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Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Sure, it will go down if a huge amount is discovered somewhere and floods the market. Like anything else rare, the value is based on the demand and scarcity. It's like the diamond market, prices are kept high by those big corporations owning and hoarding them, releasing just enough at a time to make good profits.
What are you talking about? It's down severely from it's summer highs and below even where it was in March when one of our doomsayers announced a two year bull market in gold.
If history is any indication, and I think it is, it's very likely gold will go down sometime in the future. It's also almost inevitable that gold will go up in the future. So there you have it. Gold will likely go up and down in the future.
along with the title question is why is the price of gold going up so much?
Gold was $18.93/ounce from 1850 to 1871.
Gold rallied and jumped to $18.94/ounce from 1872 to 1888 before collapsing and dropping back to $18.93/ounce in 1889.
Then a bull market started and gold climbed back to $18.94/ounce in 1890, before reaching an astonishing $18.96/ounce in 1891-1893, before the gold market collapsed and gold dropped to $18.94/ounce in 1894 and then $18.93/ounce in 1895.
Between 1896 and 1913, gold reached record lows of $18.90/ounce and record highs of $18.97/ounce.
1914-1918 gold was $18.99/ounce before plunging to $18.95/ounce in 1919.
Gold reached a record high of $20.68 in 1920, again in at $21.32/ounce in 1923, before plummeting to lows between of $20.63 and $20.65/ounce through 1930.
In 1931, the bottom fell out and gold declined to $17.06/ounce.
Gold reached $20.69/ounce in 1932, an high of $26.33 in 1933, an high of $34.69 in 1934; $34.84 in 1935; $34.87 in 1936, and then started a slow decline to $34.85/ounce by 1944.
Gold remained steady at $34.71/ounce 1945-1948, before crashing to $31.69 in 1949.
From 1950-1968 gold fluctuated wildly from $34.60/ounce to $35.13/ounce.
In 1968, gold set a record of $39.31/ounce and then again in 1969 at $41.28/ounce before plummeting to $36.02/ounce in 1970.
Gold was....
1971 $40.62
1972 $58.42
1973 $97.39
...at which time the US got off of the gold standard, and the price of gold was no longer regulated.
So, that's the history of gold prices prior to deregulation.
along with the title question is why is the price of gold going up so much?
Generally speaking, the price of gold will go down when interest rates go up, because gold does not generate interest income, so people holding gold will consider selling their gold for a relatively safe interest gain.
Additionally, if the dollar is strong, which it has been as of late, this tends to also make the price of gold go down as gold is priced in dollars.
The Fed is expected to raise interest rates in December, and is expected to continue to do so. The move would, generally speaking, increase the strength of the dollar as demand increases.
Aside from the normal gold bugs, there are a few contrarians that don't think the Fed will be able to raise interest rates very high. As an increase is expected, failure to increase serves as a short term boost to gold prices. I played this trade in late 2015 on gold mining companies, and it ended up being my best trade for the year.
So, the current expectation is that Trump is the President, and he plans on cutting taxes while starting lots of infrastructure spending, resulting in a larger deficit. To support the currency, the Federal Reserve will have to raise interest rates and many think a government spending expansion at a time of low unemployment will only result in inflation. There's an argument otherwise, but expectations set the market. Thus we have a very solid expectation of rising rates at the moment, which is bad for gold. Thus gold's marked sell off as of late.
How far it will fall depends in part on where interest rates will be. Seeing my bank stocks pop up, I've sold them, and will reenter when we're not at record highs....though I did tip back into an ABX position recently...just in case the the expectation unravels. If a gold stock is killing it, it's likely nothing else is, so I hope I lose on the trade.
It will be interesting to see if India's currency swap has any bearing on gold's market demand. India and China tend to be the most important buyers as of late.
it also depends on the perception and confidence in the dollar . gold is a competitor to the dollar and is priced in dollars .
any move in the dollar can be reflected in golds price . in fact each day of trading kitco can tell you how much of gold's move is dollar related vs other world factors .
fear ,greed and perception control gold's moves too . any expectation that inflation will weaken the dollar can jump start gold . we saw that in golds last big rally . inflation was low but the dollars value was falling and inflation expectation were rising .
it also depends on the perception and confidence in the dollar . gold is a competitor to the dollar and is priced in dollars .
any move in the dollar can be reflected in golds price . in fact each day of trading kitco can tell you how much of gold's move is dollar related vs other world factors .
fear ,greed and perception control gold's moves too . any expectation that inflation will weaken the dollar can jump start gold . we saw that in golds last big rally . inflation was low but the dollars value was falling and inflation expectation were rising .
Yeah I find that Kitco feature amusing. Did gold really go up $4.25 today? Did gold really go down $5.80?
I don't go there to see gold prices, I go there to see silver prices. Hurts to see silver so abruptly lose almost all of this year's gains - elections have consequences gulp - but the other day I took advantage of the plunge to buy more.
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