Monday, July 26, 2010

Gold Trading As Currency

In a commentary over at EquityMaster.com, Asad Dossani says the reason for gold quintupling in five years has little to do with it as a commodity and lots to do with it as a currency. Despite the gold standard being gone, lots of gold holders still expect it to act as a store of value and gold is priced accordingly.


Dossani makes a good point when he says gold cannot be printed, which keeps its value up, but gold is not supported by any major central bank; the latter fact adds to the metal's potential downward volaility.

1 comment:

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