Global Economies Affecting Gold's Price? The DOW Jones Industrial Average and other markets have seen sudden and dramatic decline over the last few weeks.
I wrote about this in earlier articles many months ago.
It is like everyone is sitting nervously at their computers with their finger right above the send button on nothing but "sell' orders.
For over four months, the markets have been trying to go higher...
but they want to go lower.
With the near record stock market recovery of the last year, you would think everyone would be happy.
Yet here we are - 30% increases in the equities markets AND roughly 30% increases in gold's price.
That is very unusual.
Could it be that even though the markets appeared to be recovering, that the real data is supporting an increase in Gold while betraying the equities markets? Even those who understand little know that most every economic indicator available points to broad based problems.
I could list them for you if I wanted to add to the laundry list of pain...
stock valuations, unemployment, residential real estate, commercial real estate, bank failures, government bailouts of companies and recently other countries..
..
but the biggest, most worrisome of them all - global government deficit spending.
Traditionally, people turn to gold when they are worried...
worried in the soundness of their economic belief's.
Increases in gold activity - which always helps drive prices to some degree - is a reflection in their lack of trust in the forms of money or wealth they use in other times.
Today that is mostly the US dollar, although all currencies are experiencing a lack of confidence these days.
With that said, less than 5% of Americans own any gold other than jewelry so what is going on with gold's price? In years past, it is common knowledge among insiders that governments around the world and their central banks would buy and sell gold to manipulate its price.
If gold's price was gaining too much ground and attention, they would often sell large quantities to flood the markets and lower prices.
Once they stayed down for awhile, short term speculators would become discouraged leaving those few who have been in the markets always for more long term reasons as lone traders.
Gold's Price is Demand Driven Although there has been widespread demand manipulation for many years, it is my belief that there has not been true price manipulation in any other way.
Because of Gold's global appeal and global use, no-one entity or group can accomplish this.
So, back to the original question - what causes Gold's price to fluctuate? And in today's case specifically - what has caused Gold's price to rise to over $1200 an ounce and has supported these higher prices for some time? Again demand I believe.
But that means someone is buying a lot of Gold and we have already concluded it is not the average US citizen.
Then who? I read a recent account of travelers in retail shops in China packed with wall to wall people buying Gold at retail prices hand over fist.
This is new wealth and lots of it.
This could impact the gold markets.
When we talk about the gold markets, in case you are new or lack experience, we are talking gold bullion and numismatics-(gold coins minted in minimal quantities to promote collectibility.
) Although governments and other institutions buy and sell gold bars, as far as the normal person goes, we are mostly talking coins minted by roughly 45 mints around the world.
So where's the real demand coming from? Countries and their Central Banks.
Not long ago the International Monetary Fund wanted to raise some cash to help struggling countries by selling 200 tons of gold.
Many stood in line wanting to buy it.
The two top contenders were China and India.
China wanted it all in the worst way, but the IMF sold it all to India.
Part of the reason may be that China already is the largest producer of gold in the world and has not been selling any of it for a long time.
It appears the government is hoarding it on top of the demand it's own citizens are creating.
And they are not alone.
Large sales of gold between countries are hard to hide.
There have not been any for years.
Countries around the world and their central banks (where they exist), have been net buyers of gold which has put serious pressure on gold's price over the last couple of years.
Now, if you are looking to make decisions on protecting what you have spent a long time earning, this should be very important information to you.
Learn about the gold markets and do it soon.
Find knowledgeable, unbiased sources of gold industry information, probably from insiders, and get busy learning all you can - then make some decisions and move forward.
We are only talking about a percentage of your assets.