Gold Price | Supply and Demand? | Fear and Greed? | Other?

79Au19779Au197 Posts: 4,047 Gold ✭✭✭✭✭
edited May 2016 in About Gold
Point forward what will have the biggest effect on the price of gold?

Consider if you will that gold has historically been a play on fear. With the exclusive exclusion* of the BitGold | GoldMoney team, everyone else is (and has been) marketing gold with a fear factor. I need not elaborate.

Now however I think that a new dynamic may be in play. That is supply and demand + media and public awareness + lack of return on traditional investments. That is not to say that fear mongering does not continue, just that the dynamic is now more complex.

Supply and Demand

If as Rickards and others imply, the Chinese are buying gold as fast as they can and COMEX and LBMA are running out of physical gold to satisfy contracts should folks actually decide to take possession, one would expect the price of gold to slowly drift upward with the occasional upward spike, gap up, and/or temporary pull back. This appears to be exactly what is happening now.

More and more big and small players are adding gold to their portfolios. A microcosm of this is the rate at which BitGold itself is growing the volume of gold stored in the BRINKS vaults it uses. The ongoing increase in the amount of gold on deposit with BitGold and others is soaking up gold production.

Fear and Greed

This is on-going, but with the Internet more and more folks are subjected to daily ads touting the need to buy gold to protect one's retirement savings from the approaching collapse of [pick one or more: US dollar, Euro, global financial system, etc.]. Fear and greed are still part of the mix.

Mainstream Media Awareness

This is a new factor. As more and more hedge fund managers and major banks come out endorsing gold, the awareness of the general public increases as does the legitimacy of gold ownership. As more and more people hear about gold ownership from trusted sources, demand will increase, and gold price will begin to respond to traditional supply and demand referenced above.

Manipulation

Efforts to push down the price of both gold and silver will likely continue to be a major factor in price unless real efforts are undertaken by the courts to stop it. However as the forces of "Supply and Demand", "Fear and Greed", and "Mainstream Media Awareness" continue to build, I expect that manipulation will begin to have less effect.


* "exclusive exclusion" - is that superfluously redundant?
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Comments

  • GoldmattersGoldmatters Posts: 4,073 Admin
    @79Au197 Great analysis. As usual the answer is always a combination of all of the above and other varying factors. All the factors above bleed into each other and effect the other in some way. I still believe in is mainly a function of the elusive Tipping Point. At some point the first 3 factors you mention will effect the 4 factor to the point it can no longer be viable. As they say, what cannot go on will not go on. The timing is always in question but it is coming, likely sooner rather than later. To use another tired saying "Inevitable does not necessarily mean imminent." But it might.
  • rohanibuang61rohanibuang61 Posts: 2,379 Gold ✭✭✭✭✭
    @79Au197 Based on element of human factors will include supply/demand, fear/greed together with all negative and positive values depending on negative or positive individuals.
  • zulu1520zulu1520 Posts: 294 Bronze ✭✭✭
    @79Au197 I'm getting really excited wish I had more fiat to covert over. I'm looking at my Scotch collection really hard.
  • 79Au19779Au197 Posts: 4,047 Gold ✭✭✭✭✭
    @zulu1520

    NOOOOO - not your Scotch

    What do you have?
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