Michelle,
Absolutely, as far as the present drop in the POG is concerned. My question is, isn't that long overdue? For example, Mohan had the intellectual honesty to admit that gold, after all, is a confidence game which for some reason has survived centuries. That, in fact, is the only reason any gold bull will provide in support of buying gold, the centuries old demand. Thus, it is no different than a game of investing in AMZN in principal, except that the timespans just are not comparable. Now, central banks wisened up in the early 70's when they realized that as the economies grow, exchange of goods grow as well, hence unless some part of the growth is handled by barter (not a good choice) the money supply has to increase as well. Hence, given that the total gold reserves in the world are constant, gold backed currencies became a relic of the past. However, as in internet stocks, past habits die hard and gold bulls are still rallying for the jolly old days. As for the present selling by central banks, it's like insiders bailing out as the equity price drops which adds to the float. A short term cause masking a long term problem. Gold bulls prefer to concentrate on the former and ignore the later. Again, no different from internet investors.
-BGR. |
