[Jewelry making - Article 01130] - Re: [Orchid] Price of Gold

[Dave Sebaste]

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Hi Friends,

    One element of the supply and demand situation that I haven't seen
    anyone mention is the dumping of gold reserves by government banks in
    recent years. Most, if not all currencies are no longer on a gold
    standard. Economists and central banks started asking themselves why
    they are holding all these gold reserves because, at this point it's
    just another commodity, like oil or copper. 

    So, with surprisingly little attention, banking institutions began
    reducing or liquidating their gold reserves, providing a more
    cost-effective way for gold consumers to get it than to justify
    mining it. I don't have any idea how much gold has been "dumped" on
    the market in recent years (last five?), but it could be argued that
    it has held gold at artificially low prices. As these institutions
    reach their desired reserve levels, this source dries up. Or maybe it
    tightens up due to a geopolitical situation. Either way, gold prices
    can be expected to rise. 

    Will gold prices ever get back down to where they were two years
    ago? Probably not, unless more gold materializes on the market
    somehow.  Will the stock market ever get back up to where it was
    three years ago? Maybe someday, but I think it will take decades. 

    Just one guy's perspective on the situation... 

Dave


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