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| Yes, price will move to where the two sides are in balance. Price will either move higher to encourage people to sell, or lower to encourage people to buy. I don 't see this market as much different in how it works. As for listening to "who the buyers and why they are buying" - sure. But, recent history shows clearly that price can go down, and go down hard, when attitudes are as bullish as they can possibly be. This is normal market behavior.
But, when I think about it, I don't see much difference to corn or beans. Supply is estimated, and someone always "owns" it too. Or, they "own" the expected supply. I agree that the comments are simply people making things up much of the time, and they show how ignorant those people are. As a market, however, gold is not very much different than anything else.
The market for money is not essentially different either. Interest rates are the measure of S&D. An oversupply of money relative to (qualified) demand, like we currently have, is indicated by low interest rates. This can be counter-intuitive for some, as an oversupply of money suggests high inflation - and the conclusion is drawn that interest rates must go up because of the inflation expectations. In reality, it is S&D for money, however, that drives interest rates. (Note - this is my understanding, FWIW, after years of thought about it.) | |
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Couple of stories pertinent to the gold market
