bigworld, gold seems like a good idea for a number of reasons. First, people consider it to be a safe haven, so gold rising would be like a self-fulfilling prophecy. Second, people consider gold to be a hedge against the declining dollar. So people will buy gold.
Also, many governments are stockpiling gold. They expect the value of gold to increase. If the SDR becomes prevalent, maybe the IMF will include gold in a revised formula for determining the value of the SDR.
However, I still don't see the intrinsic value of gold as being of great magnitude. Its primary usages are for making wedding rings and other jewelry. The only way that I see to assign a realistic valuation for gold is to determine how many wedding rings a jeweler can make out of an ounce of gold. Say that a jeweler can make 5 wedding rings out of gold at a cost of $320 per ring. That would equate roughly to the current price of gold. The jeweler would then probably charge $600 per ring, but if a person were to realize that he or she was paying $600 for one-fifth of an ounce of gold, that person might defer. Maybe a jeweler can make 10 wedding rings out of an ounce of gold at a cost to him of $160 per ring, but the same scenario would apply.
So, I don't see what's so special about gold.
As you know, people have been selling gold and silver to raise cash, presumably the US dollar. But due to people's expectations about the price of gold and the number of dollars that are being pumped into the system, I would think that that trend would reverse and that the price of gold will increase in due time.
AI
