There are two perspectives here that are as different as oil and water. The speculator and investor who are in the market to make a dollar and then there is the person who buys it for its store of value. Either perspective works for the individual.
If you want to flap bed sheets at the moon and claim that thats what made gold drop, its OK with me. The M3 money supply probably has just as much effect as bed sheets. The reason–the market is driven human psychology. Common sense and logic don’t even stand a chance. Remember the Bunker Hunt corner of the silver market in the 70’s when it went to $50? The only guy I ever knew that shot the moon and lost.
Now, if you purchase gold as a store of value, you’re looking down the road 20, 30 years. This is an insurance policy against the government pissing in the whiskey.
A few of you mentioned to go with a currency backed with gold. That sort of system protects people saving for retirement and the banks that loan out money. That works fine until you want to increase the money supply, say to finance a war or some sort of government sponsored health care.
Roosevelt during the depression had to ban gold ownership, people knew what was real and wanted gold. Nixon in 1972 had to take us off of the gold standard, because foreigners wanted to redeem their dollars for gold.
To add to the confusion, there are two different viewer profiles, those that have had an economics course and those that haven’t. If you have the chance, take just one course, I guarantee you will take all they offer, it’s the best path to a successful future.
