All this talk about gold is very interesting and compelling. And I have a position in it myself.
But, my main concern is it’s fundementals. And isnt that kind of what this whole correction that’s happening in the markets is really all about?
Gold’s biggest attraction is it’s store of value. Protection against abuse of FIAT currency, if you will. But, you cant consume it or really use it for anything very useful in life.
Fundementally, it costs about $500 to $600 US$ to produce an ounce of gold right now, in todays US$. So, at $900/ounce, it’s selling for roughly twice it’s prodcution costs. That sounds about like a wholesale price when you consider that most items sold in a store are sold for about 3 times there production costs. IMO, if gold breaks $1000, it is reacting to a panic as it is not that great a deal at that cost…i.e…the market will be betting that the US$ is really heading for big devaluation.
It seems like it’s really a hedge against panic and/or FIAT abuse.
