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  • The gold rush is over. Time to buy?



    By marketwatch.com

    Commentary: It’s time to reexamine the case for owning the metal

    It was two years ago this month that Donald Trump announced he was taking rent on one of his New York office buildings in gold bullion instead of dollars, because of his concerns about President Obama’s reckless financial policies.

    “It’s a sad day when a large property owner starts accepting gold instead of the dollar,” Trump said in a statement, reported The Wall Street Journal at the time. “The economy is bad, and Obama’s not protecting the dollar at all….If I do this, other people are going to start doing it, and maybe we’ll see some changes.”

    Trump went on Fox Business later that day to explain how the President’s economic policies were going to send the dollar to hell in a handcart.

    It’s easy to laugh now. Back when Trump made his move, gold was north of $1,800 an ounce. Today it’s $1,400. Indeed some clown suggested at the time that Trump might have signaled the peak of the gold market.

    It’s the old story. Assets rise because there are more buyers than sellers. They fall when there are more sellers than buyers. Investors, commentators and various other interested parties gather round and ascribe all sorts of mysterious and powerful forces to these moves, but at heart they remain pretty simple.

    In the case of gold this causation is even more explicit than usual, because there is nothing else — such as earnings or cash-flow — to change the equation. Gold doesn’t boost its dividend, disappoint on earnings, or decide to buy Nokia. It’s the same from one day to the next. The only things that change are supply and demand.

    Two years ago everyone was talking about gold. The federal government had just taken debt-ceiling negotiations down to the wire, revealing to the world how dysfunctional our political system had become. Standard & Poor’s had just downgraded Treasury bonds. The national debt was rising. Today almost nobody is talking about gold. So-called austerity economics, with its quaint concern about national debt levels, has been routed from the field of politics. Interest rates have been rising, which theoretically will make some bonds look more attractive to new investors.


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