gold decline - time to buy???, page-24

Hi Menta

What interests me is the place of gold in the "risk on" -"risk off" paradygm. The gold bugs on HC talk about gold as if it were a hedge ("risk off"), whereas the price action of gold is consistent with a commodity ("risk on").

What I suspect has happened is a reclassification. While the price of gold was rising (and the gold bugs were happy) it was "risk on". When the prices starts to fall and loses accumulated it is reclassified as "risk off" and characterised as a hedge against hyperinflation, monetary control, and the imminent collapse of the global banking system to justify staying long. Maybe this is where the "rationalisation" is taking place.

Good luck


Afterthought: In my experience, markets are mainly driven by fear. When prices are falling people are scared of losing money. When prices are rising they are scared of missing out.