Word: golds
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...parallel, much of oil's decline in prices since the summer was spurred by speculators unwinding their positions, as they needed to liquidate to cover losses. But gold prices have not followed oil prices downhill. It is clear that new money has entered the gold market. Many who sold their stocks and other assets have reallocated into the gold market, instead of leaving it to cover losses...
...face of appreciation of the dollar and a financial meltdown, dollar-denominated gold has still managed to hang in there, near its high. Speculation remains rampant...
...speculation in the gold market is nothing like speculation in other markets. Unlike oil, gold is not consumed, and even when it is used in products like jewelry, it is recoverable and thus maintains its value as the gold that went into it. In other words, the total supply of gold is increasing with gold mining...
...supply of gold is also a factor in pricing. Many investors holding gold reserves have faced losses in their other assets, which would have led them to sell their gold. Ordinary people, too, have motive to sell their gold jewelry during a recession, which should increase the supply of gold on the open market and impede a price hike...
Most speculation is motivated by the desire for profit. It seems that recent interest in gold is instead motivated by the desire to maintain value. After all, the price of gold in dollars has not shown a steady return. As the government continues to enact costly but what many believe to be inadequate solutions to the financial crisis, investors fear the worst for the future of the economy and the the dollar. Thus, the price of gold has become a measure of confidence in the government to handle the crisis...