Disappointing to see that gold could not hold on to its recent gains although it is still up on the quarter. It is down 3.2% in March but up 6.8% on the quarter. I’ve had many people ask me if it can fall below $1200. Of course the answer is “Yes it could” but …. and its a big but ….. many gold mining companies are finding it costs around $1200 to dig gold out of the ground. If the gold price falls below $1200 many minors will simply have to shut up shop. This reduces supply … and guess what? That’s right, the price goes up again.
I know many people are maddened by the fact that physical gold seems to be the only sane thing in an insane world yet is not making the kind of returns they hoped for in the short term. I would have to agree. The reality is, w’ve been putting up with the idea that debt can be used as equity in lieu of things with real value (like gold) for a long time now. The so called “paper gold Market” is much bigger than the physical gold market. Some say by a factor of 100-1. At the moment insanity reigns but that should not put you off holding something that has proven itself a store of value for thousands of years. The day will come when fiat currencies and multi-trillion dollar national debts disappear up their own orifice and when that happens you had better be ready. Ditto for all you silver lovers too.