My boss is a stock exchange addict. She has an excel file that contains a long list of her investments. When my boss was transferred to another department, that's when she started buying gold certificates. I couldn't comprehend that investment but she explained that gold is also a commodity that has a price, an ever changing price like stocks. Again, it is like gambling to me. But she assured me that I cannot lose money in gold. Hmm, really?
Nothing is "certain" in the worlds of stocks, bonds, commodities, and real estate. One can even argue that this is also technically true in the world of deposit accounts, since their safety is only as good as the FDIC is, and only up to $250k in any account at any institution.
Of course you can lose money in gold. It goes up and down just like any commodity or any stock. I think what maybe she said is that you can never lose ALL your money in gold. Commodities always will have a value and cannot go ´backrupt´ like a stock´s company can. But look at any graph of the price of gold and most assuredly there is some fool who bought it at the highest point and sold it somewhere much lower.
The problem is that is such a long-term gameplan they are running, and they are hurting themselves in the short-term by doing it. All deals will still be going through US dollars ( no matter what they say, the prices of their transaction is still going to be translated to USD at the time of the purchase). This also results in an extra transaction and increases the risk of the original transaction.. and you have to pay a premium when you add risk to a transaction. It sucks for Russia and China that the USD is the standard currency in the world and I certainly understand their desire to change that. But they are going to hurt their own economies by fighting against the marketplace (where everyone wants USD) and what they are doing is a drop in the bucket that is going to take decades to make any difference. The amount of USD held throughout the world is staggering compared to any other currency. Just an example. I live in a very 3rd world country that hates the USA. I can walk down dirt path in the middle of nowhere, come up to a little store in some shack miles away from anything.. and buy a two liter bottle of coke using $1 USD. People who don´t travel much have no idea how dominate the USD is throughout the world, even in countries that are ´enemies´. Check out twitter/craigslist from Russia... right now if you want to sign a contract to lease an apartment, they only accept USD. College tuition .. USD... Anything in most of the world that requires payments or a contract is done in USD.. and most point-of-sales are instantly converted to USD to determine the price in the local currency.
I believe that gold will rise in price because the worlds largest economies (USA, CHINA, INDIA) are growing and their hunger for gold in order to show off their newfound wealth is enormous.
While nothing is certain, I don't think there's going to ba a major shift in the prices for the foreseeable future. Recently the price as been in the high side and while I think it will start to level out, a massive change up or down isn't in the cards just yet I wouldn't have thought. What would influence a huge change either way when it comes to the price of gold?
