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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