Recent Trends In Worldwide Gold Prices
To sum up the current state of the worldwide economy in one word, most people would use such terms as "a shambles", "a mess", or "a disaster". Indeed, with the housing crisis still in full swing, the credit markets drying up, and the American people facing the largest loss in household wealth since the Great Depression - these terms are mere understatements of the true performance of the economy.
But is this the same for the gold markets? Traditionally, in time of economic trouble, gold prices (and prices of all precious metals for that matter) tend to rise, whilst prices of stocks and equities fall. This inverse relationship has certainly been the case with the latest round of financial world woes. As the Dow Jones and other major worldwide equity indices have sold off over the last year or so, the price for gold has risen from about $600 USD to over $1,000 USD not that long ago.
So Is It Time To Sell Gold?
Everything that goes up must come down. That is the famous saying we have all heard far too many times. So, does this apply to the recent trends in the gold market? Should we be looking to sell gold on the next bull market rally, in expectation that the price may move to the downside before long?
Well, it's quite difficult to give a definitive answer. Indeed, the benefit with the current electronically traded gold market is that you are able to position yourself in either direction (up, or down), to take advantage of pricing trends, regardless of the direction they are in.
Hence, an investor has to make a decision between these two options:
1. People still want a safe asset to invest in, so they continue to buy gold.
2. People might decide that enough is enough, and begin to sell gold.
Option number 1 would clearly cause the gold price to appreciate, whilst option number 2 would cause a sell off in the gold price.
Regardless of which option is chosen, it is clear that at some point, people will want to sell their gold in order to realize a profit they have been sitting on, or alternatively free up some capital in order to invest it in to another asset of a different class.
