Gold prices are freefalling today, and the Wall Street Journal (WSJ) just announced that the precious metal might be on track for the biggest one day crash since 1983.
China and India are the world’s two biggest buyers of gold. WSJ attributes the new price collapse to an announcement today that China showed weaker-than-expected growth last quarter. In this morning’s trading in New York, gold to be delivered this month dropped at one point by almost 10 percent, to the lowest price seen in over two years.
At the moment, gold is just a tad under $1,400, about a seven percent drop. It had already fallen five percent on Friday. Silver and copper are also falling.
Last week, the financially troubled nation of Cyprus denied that it planned to sell off its gold to pay its debts. The euro-based island nation recently had to close its banks to prevent a run on withdrawals.
Even if Cyprus had planned to sell gold reserves allegedly valued at $525 million on Thursday, the metal would be worth substantially less today.
I reported in February that big investors were already moving their money out of gold trusts. At the time I wrote that report, gold had slipped under $1,600 from a previous high of over $1,900.
Now it’s under $1,400 — and gold prices could potentially go even lower.
Gold did very well earlier in the new century, but it may have peaked in 2011. And it hasn’t done well long-term in our lifetimes.
A CBS reporter calculated: “If you invested $1,000 in gold on December 31, 1979, you’d have $3,222 today. If you invested the same $1,000 in US stocks, you’d have more than ten times that amount or $35,816 today.”
No one knows the future, and to a certain extent we’re all gambling here, but what do you think? Will gold prices keep falling?