Phil Anthropy

Louis James on Why the Big Gold and Silver Spike Will Be Even Bigger This Time

I have heard that the price of gold is subject to manipulation by gold repository banks on a grand scale. If this is true, then gold remains a speculative play. Other commodities, such as food, are less speculative. For instance, the prices of milk and orange juice are up huge in the past 18 months. Since the price of gold is dependent on both industrial demand and fear, and is also subject to possible supply adjustment by banks leasing gold from their colleagues (among other techniques), being a gold bug at this level is risky. If the U.S. has a deflationary recession, which would be good for banks holding undefaulted mortgages, gold prices will languish. However, the long-term risk-reward ratio of gold is probably as good as most speculative investments.