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Pressures on Gold and Silver Continue
September 11, 2008

Extended Pressures on Precious Metals

Precious metals continue their descentthis morning, as demand slackens further. Gold has fallen below $765 and silver has dropped just below $11.00 and ounce.

Friend and fellow blogger Dave Harper and I had a conversation yesterday regarding precious metals. Dave had written an editorial, which will be published in the next issue of Numismatic News in which he touched on both precious metals and currency exchange rates as they directly relate to the coin market. You'll want to take a look at his comments on the Numismatic News website this Friday under the Commentary section on the navigation bar.

My two cents on the subject? When I consider commodities and validity of their prices, I always look at end use. In the case of gold, for instance, I watch jewelry manufacturing trends. If that end use industry is buying less, then the price of gold will have to come down. No amount of investor driven buying can support a commoditiy market without support from an end use market for that commodity.

In essence, nothing has real solid value until it reaches it's actual use. Demand for sake of investment potential is flighty, fickle and only self supporting. Demand for useful products helps establish a firm floor under commoditiy prices. You can trust this type of "real use" demand to lend stability to commodity prices and to give you a sense of where the market is going long-term, even when investment hype is raging.

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About the Author
Tom Michael has been Krause Publications primary market analyst on more than 80 world and United States coin catalogs produced over the last 20 years. He came to KP in 1987 with a bachelor of arts degree in history, a master of arts degree in economics and a history of coin collecting stretching back to the 1960s. He began collecting world coins as a child by asking friends and relatives to bring coins back from overseas trips, visiting flea markets and having his mother watch for foreign coins in her register at the local grocery store. Today he works with a dedicated base of over 200 contributors to provide accurate market values for the five-volume Standard Catalog of World Coins series, as well as many specialty catalogs, including Coins & Currency of the Middle East and the fifth edition of Unusual World Coins.

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