By Mike Zaman
Fear is a tremendous driving force, but when we operate out of fear we seldom make the right decisions. To illustrate this, just look at our involvement in two wars of choice. While we have already lost both, we are hard pressed to admit it. And to add insult to injury we belonged in neither.
The price of Gold is not based on the law of supply and demand, neither is it based on the volume of its sales. Gold is a commodity whose value is determined in the back room of the Bank of England.
If on the other hand Gold were considered a currency, rather than a precious metal it would be a much different story.
As a currency it could float against a basket of currencies, and as inflation soars, as it will the value of gold would increase.
The current price of Gold on Thursday had traded as high as $1,220.60 and as low as $1,207.40. While the U.S. dollar index was slipping 0.94% to $86.30 and the euro was rallying 1.58% to $1.23 against the dollar. The spot gold price Thursday added more than $1, according to Kitco’s gold index, as investors opted for the physical metal over the easily-tradable futures contracts.
There is no doubt investors are concerned about the state of sovereign debts, however gold isn’t the panacea they believe it to be.
But panic is always a good motivator, and as such we are on the verge of seeing a new concept “Gold Vending machines” try to grab a market share.
The company, Germany-based GOLD to go, is currently whipping out 50 gold machines a month to meet the current demand. GOLD to go launched its first ATM in Abu Dhabi’s Emirates Palace Hotel earlier this month directly afterward they opened their second in Germany last week.
The gold ATM’s next destinations are the Bergamo Airport in Milan, Italy, all major airports in Malaysia, one of Russia’s biggest banks and an undetermined location in Turkey.
GOLD to go’s ATM looks like a vending machine and dispenses gold coins and bars weighing up to one ounce at prices updated every 10 minutes based on the real-time spot price of gold. ATM-owners can choose from a variety of other gold items, such as gold Canadian maple leaf coins, South African Krugerrands, and even some custom designs. For example, the special edition gold medallion it engraved with the Palace Hotel’s logo was created for the United Arab Emirate debut.
Although it’s an interesting concept, I can’t see a serious investor buying gold through a vending machine. Especially as there is no way to sell it back, and the price will include a margin for vending machines profits. So this isn’t for me. But then I don’t invest in gold either.
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