When any market crashes, it’s a shock. For a real nose dive it normally takes something unexpected and dramatic to kick it off. If people had any idea of the reason or that it was coming then the fall would start early and be more shallow.
Gold is misunderstood and it is viewed as “the mad metal”, so here are three things to remember whether you love or hate gold.
1. Gold is a commodity
To many people gold is something special. It’s more than just another metal that comes out of the ground. This may well be because since the dawn of time gold has been a status symbol and status is what breeds success or simply just breeds.
Whatever you feel about gold, it is just a metal. That isn’t necessarily a bad thing and it doesn’t mean it needs to be cheaper.
Gold supply has not kept up with demand so its price should rise. Where once gold was used on things that could be easily recycled. Now gold is used in things that don’t get recycled in a way that the gold is being recovered. So gold is being lost.
2. Gold is volatile
Gold used to be worth a lot less than it is today. As we have seen recently at ADVFN, you don’t have to look hard to see gold is as vulnerable to swings in values as any other commodity.
The key to investing in gold is being able to watch the gold price live.
3. Gold is not a stable store of value
It is a myth to believe gold is a constant store of value. Like anything else the price of gold is created by supply and demand. When the Spanish pillaged South America and brought the gold and silver back to Europe, there was rampant inflation. More gold meant gold money was worth less and the price of things in gold went up.
By Clem Chambers
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