Gold Prices Plunge

Just one week ago, gold hit the magical price of $1000 an ounce for the first time, "as investors flocked to a safe haven amid the falling U.S dollar and stock markets, along with record crude oil prices (Toronto Star, Mar 13 2008)". To some, this came as no surprise. Gold has, traditionally been seen as recession-proof due to its rarity and ever-increasing demand. For these reasons, many have invested much in gold, expecting (usually correctly) their assets to appreciate eventually, if not in the short-term.

However just this morning many newspapers announced that gold prices had taken a tumble. Having peaked at %1,030.80 on Monday, gold prices took a dramatic fall today, reaching a low of $905.64. The Toronto Star reported that many other stocks fell along with gold, including the Canadian dollar which reached a low of 0.98 USD this week.

What is the significance of this drop in gold prices? To be honest, there isn't much significance at all (although to some stock market analyst in New York, this probably has some greater significance). The way I see it, gold took a rare tumble today and will probably be up to its previous levels in a few weeks, if not days. Even if it takes longer for gold to regain its lost value, it is pretty certain that gold, one of humanity's rarest and most sought-after precious metals, will appreciate in value in the long term.

Although... I wouldn't say that gold is a true "safe haven" for investors. If gold really was "recession-proof", would not the gold market be flooded with investors and overstock of gold? There is obviously some underlying reason. And in this, I give my best advice for playing the stock market, as quoted by many over the years; "diversify."

kamster