In a recent article IB Times article Megan Clark made the correlation between falling gold prices and rising gold demand. Yes, it is true that the gold price fell more than 26% in 2013 in the most spectacular price decline in over 30 years. Yes, it is true that demand for gold coins was up 63% last year from 2012, and mints around the world have had trouble keeping coins like British Sovereigns and American Eagles on the shelves.
To say that higher demand is exclusively intertwined with lower prices, however, is misleading. From 1960 to 1980 the gold spot price fell repeatedly, but demand never spiked as it has in the last 12 months. What’s more, the record-high demand for gold bullion and coins that dealers are experiencing right now should boost the gold spot price, at least somewhat. But no, despite the frenzied buying gold is still barely holding its head above water.
The gold spot price is low because the Fed and central banks want things that way. They won’t be able to control gold forever but while making their last stand (and the last buck) corrupt bankers and politicians will do everything they can to persuade the average investor to buy stocks and bonds instead of gold. Demand for gold is high right now because a lot of Americans are smart enough to see the writing on the wall.
The system of fiat currency and unsecured debt is crumbling around us and a return to gold is imminent. Low prices are not causing high demand, at least not among savvy investors. Whether gold is at $250, $1200 or $2,000 we will still be buying certified gold coins and bullion because to those who understand how the world works gold is the simple, straightforward solution to a problem that has plagued America long enough.
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American Eagle, british sovereigns, gold demand, gold price, gold spot price, ib times, megan clark