Since supply and demand do not have anything to do with the current
rise in gold price http://www.kitco.com it will definitely will be
go down after the war with Iraq. When and how much is pure
speculations.
I do not see any fundamental connection between a war with Iraq (or,
rather, aggression against this country - which is my point of view,
shared by many in the USA and by many more in Europe and also, and
still, I believe, by the Security Council of the United Nations), and
the evolution of the price of gold per se. There is no doubt that the
anticipation of an attack on Iraq is functional in rising the price
of gold nowadays, but this only strenghtens an already existing
trend, making some of us even filthy richer at a quicker pace. But
that is all. The price of gold will probably go down after the
aggression has become a fact, but it will not alter the rising
trend, for which other mechanisms are responsible, mechanisms that
already existed before 0911. Basically, many consumers won’t buy
because they feel insecure, while some entrepeneurs won’t invest
because real and cold money (machinery, employees) is not as hot and
lucrative as fictious money and commodities such as gold. This is as
much as you acknowledge in your first sentence: if prices “do not
have anything to do” with supply and demand, with what do they have
to do? Best regards to all, Will (@W_Denayer)
For a world of interesting facts and resources about gold visit the
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For more in depth about the many diverse factors which
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I’d like to “weigh” in on this debate. Having been in the business
for my whole life I have always been interested in the price of gold
and what makes it move. In my opinion since Nixon took us off of
the gold standard, gold has become the shelter of uncertianty. The
uncertianty has taken many forms. In the late 70’s early 80’s the
uncertianty was inflation. In the 90’s it was tied pretty closely
to the dollar and how it performed (I think the uncertianty then was
of the US deficits both, trade and budget). Today, with the
uncertianty of war and the economy, we are likely to see gold trade
with more volitility. It may even begin to be affected in the same
way the stock market was in the late 90s with everyone jumping on
board. In that case, look out! It may be a bumpy ride.
A couple of other factors to consider are large gold holders dumping
gold on the market, Russia and China have been doing this lately. It
affects the price. Gold is a commodity that in tuff times can be
traded for food or weapons.
It troubles me also that some are speaking of this war as an
inevitability rather than a possibility. Like saying “we’ll give you
a fair trial and a first-class hanging.” With reference to the
proposed war’s impact on the price of gold, that issue is of far
less concern to me than the potential loss of human life on both
sides. Never the less, here are my 2 cents-
The US goes to war against Iraq. An expensive proposition. We end up
spending billions/trillions of dollars we don’t have. The government
fires up the printing press and issues currency to cover the bill
(in part.) This causes inflation. The price of gold rises, because
the dollar is worth less.
Probably not, unless more gold materializes on the market
somehow."
Actually more gold will start to materialize fairly soon. The cost
of producing an ounce of gold from many of today’s gold mines is
actually in the $300+/oz range. Many major gold mining operations
close down their less profitable sites during low gold price times.
When it jumps up into the current range they will reopen a lot of
these operations to make money from the mines for as long as
possible. Eventually, of course, the price will begin to fall as
more and more new material comes into the marketplace (unless of
course the idiotic speculators get involved again and run the price
up to unrealistic, and unsupportable, levels).
Daniel R. Spirer, GG
Spirer Somes Jewelers
1794 Massachusetts Ave
Cambridge, MA 02140
617-491-6000 @spirersomes www.spirersomes.com