Wednesday, August 15, 2007

Gold going cold?

The gold price seems to have pretty much frozen, despite currency worries and stockmarket volatility. Peter Schiff is mystified, too though he expects "an explosive move for gold any day now". Yesterday's IHT article notes that "central banks in Europe have increased sales of reserves this year by 7.3 percent", continuing our theme of market manipulation, and a futures trader called Ron Goodis points out, "In times of a liquidity crunch, people want cash, and that's Treasuries, not speculative stuff like gold."

This is the problem for doomsters: the 'true' value of gold is most likely to be seen, not in moderately inflationary times, but when faith in paper currency has collapsed and hyperinflation is roaring through the system. It's not something one should wish for, even if it is needed to prove one's theory.

However, there's still the question of how much longer the market can be bought off with these gold stock sales. Eventually there will be nothing left to throw off the back of the troika at the pursuing wolves. And how much has been 'loaned' from stock already?

The article says, "Central banks are the biggest holders of gold, controlling about a fifth of all known supplies." So four-fifths is now in private hands, presumably. You may not feel the time is right to buy gold as a speculation or hedge, but if you had some already, would you sell it now?

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