GOLD 0.51% $1,391.7 gold futures

Gold not going to perform if people do not believe it will

  1. 412 Posts.
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    Gold and silver able to beat inflation is actually a myth. Ever since Nixon renounce gold pegging, resulting in Nixon shock causing gold price to short spike in early 70's, In the early 80's where stagflation is rampant, gold price once rallied to 700-800 USD (highest reach 1000 USD) in early 80's where eventually get lower to around 500 USD per ounce for remaining 80's 90's and early 00's. So if you think gold able to win inflation, buy lot of gold in late 80's, you will lose to inflation badly as the price stagnant for gold for next 20 years or so.

    I know people had been generally affected by Peter Schiff, Jim Rogers, Mike Maloney or any famous gold bug out there using common sense to persuade people buy gold. However from time to time perception need to change, gold cant perform if your view is that US will fundamentally recovered. Even if the next crisis epicenter is in Asia, gold will not perform as people will rush back into dollar. The dollar printing didnt crash dollar, it only increase its base money but not so much on M2. Even the low interest rate didnt crash dollar, it merely increase M3 dollar supply offshore of US creating bubble around the globe.

    People who do not believe US able to be recover after so many years is being unrealistic. People like to use all sort of reasoning eg US do not manufacture, US have huge debt, US middle class is shrinking etc, it is all not a really big issue. The main point is, as long as people with money believe in a nation able to do well in future, no matter how big the debt is, how poor the job market is, everything will be solve. Where the confidence goes to, there will be robust growth. Same thing apply to gold, as long as people do not believe gold is real money, gold will never be real money. And it will getting harder and harder if the financial system is more stable and possibility of total failure is minuscule. Economy is like religion, only those who believe every religion and also embrace free thinking and atheist, will do well. There is no single school of thoughts in economy able to apply to every circumstances, it is all after what most of the people think, that will be the truth. And what people think will change from time to time.
 
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