Gold Price"If someone tries to tell you what the gold price will be,
they're either a fool, or they think you are." There's no end to the gold debate.
Image cnbc.com
The recent dramatic fall in the gold price (April 2013) has done little to deter the Gold Bugs - those who believe gold’s best days are yet to come. The Gold Bugs are often accused of having a near religious conviction that gold will go up, some going as far as to blame any price dips on a central banks' conspiracy to prop up fiat currency. Despite some of their extreme views, the Gold Bugs have been right on the gold price 11 of the past 12 years.
Image indiatimes.com
The Gold Skeptics on the other hand are those who see the recent high gold prices as a bubble soon to rightly burst. Some Gold Skeptics feel that it goes against all sound economic rationale to own an inert piece of un-productive metal that delivers no returns. The Skeptics, however, have been wrong 11 of the past 12 years (including, famously, Gordon Brown who as the UK’s Chancellor of the Exchequer sold half of the UK’s gold reserves at a 1999-2000 at an average price of US$275 – the 20 year low). So who’s going to be right in the next 10 years? For those of us who are willing to listen to the arguments for and against there is no shortage of predictions.
Below are listed the groups for and against. While there are various justifications cited by both sides, these tend to fall into one of several themes: Structural – that the current and future increase in gold prices are a result of the massive debt held by sovereign nations and the inevitable collapse of their currencies – which means the value of any unit of gold will increase in currencies who’s purchasing power is decreasing. Cyclical – Gold price goes up and goes down in a cycle that can be predicted from past periods. The reason for the cycle movements needn't be understood, only that there is a pattern that can be tracked and projected into the future. Technical – Uses analysis of trends to predict price movement, usually of the short term (days to months), while not necessarily subscribing to any long term cycle being at play. |
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