If gold was selling at 1400 and buyers thought it was a good investment at that price, why are now shunning it at near 1300?
SAVAGE SAYS: Now, that’s a great question!? As in any free market, the price (the “true value”)?is determined by supply and demand. (Go to www.terrysavage.com to read my column of last week, explaining the “crash” in the price of gold. My columns can now be read online through the link at my website to The Huffington Post.)
The real question is why suddenly there was such supply — or fear that a great supply of gold would be dumped on the market. Perhaps it is the fear that Cyprus would be forced to sell its gold — or that other European countries in financial distress would be selling their much larger hoards of gold.
On the other hand, Indian and Chinese buyers have entered the market, considering it at a bargain.
As most of you know, I consider gold a long-term — stress that loan term — hedge against paper money creation. And there’s certainly enough money being created these days — both in the U.S., Europe, and now Japan.
I’m not a trader, and I haven’t sold any of my own gold — either coins or stocks — most of it (but not all) purchased at lower prices. But then I didn’t sell gold at the peak of $800 an ounce in 1980, either!
I’m always hoping that gold will just keep me ahead of inflation, NOT that it will save my financial life. If that kind of crisis happens, we will have more to worry about than the price of gold. It is just a “hedge” against paper money creation. That’s how I view it — and that’s The Savage Truth.