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The Fantasy World of Gold Bug Fever.

|Includes: Goldcorp Inc. (GG), GLD, NEM
If the world as we know it is coming to an end and Armageddon is the only thing we have to look forward to, then I cannot see how gold will shine through all the mayhem and destruction.

On the other hand, is all the hullabaloo about sovereign debt, via timely downgrades by rating agency's? and double-dip recession economies, with timely help of scare tactic experts, just part of an exaggerated sensationalistic reporting... Fed by fear mongering propaganda experts.

Fear not, the world will still be the same a year from now, ten years from now and a hundred years from now and most people, the world over, want to live a happy, simple life.
 
One of the main reasons gold is sought in times of turmoil is it has the fantasy attached to it that it is a safe haven in place of money ... It has never saved anyone’s life, rather holding on to gold in times of turmoil is more likely to be the cause of the holders death by villains, rioters and murderers. If people think they can escape a tyrant or riots by having gold coins, well, ask yourself what an angry mob would do with someone who has a pocket full of gold.
 
Another fantasy about gold is it is a second currency... Gold is not a currency. It came off the gold standard in 1971 and it does not back any currency. If one countries currency weakens then other counties currencies gain. In the weaker currency, exports get cheaper and that is good for the companies in that country. Also imports get more expensive so less is imported. Eventually the weak country recovers and the roles are reversed. That is what is happening now with the Euro and it is a healthy market that allows that to happen. It certainly is no reason to own gold.
 
For people who want to speculate, then trading currencies of Forex markets makes more sense than gold.
 
It has become easier for people to gamble away their money on speculative derivatives such as GLD ... The investment seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets.
 
Gold stocks are of interest when they are valued fairly. Goldcorp (NYSE: GG) and Newmont Mining (NYSE: NEM) are good quality mining stocks, however, if gold goes back to $500oz they will take big fall.

Also, the gold stocks are over 10% off their highs and gold is trading near its High? Is the smart money cashing in now while the fodder is buy the fear stories?

Why take on that risk when so many other quality stocks offer a safer bet?
 
With the price of gold around $1230 an ounce, it may slow the sale of jewelry, as less people will be able to afford to buy. With less physical demand and more and more supply each year it is just another commodity that will be bought and sold on supply and demand.

The only way gold will keep going up is if the intellectual propaganda story tellers, spin doctors, vested interested experts and fear mongers, get the coverage in the media. to brainwash people, who cannot work out the fantasy fascination of gold. When the current propaganda becomes old hat for the media, the coverage will stop and with it gold will take a steep fall.
 
Sometimes, fantasies do come true and the gold bugs may well have their dreams come true if gold fever ever catches on with the masses. But if everyone is about to lose their jobs and their shirt in the stock market, who will have any money left to afford to buy gold at a ludicrous price? ... Pleasant dreams


Disclosure: no long or short positions in gold