By David Levenstein:
Ten years ago when gold was trading below $300 an ounce the universal manta was, "sell gold." Central banks were selling or leasing their gold in an attempt to get rid of their gold holdings and convert the money into bonds. Gordon Brown the then Chancellor of the Exchequer a role akin to the posts of Minister of Finance or Secretary of the Treasury in other nations managed to sell most of the British gold holdings at the low. At the same time some of the major gold mining corporations completely mistimed the market and hedged their output at the lows. But, this is hardly surprising as most of the major mining giants are run by people who are brilliant engineers and metallurgists, who know how to mine and produce, but who do not necessarily know much about market action. Then, when the price moved to $500 the mantra was the same except it got louder. And, then this happened again when gold hit $700, $900, $1000, $1100, and $1200. Now everyone is waiting for a large correction in gold price.
Luckily for some of us, these calls were ignored, and by investing in gold, some investors have managed to preserve their wealth. Gold has been in a bull market for ten years, and yet some of these "super-stars" still fail to see what is happening. As I have mentioned on many occasions the main driving force behind the gold price has been the declining value of the US dollar the world's reserve currency. It has been on a downward spiral since 2001 when the dollar index was 120. It then traded down to a low of around 70 in April 2008, and after rallying a few times is once again back on the slippery slope downwards.....read on