“CHINA RATE RISE HITS GOLD AND OIL PRICES”
… gold fell 2.8 per cent to $1,333 per ounce, its largest decline since July
There’s a famous (surely apocryphal) story that Joseph Kennedy decided that the 1920s stock boom had peaked when he got a stock tip from his shoeshine boy.
Michael Lewis tells a story of the mortgage banker realizing that things had gone too far in the 2000s when he met a Las Vegas stripper who had bought five houses with no money down. Not five in a row – five at the same time.
Now the airwaves are full of ads for gold. After all – it’s never been worth zero, right?
Yet all those people who have bought gold above $1000 over the past year and a half – especially those poor souls who have paid the big premium to buy gold in coin form – need gold to levitate far, far above zero. Odds are: they will be very disappointed.
There is a financial question about the consequences of their disappointment. But there’s also an interesting cultural question: Will the credibility of the radio and TV hosts who tout gold survive a drop in the price of gold? How many Fox News viewers will lose how much if gold drops back to $1000? $800? $600? And when they discover that the extra premium you pay for buying gold coins shrivels when it comes time to sell?