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One thing I am very afraid of with gold is manipulation.
Unlike paper currency that is impossible to manipulate in any way, gold can be accumulated by a group of connected buyers for the sole purpose of eliminating supply from the market. A successful cornering of the market can result in volatile swings in price. Unsuspecting buyers acquire bullion at higher prices only to see a flood of supply hit the market resulting in damaging price collapse.
This is exactly what transpired in the 1980s in the silver market. The Hunt brothers did just that with the use of leverage at a time of minimal margin requirements on commodities exchanges.
Although the likelihood is low, investors should be cautious with any commodity that can be manipulated in this way. I prefer to avoid it altogether. I thinksmall-cap stocks, such as these eight picks from Louis Navellier, are a better bet.
Jamie Dlugosch is a contributor to InvestorPlace.com.
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Reader Comments (Page 1 of 1)
4-18-2009 @ 10:30AM
think said...
Who at $900/oz.has enough money to do with gold what the hunt brothers did to silver?
4-18-2009 @ 12:44PM
James said...
You have a very creative mind. To corner the market in gold, gold has to be available for delivery. The comex or crimex, ETFs, have never had a verifiable 3rd party audit that confirms who owns the gold in storage for delivery, and how much gold is really available for delivery. That is why it is called "Paper Gold" its a promise of delivery of gold. Just like what the original US banksters printed in the early 1800's promising gold held in their banks with printed paper notes or dollars.
The same goes for silver.
4-18-2009 @ 2:26PM
TX CHL Instructor said...
"Unlike paper currency that is impossible to manipulate in any way"
OMG, if you really believe that, you need to be kept in a room away from sharp objects.
--
http://www.chl-tx.com
4-18-2009 @ 6:24PM
Mark Herpel said...
Unlike paper currency that is impossible to manipulate in any way???
This is a joke post right? You can't be serious, are you high man?
Paper currency can't be manipulated? Hmmm. Tell that to all of the people living in Zimbabwe. Frankly, Jamie you are either shilling for some crappy stock house or you have no education.
Mark
4-18-2009 @ 7:23PM
Steve said...
What in this world can't be manipulated ? I've personally made a lot of money from investments that can be manipulated. I have to say, this article was a waste of time to read !
4-18-2009 @ 10:50PM
ij70 said...
"Unlike paper currency that is impossible to manipulate in any way,"
Who let the six year old to post here?
4-19-2009 @ 7:15AM
john said...
You are delusional about paper money, how many nations have printed money that is worthless, remember confederate money?
4-19-2009 @ 7:41AM
mike said...
I think the man is dead on. Gold is totaly useless and is not good for anything. because gold is so worthless, I need you all to send me all that you have