Gold price plunge: is it time to buy?

Money briefing: the 'safe haven' asset has sunk to a six-month low. We explain why.

What has happened?

lorriman: The article forgets the other macro-economic factors keeping the price high: the continuing risk of systemic meltdown (though perhaps less now that the banks have had oppotunity to protect themselves), the risk of hyperinflation from continuing QE, the threat of currency wars, and then the underlying issues that caused all this in the first place: still unresolved East/West trade imbalance  and Euro-zone North/South trade imbalance.

Jollyboys: I do not know anybody who buys gold jewellery any more as it is too expensive. When the gold investors/central banks have moved on to other investments (as some have already (George Soros))  I think gold will plummet big time until it is at an affordable price for the average person to buy as jewellery. Who else will buy it? The increase in gold value over the last 5-10 years is a bubble. And those who snooze will lose! Agriculture/food/farmland is the new gold. As more and more people become affluent in a rising world population and energy prices, food is going to become more scarce and expensive. Food inflation is aprox 30% per year and prices are set to double in the next 2-3 years.

raoul: George Soros sold off ETFs - not physical holdings… maybe he knows the ETF game is up?

itsastickup: And brought miners.

magsmoo: Of course! And with P J Morgan rigging the silver market, amongst others?  That now is the time People around the world! We should be  buying silver, gold coins in droves,  even if its just one! it will cause P J Morgan, Blair to come crashing down like Humpty Dumpty when he sat on that wall! You can't print Gold/ Silver if you get me?

busmanj: err… no - but (unlike money, sadly) you can just dig the stuff out of the ground - they're doing it as we speak in China, Australia, USA, Russia, South Africa… Loads of it. That's even worse than printing. No, steer clear of gold unless you like a gamble - it's a bubble mainly based on confidence, same as cash. If you get me.

CMJS: Is P J Morgan like PJ & Duncan?

thedon: Its immaterial talking about the gold price in USD in this country, as most purchasers are buying in STG, and with the devaluation of the pound, gold has actually held up reasonably well in this - its currently trading £ 1050 which is only marginally lower from recent levels and higher from Decembers lows of £1005. Please get your facts right before publishing a story not that applicable to UK investors.

colinsyme: Gold that you can hold(physical variety) yes, all other forms like shares and derivatives are potentially worthless. Note; make sure that your gold is well hidden from thieves…and the government(as if there is much of  a difference)

busmanj: Peculiar, specious article, this, which rather expertly has its cake and eats it. What's wrong with money, we read, is that government can 'interfere with its value' by printing more - but then we are reminded that gold miners are tirelessly at it, extracting more; the exact equivalent of printing money (and pretty effective, since the total amount of gold ever extracted from the earth in all of history would only fill 2 1/2 olympic swimming pools: the top five producing countries alone extracted around 1200 tonnes of new gold in 2011, that's an increase in just one year equal to 0.75% of the total amount ever found. QE on steroids…). Then we are treated to the worrying idea that money off the gold standard is based on confidence - only to discover that oh no gold suffers from exactly the same weakness, having limited intrinsic value, being only 'quite' useful stuff. Gold's mainly, well, shiny; and mostly in demand to fill dictators' vaults (it says above). Gold's value is largely based on (dictators') confidence; it's worth something because people think its worth something. Odd.  Looks a little bit biased…

vforvendetta: You are very stupid.

busmanj: Why thank you. Psst - wanna buy some gold? Very cheap.

pragmatist: He is not. He is one of an increasing number who grasp that, for the most part, precious metal prices do not reflect an underlying value linked to industrial and other uses of said metals; this is particularly so for gold and less so for platinum. The "value" of gold is as illusory as that of fiat currency. In both cases this is fine whilst everyone plays "pass the parcel" and the music of confidence thrums in everybody's ears; when the music stops beware.

busmanj: By the way, it's charmingly naive that you appear not to be able to see that gold is just money, & v.v. (with the notable difference that anybody can find brand new gold, but only a government can make new money), both based on confidence, but neither much the worse for it; the 'trust' (and incidentally, what could be more life-affirming than that?) system is so big it's been stable for centuries - but be careful who you believe out there, eh.

stevep47: Are the experts that predict gold will rise above $2,000 the same ones who failed to see that it would fall below $1,600?

DrGrumpy: The gold price has not fallen recently in sterling terms, because of the weak pound. Shame on you for misleading readers. If you don't believe me look at this years price history in £'s!

alastairsnare: And that is the whole point. I buy gold because it is a hedge against the decline of the pound and the country's economy as a whole. I've got quite a bit of it now (mainly in Britannias) but I will be more delighted than anyone if the Bank of England's policy of money printing and inflating the country's debt away somehow leads to a more prosperous UK since it will mean that I will be able to continue to find well-paid employment. I'm not holding my breath, though…!

likeitis: To suggest shares or Etf's in  times of such Financial fraud is despicable. The prime reason for owning gold today should be  protection of your wealth, as governments and banks debase the currency to address the debt they have amassed. They cannot print physical gold or silver Physical gold and silver have no counter party liability, as all paper investments  in a world of Re hypothecation and financial scull duggery If you purchase any shares or Etf's they will be denominated in  a currency,  of  which you are supposedly trying to protect yourself from debasement off. Physical Gold sovereigns and silver brittanias, (as yet), carry no capital gains tax, a good start in todays world. For those that say you are at risk holding physical,…fine dont tell anyone then. I would say you have more risk today by not having any.

lorriman: Despicable? It depends on the reason for owning gold. Plenty will not be believing in a general collapse or government theft and are just looking for a rising commodity or protection against inflation etc.

likeitis:  Yes Despicable, John corzine & the theft of 1.6 billion in customers money uninsured by the CME because in truth they didnt know just how many M F Globals were out there Despicable, the rigging of Libor Despicable banks like HSBC involved in laundering drug cartel funds. do i use the term unjustly lorriman

lorriman: I refer you to my previous comment.

troutmagnet:  I think the drug cartels should go public.

daftwader: Since Gold has been rising for the past week and is again over $1600, that pretty much undermines the central thrust of this article and certainly makes the headline nonsense.

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