Delete comment from: Captain Capitalism
Gold and silver are not quite the same as other commodities like copper. While all of them have industrial uses and the demand can rise and fall based on the strength of the economy, gold and silver, by their scarcity also have value as money. You can't print more gold.
What is happening now is speculators who made bad bets, either in commodities or stocks or even bonds, are now having to sell their positions in gold and silver to cover their bad bets. In futures trading on commodities you only have to put a fraction down to secure a price, you leverage as much as 20:1. If you bet wrong you have to put more to hold that position or sell. If you don't have more money to put down or you think your bet is a wash, you dump that position. Hundreds of tons of leveraged paper gold was dumped, more than the amount of actual gold at COMEX. This triggered the panic selling of gold futures and the price plummeted. Real gold price is based on paper gold. Paper gold is nearly worthless at the moment. Speculators are getting out of paper gold, while investors are buying up physical gold faster than it can get to market. If you are investing in gold or silver it's not how much you paid at the time but how much you have when you need it.
I'm not one who has a lot of money to invest so gold is still mostly out of my range, but silver is also a good investment and you can stack a lot more of it for fewer dollars.
Apr 15, 2013, 9:38:00 PM
Posted to "What Happened to Gold"