I would venture to say that price of gold is in large part based on our perception of its value versus actual demand (demand for jewelry etc). That is very scary, because perceptions can change quickly, and it is very susceptible emotions.
Another factor which distorts/impacts the price of gold is all the money being printed by Central Bankers. That money is going to go into anything that looks like it will bring about a decent return - and I am certain some of it has made its way into Gold... How much? I don't know, and not sure if there is a way to find out. What I do know though is that if the big players want to 'change' the perception the masses have about about the value of Gold, then they simply have to strike fear in the hearts of those holding it. A massive market selloff would likely do that, and as the perception changes you would likely see the initial selloff continue.
So how low could it go? Some suggest the cost of mining gold would likely be a floor and I agree with this but if the perception has changed enough for the negative - then the downside could be exaggerated.
So where does this leave IAG? In my view IAG is a good value under $5, but it could still go all the way down to $3. I don't think the company will go bankrupt, but I can see very difficult days ahead for it, but that isn't necessarily a bad thing - they will become leaner and meaner.
Anyway, just rambling off thoughts. Anyone want to enter into discussion about this - jump right in.
Cheers and good luck to all.
It really depends. If the world has grown economically at a far higher pace than it should have, then it will take some time for inflation to surface. Central Bankers are trying to inflate their way out of the economic slowdown (the bubble has burst and they are trying desperately to reinflate it).
There are so many others factors at work too though. Advances in technology are eliminating jobs, and when those people aren't making money - demand for goods (outside of necessities like food) won't be there.
There are a lot of factors at play here. Trying to understand and predict how this will all play out is difficult. I do believe however, that the course a number of nations are on is not sustainable.