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| Updated: September 7, 2004 |
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September 7, 2004 This week gold's price dropped because of the "doomsday" effect. Investors fearing the worse, in this case, a tragedy at the Republican National Convention, had purchased gold futures speculating that some violent incident would take place during the convention, sending gold into the stratosphere. Well, I'm happy to say, that thanks to the efforts of New York State law enforcement, New York City law enforcement, and the much derided Homeland Defense team, no tragic events took place. The investors promptly sold off their speculative purchases, causing a momentary blip in the price of gold. This just goes to show the complexity of gold - how intertwined gold is, in the lives and events transpiring in real time, that even a political convention could cause gold to both rise and fall. Yet on another day, the USDX (US Dollar Index) will rise or fall, sending gold up or down. While another day, the USD price vs. the Rand may cause yet another blip on the gold price charts. And finally, the Treasury of Lithuania may opt to sell all of their gold holdings, sending gold into a price tailspin, with prices plummeting to $380/ounce or so. Yes gold has many faces, These many faces are a "Trifecta" of influences on shiny yellow metal's price. First, and most important, is supply. Second is currency fluctuation, particularly the USD. And, finally, the doomsday effect of a tragic event, or the perception of such an event occurring. All of these or any of these factors can have an influence on the price of gold on any given day. So, how can one correctly guess (predict) the trend in gold prices? Well, by discerning which of these three variables will be in play during any specific period, or by delineating which of these three variables will be dominant during any specific period, and by applying analytical skills to determine if the projected results will be positive or negative, price wise. It is an extremely rare case where two of these variables will have a dominant effect on the price of gold, and an even rarer event where all three will come into play in determining the price of gold for the same period. So, normally only one will be important at a time, however, the influencing factor will change periodically, as events dictate. And now back to work on the answer that burning question, "which face will gold wear tomorrow?" I predict the future gold prices by peering deeply into my crystal ball, until I see the trend. However, I have discovered, that others don't have functioning crystal balls, alas. Perhaps there is a business opportunity here, Gold Predicting Crystal Balls For Sale? |
| But that's just my opinion. Charles Kubach Mine-Engineer.Com |
