Fear of a Gold Bubble

Are you becoming paranoid now that the price of gold is trending downward?
Well, don’t be. Remember, gold is a very volatile commodity and prices fluctuate all the time. Very seldom do gold prices remain quiet so it is not uncommon for the price of gold to move up or down dramatically. Many times pricing has changed by as much as one hundred dollars per ounce in just a few days. If this alarms you, maybe gold should not be part of your investment portfolio. Instead, maybe a nice dividend stock is the right choice for you. Or maybe a money market vehicle earning what, about half a percent? If you are looking for a recommendation, sorry but this article is about gold.
Fundamentally, gold is and will remain a solid investment for many years to come. The long term trend continues upward and macro-economics have not changed that. If anything, they have added even more underlying support to gold’s value. More and more of the world’s governments are trying to print their way out of bad situations only to make it worse in the long term. Countries (especially the United States) continue to devalue their currency making gold the only viable option of monetary value acceptable worldwide. After all, you can only kick the can down the road so far until it becomes time to pay the piper. Furthermore, when a government tries to control devaluation through austerity measures, it only seems to incite violent protests which in turn further supports the value of gold.
Some states have even contemplated designing their own currency , thumbing their noses at the U.S. dollar but because this would violate Article 1, Section 10, Paragraph 1 of the Constitution which forbids a state to “ coin money; emit bills of credit; make any thing but gold and silver a tender in the payment of debts…”, they are exploring other options. In fact there are some businesses that are promoting gold as a form of payment for many types of merchandise even groceries. They simply weigh the gold item and apply a value relative to 24 karat and the spot price. These are people who have lost all faith in the United States dollar and are hedging their bets on the continued decline of it’s value. This scenario isn’t likely to end any time soon, if ever.
So be patient and consider a substantial decline in the gold price to be a buying opportunity not a reason to panic.