Casey Research - It’s true for almost any commodity: there are a lot of influences pushing on the price, and it’s hard to untangle them all. But gold is exceptional. A single factor dominates the market price - and you can measure it.

More than any other commodity, gold’s price rises (and falls) with demand from investors; the demand from consumers and industrial users is very much a secondary consideration. Or to put it another way, what ultimately controls gold is mass psychology.

If you were an investor during the internet craze, do you recall the absolute hysteria about Nasdaq stocks? Do you remember how everyone knew about them? Do you recall the excited banter about the latest internet company you heard at work, at home, or with friends? Do you remember the stories of people getting rich almost overnight? I still remember a news report saying that local officials at Lake Tahoe were worried because all the dot-com millionaires from Silicon Valley were buying up lakefront property and building wall-to-wall mansions, blocking everyone else’s view.

Those companies weren’t really worth 400 times earnings, and many had no earnings at all. Yet most such stocks didn’t just double or triple, but increased by a factor of 10 or more. There were internet stocks that went up 100 fold.

Is this happening to gold right now? Read More