GOLD 0.51% $1,391.7 gold futures

a question for gold bugs!

  1. 540 Posts.
    Hi All,

    I have been actively reading most of your posts and hve held gold over the past 2 months, but would like to clarify a few points of interest:

    1) sentiment indicates that as a result of growing soverign debt, the possibility of default by many Euro states and quite possibly advanced nations, that gold will appreciate in value.

    However, when Dubai World came to the markets and announced their inability to meet repayment deadlines, gold declined $U67 that evening (although there was a sharp reversal upwards). My point here is that sustained government defaults would expose gold to the downside should there be shocks to the market, wouldnt it?

    2) Following on from the above, if the above occured and markets were to react, wouldnt sentiment alter from optimism to fear, with risk of deflation in its purest form. the thought of a prolonged depression would kick in and i feel the gold price would reflect that to the downside. any thoughts?

    3) However, there would be a situation of stagflation, the money press is running hot, but it is too difficult to measure the sentiment at that point in time, as investors would fear the doom & gloom and most likely be flocking to the worthles US dollar merely out of habit. Most investors dont take risks in periods of volatility and are unsure of the true worth of gold as it stems into unchartered territory. the $US has always been perceived as the safe haven, although their would have to be a complete change in sentiment to change investors perspectives on gold before this could happen.

    I welcome your thoughts on the above

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