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Gold Will Find Its Real Supply/Demand Value at Some Point

by David Schectman, MilesFranklin.com:

This morning, the gold market duplicated its strong move up on Wednesday in the Thursday pre-New York hours. Investors finally come to their senses? I doubt it. Probably just JPMorgan letting up a bit. Above $1,400 is where we want to close by the end of the week. $1,478 will solidify the price even more.

“If the gold and silver market, are rigged and manipulated (which they are), why should I bother owning gold or silver?” Some of our readers ask that question. My answer is that the market has been suppressed and manipulated all the way up since the beginning of the bull market in 2001, with gold at $252 and silver around $4.50. Without the manipulation, you would most likely be paying multiples of what it costs you now, to acquire this timeless, real “wealth.” Would you rather pay $3,500 an ounce – or $1,400 for your gold? Gold will find its “real” supply/demand value at some point (in the next few years), so why not take advantage of a price structure that cannot last.

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2 comments to Gold Will Find Its Real Supply/Demand Value at Some Point

  • Johnny

    In other words, this is the time that separates the men from the boys. (Or the woman from the girls.)

    Only in a financial emergency should anyone even consider throwing in the towel.

  • Ed_B

    ““If the gold and silver market, are rigged and manipulated (which they are), why should I bother owning gold or silver?” Some of our readers ask that question.”

    Which they should because it IS a fair question. A lot of PM gurus have very publicly sold people on the idea that we should all own some gold and silver. I agree with this approach. What I do not agree with is the idea that we need to hold ONLY gold and silver and nothing else. Intelligent investors do not go “all in” on anything because they know that markets are fickle, subject to change for no apparent reasons, and can stay crazy longer than most of us can stay solvent. Because of that, gold and silver should be PART of one’s holdings but not ALL of them. The other parts can include stocks, real estate, other commodities, productive land and businesses, cash, etc. We never want to be in a position where typical market moves can force us to sell that which we do not wish to sell. The current situation is a perfect example. Those who are all in with PMs now have taken quite a beating in the past 3 months. Anyone who has bills that must be paid and no other way to pay them than to sell some of their PMs are forced to sell near a market bottom. Those who own other salable assets or cash are not forced to convert their PM paper losses into real losses. They can afford to hold their PMs and wait for better prices to arrive before they sell or just hold them until the time comes when they are MUCH more valuable. The key thing here is that when they sell is up to them and not to the flailing market.

    “Why would anyone TRADE gold and silver?”

    Because that is how some people make their living? These folks do not care a bit about what it is that they are trading. To them one things is as good as any other. All that matters to them is whether or not they can make a little on each trade and then trade a lot to earn a respectable amount of money for themselves, their company, and their clients, if any.

    Personally, I do not care much for trading, although I have made money doing it. To me, it seems more like wealth extraction than wealth creation. I prefer to create rather than to extract.

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