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Price of Gold Bullion and Gold Coin Prove Gold is Not a Bubble

In every market there are ups and downs, but sometimes the gold bullion market and the market for coins follows slightly different laws. Gold is a tangible commodity and real asset in a market where everything is going paper. There are potentially higher-returning investments, though they carry with them significantly more risk. In the market we have seen these past 3 to 5 years, investors have eschewed the riskier investments because of the worry about the market.

Recently, the economic indicators have been lukewarm as opposed to frigid, and many investors jumped in the deeper water with riskier, paper investments. This has led to the most sluggish gold market we’ve seen in two years. The market has pretty much gone sideways for the past three months, as demand has dropped off rapidly.

As the current economic news is mixed at best, those self-same investors are probably worrying a bit about their excursions into riskier territory and away from gold, but it doesn’t change the effect of the drop in demand on the gold price and the gold market.

It is entirely expected that demand will resume, though possibly not at the rapid rate we have recently seen. This gold market could turn on a dime, particularly if threatening news comes from Europe. It is highly unlikely the US Federal Reserve would risk spooking the markets with unexpected news, so the catalyst should be observed elsewhere.

It’s simply the nature of the gold market that when investor demand and interest turns, it does so violently and rapidly. The current doldrums may be unattractive to many investors, but they are by comparison predictable. It’s probably a good time to test some waters and see how they work. Every market has its dynamics and the gold market is no different. It’s generally easier to get a good sense of an investment when it is not experiencing the violence of a choppy market.

The fundamentals of the gold market are still very strong and sound, which few investors question at this point. The question, however, is how long will this sluggish state last and how low will the price go? Gold bullion will turn on a dime coin.

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