This is a case of throwing supply side economics out the window and crushing an entire segment of the resource sector like the very rocks mined. Tumbling prices of gold based on A New York City Index is like basing world travel on Carnival Cruise Lines. I keep wondering if economies are not tied to a gold standard, how can gold prices be tied to an economic index? I must have missed that class in undergraduate school at NYU because I think in this case, New York City and gold is merely an anomaly without a vein of substance, and simply pie in the skyline thinking.
Truth be told, my concern is for the gold industry, and not the goldbrickers in Washington. Our allies and frein-emies are hoarding the precious metal in face of falling futures, which suggests that new gold finds will sit undeveloped as cash chases cheap buys in the futures markets. Rolling mills and drill rigs and explorers will find financing even more difficult.
Other metals are having a sympathy fall in price, which is purely a meltdown in clear thinking. If gold was a gleaming buy 2 months ago, its luster is a shiny buy right now. Gold bugs be followed, they are true to the core!
Futures (from investopedia): A financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset; they are standardized to facilitate trading on a futures exchange. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The futures markets are characterized by the ability to use very high leverage relative to stock markets. Futures can be used either to hedge or to speculate on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and reduce risk (hedge). On the other hand, anybody could speculate on the price movement of corn by going long or short using futures.
Ask Mr. WallStreet Newsletter Disclaimer: http://stocknewsnow.com/ask-mr-wallstreet-newsletter-disclaimer/
Micro-Cap Review Latest Issue
Cavaet Emptor or Buyer Beware by SNN Inc. CEO Sheldon “Shelly” Kraft
Check out the book "Caveat Emptor" written by CEO Sheldon Kraft, click on the image to view a preview and the full book can be purchased for $15.95.
There are some best practices and good hints on what to look out for in today’s volatile markets.