It has done exceptionally well lately when you compare it to other commodities. If it holds up in price, the mining companies can make good incomes again. Especially if oil trends down. Mines are energy intensive ventures.
It’s a relatively useless metal, and its main consumer (jewelry) has been thoroughly squeezed out of the market. So it naturally does not suffer as much as oil or platinum from the global commodity slowdown.
For the same reason it will not enjoy as big a bounce (if any at all) when the recession is over. On the contrary, investors will rush for the exits.
For the last 12 months gold had a strong negative correlation (-2 or more) with the dollar index.
Correlation -2 means that, when dollar gains 1% against other world currencies, gold price falls 2% in dollars and 1% in other currencies. It did not crash like silver because industrial demand is not a major contributor to its price.
Right now gold is higher than it should be based on this dollar index principle. But if GLD gets into 75 range again, I’d start buying.
