Interesting interactive graphic from US Funds:


click for interactive graphic

Category: Digital Media, Gold & Precious Metals

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

34 Responses to “What’s Driving Gold?”

  1. Tim says:

    Rural getaways, fallout shelters, stockpiled food, seeds, water hand-pumps, and guns are also a sure bet, right?

  2. wally says:

    Fad > Gold is trendy > Follow the crowd > Higher gold prices.

  3. Fred C Dobbs says:

    What price will we get for our gold when our government bans ownership?

  4. royrogers says:

    ‘”wally Says:

    April 11th, 2011 at 11:47 am
    Fad > Gold is trendy > Follow the crowd > Higher gold prices.


    do you own gold ??
    do you trade fads ??

  5. Al_Czervik says:

    Neither of the previous two commenters (11:40 and 11:47) even attempted to refute the content of the original post. Fact is, gold has been working *a lot* better than what most people have in their 401-k accounts for about 11 years now. I enjoy reading all the hate for gold…it shows that a lot of people still haven’t bought into it.

    If you believe that our political and monetary system is working well, then I would agree that you shouldn’t invest in gold. However, it doesn’t take an armageddonist to see the appeal of owning gold.

  6. curbyourrisk says:

    Forget Gold. Let’s get to the bottom of the Silver Rally.Just how much does JPM have to cover their HUGE HEDGE BETS????

  7. wally says:

    “I enjoy reading all the hate for gold”

    Does hate for copper bother you? For tulips?

  8. wunsacon says:

    “Copper” and “tulips”? Sure, but just try washing yourself in a “treasure bath” with those. You won’t smell the same as when you bathe with gold.

  9. jaymaster says:

    Jersey Shore popularity continues => number of wannabe Guidos grows => demand for gold chains and pinky rings skyrockets => higher gold prices

  10. beaufou says:

    I own gold from inheritance but I look at it as another materialistic form of payment, not an alternative to our present malfunctioning system.
    Having said that, the fact that most of it is concentrated in Western Countries makes me quite confident it will remain a high value asset if or when world economies are tanking again.

  11. druce says:

    worth thinking about which of those factors are intensifying and which have peaked

  12. Al_Czervik says:

    @ Wally (and others)

    I have no opinion one way or the other on copper or tulips…and no interest in investing in either of them.

    I really don’t care if you or anyone else invests in gold. It has increased in value nearly six-fold during this century, which I believe works out to about 18%-19% per annum since it started rising. Not bad for an asset that so many people continue to hate!

    I’m happy to ride a “fad” that has shown itself to be as persistent as this one. My average cost is well under half the current price and I am using risk management techniques to avoid giving back what I’ve made so far.

    Feel free to tell me how it will “all end in tears”, if that makes you feel better.

  13. Al_Czervik says:

    @ Wally

    BTW, you still haven’t refuted the substance of the original post. Apparently, since there was a bubble in tulips several centuries ago, therefore gold *must* currently also be a bubble. Correct?

    If you choose to reply, some facts would be helpful.

  14. willid3 says:

    well all of the investment capital (aka speculators) has to go some where. it won’t be stocks or bonds. they have pushed as much as they can into oil (which if you think about is contradictory to gold. oil would loose its value if the economy collapses which is what so many think will happen and investing in gold because of it). so i suspect its just speculators, driving it up, till they get out when they hit the price they are looking for

  15. Arequipa01 says:

    The prices on rare earth elements are a barometer for war. Watch them.

  16. vader says:

    Maybe gold is a way of destroying excess fiat currency.

    Invest in gold with lots of fiat currency and when it tanks, value is destroyed.

    I’ve owned gold and lost money in gold. Kindly don’t lecture. Maybe this time is different.

  17. Left out:

    India, like China is becoming wealthier and both would rather hold gold than to trust paper as a store of wealth

    Central Banks have moved from net sellers to net buyers of gold for the first time in decades.

    Big funds have taken a liking to the supply/demand fundamentals and gold is such a small market it is easy for the funds to shift the gold market

    Gold ETF’s, their popularity and ease by which funds and investors can get into the gold market without having to deal with the actual physical metal

  18. TripleSigma says:

    Higher Interest Rates –> U.S. unable to manage its interest payments. Default immanent –> Higher Gold Prices

    Higher Interest Rates –> W.A.C.C. of companies increase & debt burden increases, profitablilty decreases, unemployment increases–> Higher Gold Prices

    Higher Interest Rates –> Struggling Housing Market collapses again, More defaults and bank write downs, another ‘systemic crisis’ QE3 to QE10 a sure thing–> Higher Gold Prices

  19. PatientCash says:

    The gold bull is a money machine. Pull up a chart. Buy on tags of the 30 week MA. Sell on a weekly exhaustion candle that pierces the upper Bollinger. If it closes below the 50 week MA, go to cash.

    Why is it going up? More buyers than sellers. Who cares?

