Recent gold spot price volatility has some investors worried, both investors in the gold market and those who have not yet taken a position with physical possession gold. After a month-long climb that started on November 3, gold topped out at $1226 in mid-December and started to slide. Gold fell as low as $1062 per ounce on the COMEX division of the New York Mercantile Exchange last month, thanks to a powerful US dollar that cramped growth in all US-based commodities. However, as many analysts have noted in the past two weeks, the recent gold spot price volatility should not be seen as a sign that gold’s current cycle is over, or that the United States economy is on some sort of magical fast-track to recovery.
No investment ever moves in a straight line (up or down) unless a company declares bankruptcy or something else unforeseen occurs. For example, last year a popular gold exchange traded fund (ETF) was performing quite well until an unexpected audit of gold in the company’s vault was performed. It was then revealed that the company did not own the amount of gold it claimed to own, and shares in this ETF subsequently plummeted and never recovered. However, this type of free-falling movement is the exception rather than the rule in investing, and you would be hard pressed to find ANYONE who believes that gold will soon drop to zero. After all, this hasn’t happened in any of the last 5000 years and most economists agree that even if the gold spot price drops significantly, there will always be people who need gold in one form or another.
If the recent gold spot price volatility tells us anything, it’s that our economy and US citizens are in a very unsure state. Gold has been constant over the years, rising and falling in value but remaining worthwhile in the eyes of humanity. The same cannot be said about fiat paper money and unstable corporations. Get the facts on the gold price every day at GoldPrice.net, and don’t fall into the trap of thinking everything in our economy is rosy as the greenback bandwagon would have you believe.
Vic Fox
