The above shows a 20yr chart of Gold. The recent drop is the worst in 20 years. Back home in Singapore, if you notice, there were already signs that Gold had formed a bubble and a crash is coming. How do i know?
The answer lies with more and more people without financial knowledge are investing in Gold. In Singapore, we saw an increase in the number of firms who promise a guaranteed return if you invest with them. These firms typically use Gold as a luring point and attract people to put their money with them. As Gold is a rather safe asset and a hedge for inflation, nobody thought that Gold price will go down. The marketing point was that as long as there is inflation and prices are going up every where, then Gold price would go up also.
Before the recent huge fall in Gold prices, some of these firms promising a guaranteed return on Gold investment shut down and the owner disappeared. This left investors stranded and they lost all their money. Examples of 2 such companies in Singapore are Genneva Gold and The Gold Guarantee. With cases like this happening, it gives us a strong hint that Gold prices are at unsustainable levels and the bubble might burst soon.
Watch this video to find out more on the recent Gold scam in Singapore by The Gold Guarantee: