Gold has hit a cap? Part 1

On my previous article about gold, we discussed some general stuff  about it, such as historical background, ways to own it and how the value responds to the inflation policy of the central banks. Now we will talk a bit more about the real value and wicknesses which are not depicted in the current stock market value.

I will be honest, I was a fan of gold, but in the last months my thoughts have changed. In a volatile and fluid economy, value is a relative term and we will see soon

why. Also before we start a scream of frustration for our readers. Please don't read articles about gold which are two years old or more. Everyone please! There is so much fluidity in the global scene and news run so fast that you can get very little to none useful info from so called "experts" from the past. I haven't seen a f*** expert showing me a check with his profits or proof that he has earned anything from gold. Not to mention how many people have lost money, because they usually appear when gold price rises and disappear when it falls! Also just to be clear, I am don't claim to be an expert in Finance either! My degree is on Informatics and Telecommunications but I like to read and learn as much as I can about Finance, it is my hobby and I love it, nothing more nothing less!

Those who watch the fluctuations in the price of gold, have saw that there is a major relation with the price in dollars. Gold rises, dollar falls and vise versa (not absolute relation of course). Relate the two 6 month charts below and see if I am right or not. Now the so called prophets tell you to buy gold all the time, that is the only secure investment and so on. Bullshit I say. What they don't tell you is that since the global economy is on a decline, the growth rates reduce and the gold consumption does as well. If it wasn't for China and India buying massive amounts, the price of gold would be much much lower! You have to understand that all precious metals and all commodities in general, trade like stocks. That is why in a global uncertainty like this, maybe the biggest after World War 2, we haven't seen a major rise on the price. Knowing that more or less all economies have fallen in a pit of mud, gold should be around 2500$ by now ( my estimations here ) but it doesn't and that matters!

 chart from http://www.quotes.ino.com/ 

chart from kitco

So why there is no increase in price? First of all as we prementioned, demand is on a decline. Second and most important, manipulation. Do you know what a Mexican wave is? Look this video here and we will discuss more about it tomorrow!