Silicon Valley State of Mind, a blog by John Weathington, "The Science of Success"
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    Welcome to a Silicon Valley State of Mind, thoughts tips and advice based on the consulting work of John Weathington, "Silicon Valley's Top Information Strategist."

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Silicon Valley State of Mind

Tips, thoughts, and advice based on the consulting work of John Weathington, "The Science of Success."

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Posted by on in Leadership

If you’re invested in gold, you may be experiencing a bit of anxiety. The precipice gold fell off this month makes the fiscal cliff look like a street curb. At the beginning of the month, an ounce of gold was worth about $1,600, and now it’s struggling to stay above $1,400. That’s a tough reality for someone who was recently worried about the US dollar and turned to gold for a safe place to invest. Unfortunately, there are a lot of people investing in gold based on sophistic reasoning. It’s important to check with trusted advisors before making important decisions.

The dirty truth is that people in the inside think most gold investors are pretty ignorant. They’re saying that dumb money is pushing up the price of gold—and I believe they’re right. Although common lore says that gold is a good investment to hedge against the US dollar, it’s a trading instrument that works like anything else. When gold is popular—for whatever reason—people buy it and the price goes up. When people get scared, they sell their gold, and the price goes down. If a lot of people get scared at the same time, they all sell at the same time, and the price plummets. This is what happened a few days ago.

The key here is that most financial analysts knew this—the joke is on the gold investor who didn’t know better. It’s important to surround yourself with trusted experts and turn to them before you make any big moves. Otherwise, you might end up holding fool’s gold.

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