Salient to Investors:
John Ryding at RDQ Economics said:
- Unlike with stocks, there are no tools or models that determine the fair price of gold – it is psychological. Industrial and jewelry demand total only 55% of demand.
- The 10-yr bull market was caused by the Fed being incredibly accommodative – 1% in 2001 and 0% in last 4 years – creating a fear of debasement of paper money.
- The pre-financial crisis price of gold was $600 so if and when the Fed returns to normal monetary policy then you could argue gold could fall $600-$800.
- Gold has not done well under QE3 so if printing more money did not propel the price higher, then like any commodity that does not trade well when the fundamentals ought to be supporting it, the risk is a big scramble to the exits.
- Gold is a stock trade so we are not trading new production, like with oil, we are trading all the gold that has ever been mined in the last 5000 years. New production is only 1% of volume of gold being traded,
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