Is Gold Heading For a Correction?
Gold is down a bit today, but at $1154 a troy ounce we are still looking at unprecedented prices for the commodity. There are well-paid theorists that say gold is headed for a correction, and some that say we haven’t seen anything yet. I say the best way to gauge the market is by using good ol’ common sense. What I see that is different these days than in years past are the sources of raw material. In the past people have looked to gold mines as the source of raw gold. Today we are also getting gold from the public. People are turning in their gold for cash, much less cash than the people who are melting it down are getting for it. So what this tells me is that we have found a new source of cheap gold. It is much cheaper to buy gold at a discount from the public than to harvest it from the earth. The costs of smelting are nothing compared to the costs of mining. Mined gold, by the way, also must be smelted. Seems to me that this new found supply is pretty much endless. I mean, it’s recycling; remember the triangle circle printed on the recycling bins? Which leads me to the common sense conclusion that gold is indeed headed for a correction.
