The Price of Gold

The price of gold, For a very long period of time, was quite stable. World economies based their currencies on gold. Nowadays that practice is long gone and gold prices are being driven from one extreme to the other.

Figuring out which way the gold prices are going to go is a full time job for the worlds experts. Recent figures released by the world gold council, has revealed some of the reasons for this price volatility.

In the WGC's latest report for the 3rd quarter of 2008, Gold Exchange Traded Funds (ETF's) were largest portion of gold sales with 382 tonnes sold. This is an increase of 56% from the same period in 2007. But the real suprise is that 111 tonnes can be attributed to the collapse of Lehman Bros over the space of 5 days !.

Lehman Brothers had to sell off its ETF investments at fire sale prices to stave off collapse. Many other companies in dire need of cash in this financial crises appear to have done the same in the third quarter of 2008.

Some brokers say that this selling of of gold Assets by corporations trying to stay solvent may be the reason for the recent decline in gold prices. The opinion is, once people realize that this decline is not a downturn in golds fundamentals, the price will shoot back up again.

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