The Collapse of Gold

2 Minute Read

It hasn’t been a good year for gold investors, and yesterday, things got even worse. After a 5% drop in gold prices on Friday, gold took its largest one-day decline in 30 years on Monday.

Gold was priced at $1,355 an ounce when the markets opened on Tuesday, down $533 from its all-time high of $1,888 in August of 2011. What’s behind the slump?

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Market analysts and traders say investors are becoming less concerned about global financial stability and inflation. Until now, those investors bought gold as a hedge against inflation and stock market losses. But with the stock market currently at record-setting highs, investors are snapping up stocks.

There are also fears that Chinese investors will stop buying gold after recent reports that their economy is slowing.

In other words, there’s no real reason why prices are falling, just like there was no real reason for gold prices to be as high as they were. That’s why Dave has always advised against investing in gold. Gold is a commodity, and commodity prices are usually driven by speculation rather than actual supply and demand.

Invest for the long haul in mutual funds with good track records, and you’ll be as good as (well, better than) . . . gold.

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