Sunday, August 25, 2013

Keep Calm And Hold Your Gold

We’ve been here before.

The price of gold dips, and headlines like, “Is gold’s price drop just the beginning? and “The Price of Gold Is Dropping Like A Brick” start popping up all over the place. The blogs start recycling Warren Buffett’s various quotes on why he’s not a buyer of gold, and the chatter builds on why gold prices dropping may be a sign that gold is not as safe a bet as some would have you believe.

Okay. But, let’s remind ourselves that we’ve been here before. And when it comes to gold, we are better served by staying calm and letting history serve as our guide.

It is true we may be entering a new era with new emerging markets, but it still serves us to look to the patterns of the past and pay heed to what factors have contributed to the fluctuation in gold prices. Factors ranging from simple supply and demand to inflation to patterns of the central banks all contribute to the rise and fall of gold prices. Currently, the fluctuations in gold are most likely related to a convergence of a number of these different factors. Yet, based on historical trends, the recent gold fluctuations show no signs that they are anything more than just that: recent fluctuations.

Just look at the year-long trends since 2010 in this series of charts from Kitco on Gold’s value.

gold graph gold graph gold graph gold graph

Each year, gold’s price has taken similar dips before rising again, and leveling off to carry into the following year. Even if gold prices do not return to the $1,700 per ounce range this year, the $1,300 per ounce range is still an indicator of the long-term value of gold.

A deeper look into the historical value of gold can be viewed from the National Mining Association here.

Overall, the evidence shows that the recent dip in the price of gold may very well prove to be a buying opportunity. The uptick in interest in gold refinery has a very real basis. Let’s not forget that it is not about the monetary value of the gold alone. Those in the know recognize that gold is a soft precious metal that can be brought to a gold refinery and melted down for use in things like fillings and wiring.

Gold has always been the only true “store of value” in a world built on paper-money. The key point to keep in mind is, even in one week’s time headlines can go from “The Price of Gold Is Dropping Like A Brick” to “Gold Firmer on Short Covering.”

This guest post was provided to Doomsday Moose by Garfield Refining, a precious metal refinery offering nation-wide service to individuals and businesses since 1892. Garfield Refining provides expertise in buying, selling & refining gold, silver, platinum and palladium, with more than 120 years of experience. For more information and updates on gold news and prices, visit the Garfield Refining’s Google+ Page.

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