How markets react to sentiments about a commodity is never accurate, close yes, accurate, definitely not!
The market sentiment towards gold is just like any other commodity and it largely depends on two factors, demand and supply – demand being the more influential factor in comparison to supply (gold supply is always within prediction). However the fact remains that higher demands met with lesser supply pushes the price of gold through the roof and the opposite (when supply is available and demand is sluggish) the prices of precious metals come crashing down.
This phenomenon not only affects the precious metal industry, but it actually affects every other industry as well. The precious metal trade platform is however a more solid trading platform when economic and political environments are stable when compared to other commodities which are easily influenced by market sentiment throughout the year.
Market sentiments makes trading commodities more of a gamble with the big players of the industry being the puppet masters and even they sometime fails miserably in controlling the market. Buying and selling gold or precious metals are conducted in a variety of ways from ETF, to the bullion market and even the jewellery market and they in comparison to other markets are not volatile and hold steadily in most situations.
What is important for those who intend to start trading gold is that buying gold is a long term venture and hoping to make quick returns from the precious metal industry is close to folly. People or traders who buy gold often wait for gold prices to dip below the daily fixings or spot prices before moving in to purchase gold and as soon as they move they break market resistance and send the gold prices up again before they decided to release their purchases and the last in line normally lose out to the speculative forces of the market.
Converting gold to cash is what drives the prices of gold down when currencies seem to have a better position economically, and the opposite exchanging cash for gold normally happens in mega proportions when there is news of a looming economic crisis.
Whatever it is one thing remains evident is that precious metals will always retain their purchasing power unlike paper money which is doomed to return to what it actually really is, plain paper from a tree bark.
Therefore the best advice that can be given to anyone reading this at the moment is that the best kind of gold to buy for investment purposes is PHYSICAL GOLD BULLION either in the form of gold coins (where the gold buyer may incur some transportation costs and coinage expenses) or gold bars which can be kept hidden behind your cupboard without having to contend with gold storage agents who would eventually eat up whatever the gold is supposed to hedge you or protect you from provided the bullion you buy are left alone and un-tampered with to maintain its authenticity and avoid costs associated with assaying.
The one good thing about gold bullion is the fact that no matter what happens; there will always be buyers for them.
