Confusion over the daily fluctuation of the markets based on little snippets and tidbits of news can drive even the most astute trader or speculator batty, but in the case of gold, investors and pundits like Marc Faber and Jim Rogers aren’t confused at all, and they both say they have no intention of selling their gold, and are always on the lookout for dips so they can acquire more.
Without getting into too much detail, the reasons these guys continue to do this is there overall understanding of the macro-economic circumstances.
If you understand the macro-economic situation affecting any investment, and gold in particular, the daily ins and outs of the market are largely irrelevant, unless you’re trying to make a quick killing, which hopefully you’re not. Even the day traders can’t do that great in attempting to time the market, and very few are that successful, even though there is always the glamor attached to being involved in it.
In general, macro-economics as it relates to gold, will deal with issues like national debt, inflation, paper currency and the practices of central banks; all of which the above are highly affected by.
For example, around the world now central banks refuse to implement austerity measures into their practices, as they’re committed to bailing out whatever major problems occur in order to save the various economies or industries they deem in need of saving.
That means they’ll have to print money and government debt will continue to rise to astronomical levels.
Another indicator is job creation in the private sector, which is just above zero in the United States, with the government being the almost sole creator of jobs, which means they’re propping up the economy while creating nothing of value that has a chance to last.
This is why Faber and Jim Rogers continue to hold gold. The central banks and governments have become addicted to these practices even more than in the past, and it’s not sustainable by any stretch of the imagination.
Consequently, trust in paper currencies is eroding around the world, and the only reason the U.S. dollar is stronger is because the euro isn’t. It’s not because it has some type of safe or mystical power which makes it a place of safety. It’s only relative in the sense when you compare to the condition of most other currencies in the world, which for the most are even more unstable.