So, you think that the gold prices today are reflective of a pricing “bubble” that has risen out of the market chaos of the past few years? You might be correct, but we don’t think that is the case. We think that the gold prices today are something that anyone could have predicted and which are an accurate reflection of the ongoing instability in the world’s larger markets.
For instance, you have to begin to understand gold prices today by looking back four or five years ago. Just around the time that the famous subprime mortgage crisis occurred it became pretty obvious that people understood the hazards and were heading rapidly to a safe haven, meaning gold and silver. You can see this easily by looking at tables and charts of data relating directly to the prices at the time. You would see a rapid spike in pricing that was concurrent with the next crisis or issue.
Whenever there was news of some slight improvement or some new plan to help the economy or markets the prices would decline. Sadly, there have been no long-term solutions yet and this is still reflected in gold prices today.
Here’s a good example of what we mean. If you watched the headlines in the last weeks of December 2011, you would have seen that the prices for food and oil declined, that the American dollar showed new signs of strength, that China had put a halt to its domestic gold trade, and that billionaire tycoon George Soros had unloaded most of his gold holdings in the market. That caused a serious decline in the price of gold because it gave consumers a sense of improvement that was not all that accurate.
You can watch the gold prices today, and in the coming weeks, to see just how inaccurate the behaviors of some investors were in the face of those details from the headlines. Because the markets have not yet stabilized and because there have only been signs of mild or slight improvement, it is not yet time to turn away from gold as a safe haven. Financial experts insist that gold will increase by yet another forty percent in 2012. That means that buying it now will allow you to get the lowest pricing in the past year and to hold on to that asset as it reaches record highs in the coming months.