In 1987 interest rates hit around 17%, the economy was over heating. The gold price rallied like it did before the GFC. Then the gold price cashed as did the whole asx.
Gold was an inflation hedge and those caught at the top lost because they were followers not leaders.
Cash doesn't ever lose value in real terms. Assets gain value. The market is still overvalued which will result in deflation and the gold price falling. Deflation and inflation are the main driving forces for gold.
Unless you are talking about cash losing value against foreign exchange but that is really only temporary.
When interest rates drop they invest in the asx 200 which recently overheated again. If the reserve bank dropped interest rates again the ASX will bounce back at lightening speed. Pe ratios of 21 and 22 are acceptable when you cant get more than 2-3% return in the bank and not growth.
How can you preach gold is better than banks.
Gold lost 23% in number of months while your bank is still giving you 2-3% and no capital loss.
It seems that anything that doesn't take off at lightening speed is seen as underperforming or a bad investment.
The top 50 gold mining companies can supply gold to the market under $900 usd ounce.
This doesn't include all the residual production from bulk commodities. Which is probably well over 400 tons a year.
Now the gold bugs are also trying to flog off silver.
Just one copper mine per month produces 75,000 ounces of residual production of silver.
Copper similar effect on the gold supply.
RMS Price at posting:
13.0¢ Sentiment: Sell Disclosure: Held
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