There are two distinct risks in the gold market that are distinct and must be considered separately and not as a single risk.
These risks are the weakening economy and the falling price of gold.
The weakening economy will cause an increase in unemployment; with more job losses and fewer people applying for jobs. Unemployment will hurt the economy more than just good times. The result will be a further contraction of the economy and a reduction in employment.
This will cause businesses to cut costs and some may lay off workers or reduce hours; which will force more businesses to cut costs; which will lead to even more business cutbacks and layoffs. As a result, the economy will be hurt even more, and companies and businesses will cut even more costs. This will cause an even further economic contraction.
Inflation will follow the weak economy. The falling price of gold is related to inflation; because the falling price of gold causes a fall in prices of all goods and services; while inflation rises. A weak economy will cause the prices of goods and services to rise.
Rising prices of goods and services cause a demand-supply imbalance between the world's currencies and the stock markets. The larger corporations will buy up all the stocks; and those stocks will rise in value. The small companies will see their shares rise in value; but the large corporations will buy up more shares of those companies; and the prices of the stocks will continue to rise.
This will affect the stock market too. The stocks will fall in value, but will rise in price. This will mean that the big corporations will be able to buy up more stocks; and will thus be able to raise the price of those stocks; which will further rise in the prices of all stocks.
This will lead to even greater financial problems for the stock market. People will lose money; and they will start to pull out of the stock market. They will sell out all their stocks; and take their money out of the stock market. This will cause even more selling and pulling out of the stock market.
Many investors will now be concerned about the risks to themselves from investing in these economic sectors. The bad news is that investors have to do some serious thinking and planning when considering this risk. Investors will have to focus on how much risk to be taken and also where to invest to minimise the risk.
For investors who do not want to have to deal with the risks of this riskier asset class, then they can look at other investment vehicles such as bonds. There are many safe and secure investment vehicles to be had that have the same risks as bonds; however, with the advantage of a lower risk and better yield.
The U.S. Treasury bond market is a great place to get the rewards of safe risk; with the chance to earn and grow while you wait for the bull market to go up in value. This allows people to trade risk without risking anything. This will be great for the future of the investors in this market.
There are a number of gold investors who see the risks of investing in the gold market; as a good reason to hold onto their gold for a longer period of time. Although there is a higher degree of uncertainty, there is also the potential to earn more than what one could ever have expected if they had bought and sold gold all by themselves.
Holders of gold are paid a huge premium over the spot price of gold. As a result, investors who are shorting the gold market are more likely to earn a large rate of return.