In Bottomed-Out Economy, All That Glitters Is Sold; So Why Is Gold's Value Still Climbing?
Here's a phenomenon that seems to run contrary to popular concepts of how markets work: As the economy falters, the jobless droves have pawned their gold; and yet that seeming flood in the market has done nothing to reduce the value of gold. On the contrary, gold has increased from $681 per ounce last October to this month's height of over $1,000 per ounce -- and it's expected to grow toward the end of the year.
A local man with a considerable stake in this theory is Jeffrey Aronson, one of the co-founders of Pompano Beach's Cash4Gold, a company so rich and so cocky that it recently offered to run the federal government's Cash for Clunkers program. Aronson's belief in gold's market buoyancy appears to be based on his faith in bullion -- the precious metal in forms like the one pictured above, which acts as a unit of wealth across currencies. From Bloomberg.com:
The interest in bullion has kept the influx of scrap from depressing the market, said Aronson.
And it shouldn't be surprising that bullion is popular, what with the world's faith in the markets having been shaken by the past year's economic turbulence.
"With the amount of gold that people on the investment side want right now, there's never a situation where you're oversupplied," said Aronson, who is 36.
So there you have it: High supply. High demand. But if Aronson's become fabulously wealthy as a result of the gold rush that followed the economic collapse, I rather doubt his interest in trying to help the U.S. Government stabilize the economy.
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