Extended Pressures on Precious Metals
Friend and fellow bloggerDave Harper and I had a conversation yesterday regarding precious metals. Dave had written an editorial, which will be published in the next issue of Numismatic Newsin which he touched on both precious metals and currency exchange ratesas they directly relate to the coin market. You'll want to take a look at his comments on the Numismatic News websitethis Friday under the Commentary sectionon the navigation bar.
My two cents on the subject? When I consider commodities and validity of their prices, I always look at end use. In the case of gold, for instance, I watch jewelry manufacturing trends. If that end use industry is buying less, then the price of gold will have to come down. No amount of investor driven buying can support a commoditiy market without support from an end use market for that commodity.
In essence, nothing has real solid value until it reaches it's actual use. Demand for sake of investment potential is flighty, fickle and only self supporting. Demand for useful products helps establish a firm floor under commoditiy prices. You can trust this type of "real use" demand to lend stability to commodity prices and to give you a sense of where the market is going long-term, even when investment hype is raging.