StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

A Gold Market Bubble Myth - Research Paper Example

Cite this document
Summary
This research paper analyses and bust the myth that there is a gold market bubble. The author stte that in order to understand the way gold market work, it is critical to understand the primary drivers of the precious metals price, in particular gold. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.6% of users find it useful
A Gold Market Bubble Myth
Read Text Preview

Extract of sample "A Gold Market Bubble Myth"

Download file to see previous pages

On the other hand, Marc Feber debunks that idea by explaining that gold’s appreciation to $1,900 an ounce reveals that there is no bubble. It is because the central bank continues to increase money supply which has assisted spur the precious metal to this level. Furthermore, he argues that the gold is not in a bubble as when one buys gold, it is more of insurance in the face of financial market problems and systematic failure (Qt. in Chanjaroen). The prices of precious metals, such as gold, platinum, and silver are driven by a wide range of factors.

These factors may include, debt levels, currencies, money supply, inflation, CDS spread, interest rates, and fabrication demands from other sectors, such a electronics, solar appliances, and jewelry. Recently, investment demand proved to be the primary driver as investors used precious metals in comparison to the dollar as a ‘store of value considering inflation, general hedge, and currency depreciation. Signification demand arises from buyers in Asia, pension funds, diversification and investment demands from hedge funds, and central banks monetary demands(Durden).

Debt Level Increase vs. precious metal (Bloomberg Industries) (Source: Durden) The major factors contributing to such demand are concerns about an economy on a global scale, inflation risks, and risk of currency debasement. Moreover, gold has always been the preserve of the smart money. Risk aversion and wealth preservation concerns considering currency depreciation are the primary reasons that drive precious metal demand. However, there is no “greed trade” or public buying of gold in an expectation of guaranteed profits or return.

This was the case with the Nasdaq bubble or the recent real estate bubble that had a huge impact on western countries. Retail demand as a result of hype is negligible; however, it is increasing. Moreover, increasing demand on the global level is dealt with by very small supplies as supply is slightly lower than in 2001 (Durden). Furthermore, historical context provides ample evidence that gold’ resurgence has a long way to go.   

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Gold Market Macro and Microeconomics Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Gold Market Macro and Microeconomics Essay Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/macro-microeconomics/1432293-gold-market
(Gold Market Macro and Microeconomics Essay Example | Topics and Well Written Essays - 750 Words)
Gold Market Macro and Microeconomics Essay Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/macro-microeconomics/1432293-gold-market.
“Gold Market Macro and Microeconomics Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/macro-microeconomics/1432293-gold-market.
  • Cited: 0 times

CHECK THESE SAMPLES OF A Gold Market Bubble Myth

Financial Crisis

The slowdown contributed to reverse the commodity market conditions which paved the way for the bubble to develop and ultimately destroyed the bubble.... The World witnessed overnight contraction of the capital market resulting in credit crisis and lending became difficult.... As the paper declares the shortages triggered a recreation in the commodity market as well as in the oil market....
15 Pages (3750 words) Essay

Goldman Sachs and the Future of the Internet

It will analyze the dot-com bubble from an historical and sociological perspective.... Goldman may not sell its holdings in the company before the bubble bursts.... Given that the last dot-com bubble is still remembered, a cautious strategy would be for the firm to exercise due diligence practices before promoting such companies.... The world economy is currently in a very fragile state, largely due to the real estate bubble aftermath....
15 Pages (3750 words) Essay

Behavioural Finance View on Market Bubbles

Tulip mania was the first major economic bubble faced by the global investors where the costs of tulips had increased to an unprecedented level.... Coursework Assignment Behavioural Finance View on market Bubbles Table of Contents Overview of Tulip mania (of the 17th century) 3 Literature Review and Explanation of Tulip Mania (of the 17th century) 3 Historical Explanation of Tulip Mania (of the 17th century) 4 Key Elements or Structure of Tulip Mania (of the 17th century) 4 Behavioural Finance Phenomena of Tulip Mania (of the 17th century) 5 Overview of Great market Crash of 1929-33 6 Literature Review and Explanation of Great market Crash of 1929-33 6 Historical Explanation of Great market Crash of 1929-33 7 Key Elements or Structure of Great market Crash of 1929-33 7 Behavioural Finance Phenomena of Great market Crash of 1929-33 7 Refe… rences 9 Overview of Tulip mania (of the 17th century) Tulip mania of Holland is considered as one of the most important events in the history of market uncertainty which had occurred during 17th century....
4 Pages (1000 words) Essay

The World Wide Web Bubble

In the financial market, the stock market bubble means a self-perpetuating increase or downfall in the share prices of the stocks of any industry.... This research paper talks about the dot com bubble also known as information technology bubble or world wide web bubble, one of the most speculative bubbles between the period of 1997 to 2000 ) when the stock markets in most of the industrialized nations witnessed their equity value rising rapidly....
10 Pages (2500 words) Research Paper

The 2007 Real Estate Market Crash

This research paper looks at the recent drop in real estate market prices that is taking place in the U.... The drop in real estate market prices is not an isolated event.... economy was doing well, the truth was much darker than what most people believed: the economy's weakest link, the housing market, was in even worse shape than many realized....
11 Pages (2750 words) Research Paper

The South Sea Bubble

A financial bubble is a market condition wherein commodity or stock prices increase to absurd and unsustainable levels, to a point that they no longer reflect… Due to irresponsible speculations and other influences that entice careless investors to buy commodities or stocks to a unreasonable level this phenomenon inflated prices to an unrealistic level that would eventually With desires to get rich quickly, ambitious investors hurriedly and haphazardly invested on stocks of a particular company without first assessing its real situation....
3 Pages (750 words) Essay

Efficient Markets hyphotesis

In this paper “Efficient market Hypothesis” the author will talk about the efficient market hypothesis in great detail with reference to technical and fundamental analysis.... He will talk about market efficiency and types of market efficiencies.... hellip; The author of the paper states that the efficient market hypothesis proposes that assets in financial markets are priced after taking all the public information available into account....
8 Pages (2000 words) Essay

The Financial Accelerator and the Flight to Quality

The investment in the market (I) is a function of rate of interest (r).... Hence, investments made in the market are adversely related to the lending rate of interest.... A closed economy is a hypothetical economic system that does not engage in any foreign trade....
9 Pages (2250 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us