Tuesday, November 18, 2008

Gold coins

A column in the New York Post reports that there is increased demand for gold coins even though the bullion price of gold has not risen. Gold is an asset that becomes attractive when there is fear of inflation, so my presumption is that more people throughout the world are now worried about potential inflation. (I remember the 1970s too well to dismiss the possibility of future inflation.) The column explains the failure of gold prices to rise in this way:
"Gold should be moving up," Murphy says. "How could there be such a dichotomy between the historic high premium for coins all over the world and the low Comex price?"
His answer? "Today the public is buying gold like crazy, but the US government and the banks that hold bullion are intentionally keeping the price down."
I do not know enough about what is happening to be able to judge whether that answer makes sense or not.

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