Why do people think gold and silver prices are high? Please explain to me why you think gold prices are high.?

Question

Why do people think gold and silver prices are high? Please explain to me why you think gold prices are high.?

Answer 1

Gold and silver, along other limited (available) commodities are though to be a hedge against dollar devaluation (destruction), increasing inflation, and economic and political risks. You can see that all of this three are happening now, to some degree, and poised to increase sometime in the future.

The main reason why people get into gold is because it is a much better store of wealth value than (fiat) paper money. Central banks can and sometimes do print much more money than justified by the economy. As they increase the supply of money (and decrease its cost, that is interest rates charged by the Fed, which is currently negative real interest - the Fed is practically paying to lend money to banks who are so broke that are unable to pump it and lend it (except maybe invest it in commodities and oil)). The gold is called the "last burgular alarm" meaning that if it goes up in price, it is usually because of destruction of the value of money (high inflation rates and higher expected future inflation). Gold and silver, contrarily to paper money, exist in limited quantity, so it difficult to manipulate them to the upside. However, I read some analysts who think that both are heavily manipulated, by central banks, downward, and explain that the recent decrease in price from $1000 to $800, by nakes shorting and negative leasing rates. And if you have some inclination to believe in some sort of conspiracy, central banks (and especially the Fed) are highly motivated to silence gold prices because they indicate the extent to which currencies are devalued.