Gold Stocks And The Price Of Gold

September 4, 2014

Price of gold

It’s one of those enigmatic moments in history. As economic conditions worsen, and so do socioeconomic conditions in turn, the performance and returns from stabler forms of capital (and the wealth of those who possess them) improve.

Those who have used foresight to get out of collapsing fiat currencies (the minority) will face some frustration from those who did not avoid the inevitable bust of conventional forms of wealth.

Early Indicators

Before dealing with the social reality of what is happening, we should be very clear about reading the winds correctly, of course. What is happening? And why?

Let’s take the question of gold prices in relation to the prices of stocks like mining companies. There could be (and there is) earlier activity and stimulation in the gold stocks well before visible signs of revaluation of gold per se.

We know what is happening by both contemporary markers as well as by historical wisdom. True, these are unprecedented times, in which technological wild cards abound, yet history shows clear patterns when it comes to the results of in-bred economic practices over time.

We can actually start with the plain fact that when fiat currencies, let alone hegemonic currencies like the US Dollar, start faltering because of how they were used, as well as their lack of support in a calculable reserve capital (such as the previous world concorde using the gold standard), there is a domino effect with a late clamour towards stable investments. Gold, silver and other metals will rise in price. This is a fact, observed like recorded weather patterns.

Social Dimensions

Now, the next layer is social and cultural. Political turmoil, for example, can crop up at any time to threaten the often-fragile balance nations’ currencies manage to keep. Smooth natural performance of a fiat currency is somewhat of a myth; these forms of capital today are much more speculative and leveraged than most people could imagine. Such arrangements are rocked to their cores when civil uprisings or revolutions occur.

Both the mishandling of financial systems and an entire economic paradigm (with federal reserve-like agencies that each prop up a fiat currency), at a factual and mathematical level, forecast a collapse and surprising levels of socioeconomic instability.

There is even now, with the ways that gold prices are manipulated down, an element of social and political intrigue burdening alternative forms of capital -- this is to be expected. Such interference in the more natural, unregulated performance of a precious metal like gold is an early indicator of its actual latent or restricted power at the moment.

As gold investors will admit (calmly, since they use a long term view), artificially low prices on gold allow those with foresight to buy early and achieve an enviable return on investment once prices rise. But another very clear indicator that gold is quivering with life that is measurable is the performance of sectors that deal with it, such as mining or gold-based investment forces.

We see that gold stocks are a robust investment today (both mines and royalty/streaming companies), as well as other industries focused upon precious metals that can also act as a commodity such as silver, which is consumed by industries like electronics.

Making the Complex Simpler

There are many purely economic factors and stimulants that affect the price of gold. But the market itself, when it highly values stocks in precious metals and veers away from fiat currencies, gives a more unbiased status report for those who can read it.

Inflation rates, geopolitical stresses, social phenomena and technological innovation (and social change) are all central forces in how the price of gold is evaluated. But the two driving forces are the over-extension and over-leveraging of the Dollar and other fiat currencies, which are also increasingly virtual forms of capital, and, political clashes as Russia, China, India and Latin America begin de-dollarization policies.

Those are the red flags, harbingers about any coming rise in the prices of precious metals, well before those prices are allowed to self-adjust in the market. The fact that gold stocks are thriving is as strong an indicator as one would want or need, amidst a global financial environment that is on the brink of such tumult and change.

Those who doubt this change are not consulting the deepest most revealing layers of the issue (like sluggish wages and lagging consumer saving rates, overvaluation of stocks, price manipulation, and the psychological state, if you will, of the banking sectors). The added inflammability of volatile trade and political disputes and inner sickness of financial systems just makes one’s perspective better, senses sharper to react.

Experts still think that the markets have room to expand a bit before popping, but all the major and oblique indicators of the coming rise in gold prices are plain to see, now. Financial planners specialized in retirement investment are opting for IRA Gold options of course, however, we’ll see the demographics of those acquiring assets in precious metals diversify as more see the signs of the times.

India and the U.S. trump Italy as top gold jewelry exporters.