Gold and silver pricing dynamics does not surprise anyone with an inkling into the current global crisis. The way people and markets respond to the changing prices of gold is quite different from what is normally expected. The figures are not always as they seem because when it comes to precious metals, a different rule applies.
It is well known that in any trade involving buying and selling, people buy when prices are down and sell when prices pickup to cash in really big-- but that’s as far as it goes. According to insights revealed in a recent release by Jeff Berwick-- founder and one -time CEO Stockhouse.com, gold and silver merchants behave differently.
To understand their behavior, it is imperative to first expound the concept of fiat currency versus solid precious metals. In the current global economic meltdown, proponents of solid precious metals above fiat currency feel very justified. This is because fiat currency as stored by central banks has proved worthless in the face of global inflation while gold and silver hold their ground.
To prepare against inflation, those people who think differently invest in precious metals like gold and silver rather than in cash. Precious metals serve as a hedge against inflation in the current instance. But that is exactly where the difference in behavior sets in. The very reason why people invest in precious metals is because they do not trust fiat currency.
This lack of trust ensures that they do not sell their gold and silver whatever the current market price. The result is that believers in fiat currency will never invest in precious metals while those who invest in precious metals will never sell their metals in return for fiat currency.