Reply #94: I wouldn't touch an ETF with a 10-foot pole

[Art_from_Ark]

And I certainly wouldn't want to try to short the gold market right now. As I said, it would be a sucker's bet, for the following reasons:

The world, in general, does not trust fiat paper currencies, especially people in countries that have had particularly bad experiences with paper. This includes most countries in Africa, most countries in South America, various European countries, and several Asian countries as well. In fact, the United States has been rather lucky, in that it has not had to scrap one currency and start from scratch with another. In fact, it has the second-oldest continuous currency in the world, second only to the British pound-sterling. So for the most part, Americans living today have been insulated from real monetary crises (the inflation of the '70s notwithstanding). But there is worldwide demand for gold as a means of preparing for a possible monetary crisis.

At the same time, there is no longer (well, for the time being, at least) the specter of European central banks dumping gold on the market when their target price is reached. As I noted to the original poster, it is no coincidence that gold has made significant gains since 2002, when the euro became official and European central banks agreed to voluntary limits on their sales of gold. The wild card now seems to be China, and to a lesser extent India, plus various other smaller bulk buyers. China could conceivably dump a bunch of gold on the market and cause prices to fall, but it seems like they may be content to be sitting on "real money" for the time being.

Personally speaking, I am a little nervous about these highs myself. I would not recommend that people buy gold bullion now, especially if they have no background in the gold or coin markets. But at the same time, it seems like there is major support in the 4 figures now. The people who proclaim that they will be buying once gold goes back to $350 or whatever don't seem to have a clue that the fundamentals of the gold market have changed dramatically since the price blipped momentarily to an $850 high in January 1980