It is indeed the last day of the Nepalese Year 2068, and denizens in the capital and around the country are making plans to celebrate to usher in the New Year with renewed hopes and optimism. A lot of effort and time has gone around in preparing the parties which will give the citizens a much required push to do even better in the coming days. Leaving behind the frenzy of the celebrations, yours truly is here amongst the mix of writing the last blog of the Year 2068.

Gold is speculative by nature, since one is reliant on some other trader buying it, to maximize the returns out of it. Not only is gold a means for speculation, but there has been an incredible amount of accumulation as seen by the increase in the reserves amongst central banks worldwide.

During the early 1980’s, the Hunt brothers conducted trades so wild that is drove silver price which was a meager $5 an ounce to spike to an indomitable $49.95 per ounce in about a year. This huge silver bubble ultimately led to the bankruptcy of the Hunt brothers, but it also had some consequences outside the trading pits. There were lines of people waiting to sell their silver into the speculative frenzy, for prices they could only dream about.

So what does the above paragraph regarding silver have to do with gold today? Basically, a lot. Most of my ardent readers would not believe when I say that people are again lining up to sell their gold reserves. But the situation supports my preceding sentence. There are numerous stores buying up jewelry, gold coins, gold watches amongst others. This is all being bought essentially based on its price; it’s all being melted and delivered into the speculative frenzy, just like back in the 80’s on that silver run.

This is indeed a worldwide phenomenon. As in many other speculative bubbles, one of the problems is that new supply hits the bubble as it is growing, so if the bubble just pops to the point where it started from, more money is lost by the participants than gained. And the same thing is also happening to gold today.

Not only is gold speculative, not only has there been a tremendous amount of speculation already and the trade is incredibly one-sided, not only this, but the world at large is melting its gold and selling it into the market. This is the kind of anecdotal evidence that, in hindsight, stories are made of - "people were melting their gold at the top".

See you all on the other side of the New Year!