Any item is only ever worth what another person is willing to give you for it, and that worth varies depending on circumstances.
You may own a Rolls Royce, it may be worth a lot of money……but when the oil runs out it’s worthless.
As for precious metals, their worth is based on supply and demand. Remove either and they become worthless just like the car with no gas to run it. If folk ever decide they don’t want gold anymore, that they’d rather spend their money on something else then it has no value…..it’s only the fact that people want it that makes it valuable. The other half of the equation of course is supply…..there is only so much gold in the ground and only so much mined at any one time. So more people want more gold than there is being produced….and that increases it’s value.
If someone were to find a bottomless pit of gold somewhere that meant we could all have as much of the stuff as we wanted for next to nothing then the value of gold would drop as a result.
As long as people want precious metals and there is only so much of the stuff available then they will have value…..change either of those two factors and they don’t.
the worse the economy the better precious metals looks to an investor. When the value of the dollar is low then the value of say gold or silver is high because it becomes the main value and way to trade. The price on precious metals used to be low now has gone higher but last week (or the week before) the price of gold dipped.
Yes , Precious metals price is a factor of Supply, Demand, And Fear, and speculation.
At present time, gold gas been overbought through fear and speculation, it is due for a SIGNIFICANT correction.
But it is a store of value compared to Fiat Money (paper backed by nothing)
Gold prices will increase to the end of the cycle in 2014, BUT there will be corrections along the way, and we are due for one now.
The price of anything can go down.
Any item is only ever worth what another person is willing to give you for it, and that worth varies depending on circumstances.
You may own a Rolls Royce, it may be worth a lot of money……but when the oil runs out it’s worthless.
As for precious metals, their worth is based on supply and demand.
Remove either and they become worthless just like the car with no gas to run it.
If folk ever decide they don’t want gold anymore, that they’d rather spend their money on something else then it has no value…..it’s only the fact that people want it that makes it valuable.
The other half of the equation of course is supply…..there is only so much gold in the ground and only so much mined at any one time.
So more people want more gold than there is being produced….and that increases it’s value.
If someone were to find a bottomless pit of gold somewhere that meant we could all have as much of the stuff as we wanted for next to nothing then the value of gold would drop as a result.
As long as people want precious metals and there is only so much of the stuff available then they will have value…..change either of those two factors and they don’t.
the worse the economy the better precious metals looks to an investor. When the value of the dollar is low then the value of say gold or silver is high because it becomes the main value and way to trade. The price on precious metals used to be low now has gone higher but last week (or the week before) the price of gold dipped.
anything that goes up will go down and anything that goes down will go up