What I Really Like...
Notice how the gold price is trending higher with every upward bounce back of the financial markets. Gold is now over $1700 US today even as the overall market gradually moves slowly back to a more normal trading range.
Now is this trend in the gold price sustainable? Is this move just a reflection of the present market uncertainty? Or does it represent the inflationary impact of the recent vast monetary easing and governmental spending? This pandemic crisis has been a huge driving force for that. Or perhaps it is some combination of both?
What I find more interesting seems to be the fact that even with the recent dramatic sell-off in the financial markets, there seems to be a lot of investment capital left to drive the markets right back up to where they were before. That is one of the unique advantages provided by access to cheap and easily accessible money.
Everyone now seems to have some means to get a piece of the pie. It seems like a miracle but it's not. The pie just keeps getting bigger. But so does population growth. The need has to be filled.
Does government always do what's necessary to maintain a stable economic climate for job creation and the survival of its financial institutions? The answer is definitely yes. For as long as we have been alive, the dollars that we have used to purchase goods and services has steadily declined in value. Over time, more always buys less. A lot less!
Is this positive for the price of a commodity like gold? Well yes! Due to its inherent natural rarity like certain other metals, its value is bound to rise relative to the supply of money in the financial system.
The more and faster the money supply grows, the speedier and higher the price of gold will move at a proportional rate. It is a rather simple mathematical equation that no investor really needs to understand. You just need a little cash to get started.
Most people have a job. But you must keep on buying as long as they continue to live. Leaving your excess hard earned dollars in a bank account is now no better than leaving it concealed in a mattress or rotting in a hole in the ground. Sometimes, there is a need to take a little risk!
All the best! Java