Price Action is Price Action. There isnt much point in looking for why the price is moving in one direction or not. Logic doesn't prevail in markets. Is Gold a good long term investment? The simple answer is yes. What the short term brings is how convincing one side or the other is. Every body has positions on both sides, there will be winners and there will be losers.
However there is one thing that makes Gold different from say a currency like CHF (which experienced a similar plunge last year), and the difference is that it is psychologically difficult to make someone part with their Gold by telling them it is suddenly worthless. The people who hoard Gold like Central Banks cant be convinced to let go of it, just like you can make a woman sell her jewellery by telling her that its not going to be worth it soon in the future. As human psyche defines where markets go, my opinion is the shorts will have to be careful, as buyers will buy at this price level.
Last thing that makes Gold shorts difficult is the fact where the interest rates are. Inevitably its not a sustainable position. When the market normalise other assett classes will be hit with deflationary pressures and assets like Gold will end up in the receiving end of the cash coming out of them another Gold positive. This is contrary to the mind set of Gold being an inflationary hedge but thats how and why Gold is different.
Thats my 2 cents.
However there is one thing that makes Gold different from say a currency like CHF (which experienced a similar plunge last year), and the difference is that it is psychologically difficult to make someone part with their Gold by telling them it is suddenly worthless. The people who hoard Gold like Central Banks cant be convinced to let go of it, just like you can make a woman sell her jewellery by telling her that its not going to be worth it soon in the future. As human psyche defines where markets go, my opinion is the shorts will have to be careful, as buyers will buy at this price level.
Last thing that makes Gold shorts difficult is the fact where the interest rates are. Inevitably its not a sustainable position. When the market normalise other assett classes will be hit with deflationary pressures and assets like Gold will end up in the receiving end of the cash coming out of them another Gold positive. This is contrary to the mind set of Gold being an inflationary hedge but thats how and why Gold is different.
Thats my 2 cents.
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