The price of gold is dictated by market forces, by supply and demand.
The European central banks have been selling gold not to hurt our N.A. mining industry by driving the price of gold down but to prepare themselves for monetary union by 1st January 1999.
The Reserve Central Bank of Australia sold 167 tons of gold recently not to hurt goldbugs' investments in mining equities but to stand to gain A$80,000,000 from bonds. Also the sellers felt that gold would probably bottom out at about $250-$270 and therefore they decided to sell off at a much higher price. Why keep a declining asset which also cost money to keep?
In the current economic climate in which the US$ is strong and inflation is apparently low and well under control, and the economy as a whole is healthy and strong and unemployment is low, gold has lost a lot of its importance as a store of value and as a hedge against inflation. So, it is not surprising that lots of folks are selling gold for cash. Right now, it seems that CASH IS KING! and bonds are considered both as a store of value and a hedge against inflation.
It won't help matters if you were to go everywhere asking governments to stop selling gold. They will probably laugh at you!!! You see, governments do practise cahootery to 'demonetize' gold as much as possible. Canada has been selling gold now and then. The US government will be selling in the future. With gold sales looming in the horizon, it seems that the price of gold is headed down and down.
However, in Asia, more and more Asians are becoming rich and they will be buying more and more gold as a store of their wealth and for prestige. Also, more and more gold is being used for fabrication purposes (e.g., jewellery). It now appears that where this is concerned, demand exceeds supply. So, there is a very good chance gold will make a comeback! Also, after cash and bonds will have had their day at being accepted stores of value and governments started to screw things up (due to greed etc), the people would most likely clamor for gold and a return to the gold standard. When will the second coming of gold happen? Who knows? In the next few years perhaps or when we are no longer around a'waitin' and a'hopin'..........................
Richnorth |
