Rising towards $2,000 during trading on Tuesday, investors may have been tempted to sell gold after the drastic 10% correction this morning. Gold is a commodity, but trades like a currency. Minor news events and people’s speculations can thus make it quite volatile.
If you invest in gold as a hedge, these fluctuations shouldn’t sway your convictions about the precious metal. The experts say the fundamentals are still there, and that nothing has changed. Maybe you don’t care about the fundamentals since you don’t believe in fiat currency and are willing to hold a hard asset no matter what.
Many people also believe in gold because of the status it provides. How many people have you seen adorned in gold – watches, necklaces, earrings, and rings. Even after those desires to impress fade, the gold is still worth something and people forget you can get cash for gold. Cash in your pocket is much better than jewelry collecting dust in your drawers.
If you listen to someone who has the gold bug, every time is always the right time to catch the “Midas Touch” and turn your fake assets into real ones. The government is crumbling and on the verge of failure….
As Forbes notes, gold follows a “Buy the Rumor Sell the Fact” pattern. Fear can drive the commodity’s price, but fulfilling loans and obligations requires liquid currency. Paying off liabilities means selling assets like gold.
No matter your reason for holding the previous metal, remember prices are based not on earnings or dividends, but what the person next to you is willing to pay.