Why does the price of gold go down?

Discussion in 'Commodities Forum' started by wulfman, Jul 29, 2014.

  1. wulfman

    wulfman Guest

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    noob question i know. But if it is a precious metal and becoming less abundant on our planet then why would the price of gold ever decline ? or even silver for that matter? Chemically it is possible to make gold from another element but financially not plausible. So why the heck do I see gold prices declining ? Paper money yes of course it will decline as it can be made at the discretion of the Federal Reserve. But gold ?
     
  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Lots of factors - speculation, actual demand, strengthening dollar, deflation, etc.
     
  3. wulfman

    wulfman Guest

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    i know each dollar is backed by gold so i understand if it fluctuates inversely as the dollar gets stronger. but still its not like a strong dollar makes gold any more abundant on this planet.
     
  4. JR Ewing

    JR Ewing Super Moderator Staff Member

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    The dollar is technically not backed by gold - hasn't been for over 40 years. But as the dollar strengthens, the relative value of everything else declines - assuming everything else isn't going up proportionately as much or more. Your dollar has more buying power, and you're able to buy more stuff with it - gold included.
     
  5. turt

    turt Guest

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    Technically, price and rarity have very little to do with determining value. Like already mentioned, if currency is worth more, the "price" of gold will go down and the opposite will occur the other way around. When the economy is bad, more people will invest in metals than stocks and other investments. If the price of gold goes up a lot, more people will buy it hoping to make a profit which will further increase the price...
     
  6. Casper

    Casper Well-Known Member

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    Gold and Silver are heavily manipulated by J.P.Morgan. They run it up and down as they want. They dropped the price of silver from above $20 to sub $9 in 2008 after they took over Bear Stearns, which had large physical gold/silver holdings. They had a big investigation but it was whitewashed on 'National Security' grounds. JPMorgan lost $6 Billion last year in the 'London Whale' scandal where they were naked shorting silver.

    When you buy or sell gold or silver ETF's (that is $ to 1 troy ounce price) but the 1 troy ounce is 'notional' as it is 'paper' Silver

    ETF's are traded/leveraged at 100 to 1, that is for every physical ounce of silver actually held in the vault, 100 'paper' silver ounces are traded. This means that in reality, you are buying and selling 'fresh air' because that amount of gold and silver do not actually exist.

    The gold 'fix' would always be put in at 10.30am by LBMA (Rothschild)

    See The Gold Anti-Trust Action Committee (Gata)

    Andre McGuire interview on King World News

    http://kingworldnews.com/kingworldn...10/3/30_Andrew_Maguire_&_Adrian_Douglass.html

    Many say Gold should be at around $5000 an ounce now but it has been suppressed for years

    Many people put their faith in physical gold and silver expecting that when the manipulation finally ends, the true market price will be realised
     
  7. Colebra

    Colebra Well-Known Member

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    I had this question myself.
    I landed in some company's website a few weeks ago, and they had side by side graphs of the value of gold and the value of cryptocurrencies.
    I can't remember what they actually did, and even at the time I found it I didn't really fully understand it.
    But gold was a line going straight down for ages...

    I knew about the dollar not being backed by gold thing. Other than that...pretty much didn't understand a thing.
    Which is sad... I need to find some to get up to date with this stuff. I always feel like a dummie when I come to this forum...
     
  8. wulfman

    wulfman Guest

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    Thanks for the feed back guys and forgive my ignorance. I really thought that each dollar the government produced was supposed to be backed by gold at the Federal Reserve. Glad I know now how it really works.
     
  9. Casper

    Casper Well-Known Member

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    I have no current positions in Gold or Silver but it looks like there could be a lot of volatility over the coming days. Often get a run up in price prior to big events such as:

    The Financial Times reported overnight on the uncertainty regarding the 117 year old silver price fix:

     
    Last edited by a moderator: Jul 8, 2016
  10. al.palacios

    al.palacios Member

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    It's like everything else, it's a commodity that dependeds on the law of supply and demand. If many people are selling it will go down, if many people are not selling it will also go down. It is tricky and fickle like all investments.
     

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