  20. cheese says:

    The other night when Kudlow had Jim Grant on, Grant paraphrased an FT writer something like….”I understand what QE is, but, what is money”

    If you’ve held dollars over the past decade……….how can you not question its store of value?

    Remember, we’re coming up on the 40th anniversary of the last U.S. default.


    I’m not sold on a gold backed currency as much as Mr. Grant.

  21. troutbum says:

    Gold has been a store of value for 2000 years, show me some paper currency that’s 100 years in existence, let alone a store of value.

  22. cthwaites says:

    Nothing to do w the biggest gold buyer (GLD) stripping out 1% a year for managing yr gold…, of course not.

  23. louiswi says:

    New defintion:
    Money is a unit of exchange and a temporary store of value.

    Gold can’t be a long term store of value anymore than a fiat currency can for the simple reason that miners are continually creating additional supply. It isn’t Krypotonite-there’s actually quite a lot of it and more coming every day.

  24. D Dog says:

    After Y2K, gold and silver got so darn cheap, it seemed like a no brainer to not buy it, since it was selling for less than it cost to produce it. I actually didn’t buy it as an investment, but rather a store of value as I thought there would be inflation which surely has been the case. When I inherited some stock from my father and it started to go down, I sold it and bought more gold. I guess you can imagine how lucky I feel now with Enron going to dust. I always enjoy the high flying $$ guys that post on your site Barry, that just hate gold and silver. I would imagine that they would be singing a different tune if they had a lumpy bed of Au an Ag to sleep on.
    D Dog

  25. wildebeest says:

    I buy gold because Glenn Beck told me too.

  26. Al_Czervik says:

    @Troutbum: Good point. USD has lost nearly 98% of its value vs. gold over the past 100 years.

    @cthwaites: Not sure what the point of your comment is, but the management fee of GLD is actually 40 bp. That’s less than a lot of mutual funds charge. BTW, I reviewed the management fees of several of the funds in the family you linked to in your signature and they are all well over 100 bp.

    @Louiswi: Regarding the efficacy of gold vs. USD as a store of value over long periods, please refer to Troutbum’s comment at 5:12 pm. Regarding the issue of expanding supply, do you have any idea how much additional USD has been supplied over the past 2-3 years vs. the supply of gold over the same time period? Are there any factors constraining the creation of additional USD vs. additional gold? What are likely future changes in relative supply of USD vs. gold?

  27. constantnormal says:

    I like it when people have nice simple explanations for things …

    So, why has silver outperformed gold for what seems like an incredibly long time? Same reasons? OK, so why isn;t silver matching gold, why is it doing so much better?

    Or perhaps, the question should be, why hasn’t gold kept up with silver?

    You can play this game with a whole list of commodities, from copper to cotton. Platinum is nice, too. And recently, rare earths most of all.

    There’s nothing special about gold. Only about the abuse of and decline of fiat currencies. Which commodity jumps up more than another is an interesting exercise, without any clear answers. Probably herd behavior accounts for a lot of it, and meddling by the Fed or other powerful interested parties.

  28. Al_Czervik says:

    Very devious of Barry, posting something so obviously controvertial to distract the natives while he’ll be in-flight and unable to attend to the blog…

  29. johnl says:

    Bubble or not?
    How many people that you know own gold? Not many I’ll wager.
    How many people that you know owned the last bubble du jour? Quite a few?
    Last time gold bubbled people were lining up on the street to buy the stuff. The only people that seem to want to buy it now are 4gold scrape dealers!


  30. royrogers says:

    Barry is probably doing a quick survery of herd opinion on gold as a contrary indicator.

    Alot of gold bears around, so I assume that is still bullish for gold

  31. barbacoa666 says:

    Someone (I believe Eddy Elfbein) posted data showing the POG varies with real interest rates. When real interest rates are 2% or lower, POG rallies

  32. farmera1 says:

    I’m getting nervous about owning gold/silver/platinum. I have a very carefully scientifically justified reason.

    When you read about an asset on the seventh page, generally about how bad an asset is as an investment, it’s time to buy (2001 for example). When you read an asset on the front page or see it advertised on TV, read about it in the financial magazines, see the guy on the corner holding a sign about buy/sell, it’s time to sell. Works in slightly modified forms for farm land, real estate, stocks, commodities.

    The noise level for gold is going off the chart, but I’m confident “…this time it’s different” because I want it to be so.

  33. cthwaites says:

    @ Al_Czervik

    The fee comment is because the TR of GLD from 2006 is 140.7% and from Golds (commodity) is 145.4% so roughly a 1% a year in management fee and contango fee etc. Should have made that clear. I’m not refuting the value of Gold as an investment nor arguing the fiat money point. Just that we do have a very different buyer in the mix this time round….a well publicized ETF that holds physical.

    And yes, our funds do have a mgt fee more than 100bps a) not for the I-shares b) they’re active funds not passive and c) they’ve outperformed their index.