mikeylikesit

Gold as an Investment? Think Again

I knew a few gold bugs 2 years ago at one of my client sites. I could never get them to understand that Gold is a commodity nowadays. It's used in electronics and jewelry.

If the economy gets bad, then people will buy less of each meaning that there will be more gold available for purchase thus driving the price down.

Sure, costs to mine it have increased but how do you figure that into a rising price for a commodity that isn't in demand for anything necessary to produce (luxury items) in a bad economy.

Lastly, I also mentioned I'd rather have a couple of HK MP5's and crates of bullets in their 'global war' scenario that they insisted was around the corner.

Picture it... global war. 'Hey buddy, got some food? I'll trade you some soft yellow metal that is real purty'. Blam**** 'Thanks for the gold you idiot'.

Do we need to mention that if we really have a global financial melt down, that gold they bought is ... somewhere.... so how would they trade it?

People just haven't figured out that we are off the gold standard yet. The only use of the shiny yellow metal is in production of certain products and the price should reflect the demand for those products.

I'm a gold bear because there is no way there is enough folks who still buy into the gold bug theories to really push the bubble it was any higher.

The recent volatility will force the weak minded folks who bought just because it was up to the sidelines and they will be fearful of buying back in. These are the folks who are investors and got fooled by the hype. They won't make that mistake again.

BTW, thanks to the author. It never crossed my mind to invest in those foreign currency indexes. I'm going to keep my eye on the economy and maybe put a few bucks into them.