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This morning, gold prices crashed through $1,300 an ounce, hitting the lowest level in two years. At $1,300, gold is now down 30% from its peak. And all investors who finally bought into the gold mania over the past couple of years are now underwater.
If this were mere "volatility"--if gold had some fundamental value that it would likely eventually return to--then the price drop would be no big deal. But there's no solid theoretical way to "value" gold, so its price could do almost anything. Gold prices could fall another 50% to $650, for example, and still be 50% above their level for the prior couple of decades. (In case you needed any more evidence that gold prices don't always go up, from the late 1980s to the early 2000s, gold prices dropped by more than half...
If this were mere "volatility"--if gold had some fundamental value that it would likely eventually return to--then the price drop would be no big deal. But there's no solid theoretical way to "value" gold, so its price could do almost anything. Gold prices could fall another 50% to $650, for example, and still be 50% above their level for the prior couple of decades. (In case you needed any more evidence that gold prices don't always go up, from the late 1980s to the early 2000s, gold prices dropped by more than half...
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