By Ian Cowie
1 March 2012
Sharp falls in the gold price have prompted some bears or pessimists to predict it will plunge below $1,000 (£625) an ounce.
Even specialist dealers, such as GoldCore , talked of "blood in the gold and silver trading pits as leveraged longs got their heads handed to them on a plate".
Goldcore priced bullion at $1,721 or £1,079 per ounce this morning, compared to yesterday's fix of $1,788 or £1,121 per ounce. A spokesman said: "The massacre is attributed to a host of different reasons - from month end book squaring to Bernanke's suggestion that ultra loose monetary policies may soon come to an end.
"None of these reasons would justify the scale of the massive sell offs seen in gold and silver yesterday. Gold and silver markets saw massive sell orders from large institutional sources - as only large institutions selling could have caused a price falls of the magnitude seen yesterday."
… Similarly, Alan Steel of Alan Steel Asset Management , said: "We may have the odd correction in price but gold is on a long haul secular bull market - in other words, the main direction is up.
"However, the crowd gets extremely pessimistic or optimistic from time to time. So we should see a short shallow fall in price which I'd view as a buying opportunity.
"We are not out of the woods yet on government debt in the West. Or, as we say up here in Scotland, governments are on a shoogly peg . As long as that's the case and interest rates remain low, there's a strong case for holding a portion of gold - in an exchange traded fund, unit trust or whatever - as an insurance policy. I certainly do."
So, barbaric relic whose bull run is nearing its end or a long-term store of value that governments cannot devalue? Amid all the excitement of opposing views, it is worth remembering that despite recent setbacks, the gold price remains more than 9pc higher than it started the year.
Quote Courtesy of The Telegraph
1 March 2012