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Most gold bulls will be right for the wrong reasons

- Steve Saville - Speculative Investor

Steve hi, I just want to raise a point: price of gold is NOT a function of supply and demand because gold itself IS the price (of the goods and services traded). Historically gold used to be the tender for all economic activity and printed currency used to be the representative of gold until US left gold based system. So the value of gold is calculated against the goods that it can buy wheter it be printed currency or grain. When there's a lot of grain in the market you can trade less gold for an ounce of grain. Thus when there's trillions of dollars circulating in the system you should be able to trade less gold for more dollars. The other comentator rightfully pointed to the paper gold (which is non-existent in material form), the leverage of the market manipulators who hold large amounts of the real thing, resulting in todays low dollar-to-gold exchange rates (mind you .. NOT low price of gold). Anyway, all I want to say is that the value of gold derives not from supply and demand of the metal (given that it is scarce naturally), but from it's ability to carry a value that can be used to set values of other things. After all, what use of any given metal for a person if it is not a useful tool for something?

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Beginning of the headline :An interesting aspect of the gold market is that most analysis is off track, with the reasons put forward for being bullish generally being further off-track than the reasons put forward for being bearish. That's despite gold bulls having the long-term price trend and fundamentals in their favour. The problem is that most gold bulls pay scant attention to the real fundamental price drivers and focus on things that don't matter. A good example is the current focus on the possible reduction in ann... Read More

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