Who controls the price? and why were they chosen to control it?
2006-06-20 09:15:42 · 6 answers · asked by Holliday429 1 in Business & Finance ➔ Investing
Are you talking about the futures market? Options? ETF's on gold stocks? Gold stocks themselves? These, to me, are the market. Or are you talking about the spot market?
The gold market works like any other free market. Like the stock market. If somebody "controls" it, what would be the point of investing?
2006-06-20 09:25:23 · answer #1 · answered by dredude52 6 · 0⤊ 0⤋
The simplest way to explain gold price movement may be to remind you of what happened when the "Cabbage Patch Doll" craze hit the markets. First there was a lot of people buying them, then there was the fear of not being able to get one so the people who owned them could name their price. Eventually when this greater fool theory ran its course and the supply caught up, prices stabilized at a level that people were now willing to pay. Prices of all commodities are controlled by Supply and demand. In the case of the Gold Futures markets, those that are not willing to take physical delivery on a 100 ounce contract of Gold ($60, 000 worth) will have to liquidate their contracts before the expiry of that contract and thus by selling their position will add pressure to the price, which will in turn will cause more selling, which in turn will bring Gold to its true value.
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2006-06-21 00:52:05 · answer #2 · answered by Marty H 1 · 0⤊ 0⤋
Gold is a commodity. It is bought, sold, traded just like oil, pot bellies, or copper. It is sold as a current commodity or traded as futures. It can be bought just like stocks or real estate and sold the same way. Gold prices are easily correlated to instability in the global marketplace. When investors are uncertain or nervous, (this includes governments, which are the really big investors) and they fear about inflation, war, oil prices, etc; they tend to turn toward investments such as gold because it is a universally understood means of storing wealth, or assetts. This is why gold prices have escalated so rapidly recently; there is a tremendous amount of uncertainty around the globe on all fronts. When the geopolitical situation starts to look this way, gold is always a good hedge against inflation.
2006-06-20 16:28:37 · answer #3 · answered by steven s 2 · 0⤊ 0⤋
Here's one thing to keep in mind: gold is literally a rock that someone dug out of the ground. (I know that's obvious, but some people get caught up in the gold frenzy and seem to lose sight of what gold really is.) It doesn't generate profits like a corporation, or pay interest like a bond. It doesn't do anything. You just have to hope someone will buy it from you later at a higher price.
2006-06-20 16:29:57 · answer #4 · answered by rainfingers 4 · 0⤊ 0⤋
Don't get carried away with conspiracy theoriests. Any market is controlled by demand and supply. These demand and supply comes from various sources like physical demand, futures and options.
Read uscommoditiestrader.com website to learn basics of trading gold and gold stocks.
2006-06-20 16:48:06 · answer #5 · answered by Onceuponatime 2 · 0⤊ 0⤋
The price is decided by supply and demand. In other words, If I have some gold and you want some gold, you have to pay the price I ask, unless there are lots of other ppl with gold to sell.
This may help:
http://en.wikipedia.org/wiki/Gold_as_an_investment
2006-06-20 16:21:22 · answer #6 · answered by Joe the answer man 4 · 0⤊ 0⤋