Rise in the price of precious metals

[Apotheosis]

So, gold, silver, platinum, palladium.... All have been going up steadily for the past few years (due to a number of factors, the least of which is this "oil crisis" we are hearing so much about).

What impact does the purchase of these materials have on the economy? or is it just a secure investment (if you have the $$ to shell out $573+ for an ounce of gold).

[Warriorbird]

It is NOT a secure investment. It is just triggered by the same forces that have given Exxon/Mobil their current profits.

[Goldenranger]

This response is coming from a position of financial ignorance, except for reading the newspaper, internet etc. I'd have to agree with Warriorbird its not a secure investment in the great majority of situations but there is a reason currently why large entities are buying great quantities of the metals. From what I've pieced together, the debtor status of the United States to such a large extent (from mainly China and Japan) has made many nervous about a run on the dollar, making it even weaker than it is currently (remember when the Euro came out and was worth what .83 or .87) and the traditional method of securing one's self against the weakening of a currency is to replace that particular currency with an investment in precious metals, again traditionally gold.

Survivalists and crazy militia types also prefer this method for an abundance of reasons (Civil War, Armageddon, Insurrections, Moral Collapse of America etc.)

[Apotheosis]

pretty much what I figured Goldenranger, I just wanted to understand the hype behind it a bit better, or why someone would choose it over another investment.

The potential run on the dollar makes sense, but why not just shift over to a different currency rather than the metal?

[xtc]

A friend of mine is a CA and a CFA. He works for an Investment Banking firm, his speciality is mining. He is involved in putting together large deals primarily IPO's and financing, we have worked together on a few deals. He believes gold will continue to rise for at least the next 6 months, some of his clients are even more bullish on gold, but that may be in an attempt to raise their own stock prices.

[Sean of the Thread]

Siren will pwn you all on this. Apoth you're better off trying to figure out the WoW herbal market let alone RL precious metals. :P.. kidding of course I'll get a response to you when I have time.

[holocene]

dollar is perceived as being worth less...therefore commodities increase in dollar value. As interest rates rise (if it continues), the dollar is worth more, and we'll see the price of commodities come back down.

that the simple take.

[xtc]

dollar is perceived as being worth less...therefore commodities increase in dollar value. As interest rates rise (if it continues), the dollar is worth more, and we'll see the price of commodities come back down.

that the simple take.

Many analysts believe that the rise of gold this time round is partly due to the decreased US dollar; however many of them believe this is only the beginning of gold's rise and that future gains will make the gains so far look like a pittance. They believe that the future demand for gold will be driven by global investment demand. This will mean that US dollar based gold trading strategies will become irrelevant and this will make gold detach from the US dollar. They believe that gold will rise on its merits in all currencies at the same time. They are forecasting a long term bull market for gold. I have one client in the gold industry who believes gold will hit $800 ounce.

Of course this is all theory, gold prices have traditionally been tied to the price of the US dollar.

[crazymage]

Siren gets me hot when she talks money. hardcore like.

[Latrinsorm]

Siren plain gets me hot. She could be talking about ball weights.

I hope we as a species mature enough soon so that the shininess of a rock isn't what we base international economies on.

[Mistomeer]

Gold is generally a secure long-term investment. The price of gold typically rises during war and besides, a few shares of Google stock won't get you out of a Mexican prison after a night of tequilla induced debauchery, but a gold coin will.

[Back]

Siren plain gets me hot. She could be talking about ball weights.

I hope we as a species mature enough soon so that the shininess of a rock isn't what we base international economies on.

Spoken like a true Socialist. And before you disagree and point to the Siren comment... speaking as a true Socialist, I find her hella hots too.

And Mistomeer's comment on gold is quite simply the god's honest truth. IF your investments are physical rather than abstract.

[Goldenranger]

Or they hit you with their baton and take your gold coin. :D