Gold

[Jess9]

I see kitco headlines show "target" now adjusted to 2K / oz gold. Wow, big bucks will be made for producers in the next year or three if this gets hit. ASX looks set to outperform, driven by its undervalued gold companies doing a catch up quick time.

[Skol]

Quite right there Strat,
I was watching CNBC today briefly and there was a discussion on the NASDAQ and S&P 500, how well they've done just recently. The DOW is up 8.4% in Sept. & S& P 500 up 9.5%, still the best Sept. since 1939.
I wonder how many hedge and mutual fund managers are sweating, missing out on the action and contemplating unloading the yellow stuff?

Bears are on the endangered list.

[elZorro]

A 2007 article, but still valid (http://www.zealllc.com/2007/goldprod.htm). When gold was $600 an ounce. Since then there has been feverish activity from miners, lots of capital equipment purchased and exploration carried out, but not a lot more gold produced yet. At a recent conference, the largest miners discussed their problem of replacing mined gold with new reserves. No argument can replace the fact that as the human population grows steadily wealthier (well, we can all hope), there will be a demand for more annual ounces of gold. This conflicts with the fact that gold is getting harder to find.

We could all stay out of the gold market, and maybe that would be safe. Or would we be kicking ourselves for the rest of our lives, that we didn't give it a go? Is this an opportunity that will replace property as an investment for the next few years?

[Skol]

I see kitco headlines show "target" now adjusted to 2K / oz gold. Wow, big bucks will be made for producers in the next year or three if this gets hit.

Like a Ponzi scheme, the promise of higher and higher returns, a sure sign of a bubble.
In 1920, Carlo Ponzi promised to pay 50% interest for the use of 45 days deposits (162,450% annually), very tempting indeed. Unfortunately for the depositors, it ended in tears, probably similar to Kitco who now say you better get on board because the 'target' is 2K.
Good luck.
You obviously didn't read my previous post which said "any attempt to forecast a price can be deadly".

[Huang Chung]

Skol.

A bubble can be a beautiful thing, especially if you hitch a ride when it's still relatively small.

It's like driving a car....fine and safe if you drive it within the speed limit, still probably safe enough if you exceed the speed limit somewhat, but generally deadly if you drive it at break neck speed.

The printing presses are humming, and the USD falling, so I don't think gold right now is anything like that car travelling a break neck speed. If anything, the last week or so makes me think they've just raised the speed limit it's safe to drive at....

[Skol]

HC,
Since you mention speed I have a special para. from one of my books just for you.

'It is impossible to invest successfully in a speculative mania. A mania is like a speeding freight train. It accelerates, rockets along, slows at some points, only to speed up again. Getting on and off at just the right time is near to impossible. More likely, you'll end up standing in front of it, unable to move as it bears down on you.'

As an avid follower of bubbles, the last one, if you will forgive me for diverging for a moment, was South Canterbury Finance, a $2 billion implosion the NZ taxpayer has to suffer for for some strange reason, now the US Government is passing a law to protect suckers who invest in gold. Let them eat cake I say.
www.cnbc.com/id/39343339

[Huang Chung]

Than I guess you've got to properly define speculative mania, and whether it currently applies to gold.

Something I read on HC which seems worth considering...

The only gold commercials you see on TV are those where the advertiser wants to BUY your gold, not sell gold to you.....

[Skol]

Than I guess you've got to properly define speculative mania, and whether it currently applies to gold.

Something I read on HC which seems worth considering...

The only gold commercials you see on TV are those where the advertiser wants to BUY your gold, not sell gold to you.....

That's typical Hot Copper, some very naive dudes there who don't know what's going on.
Travel to the USA and check out the TV there, it's full of it, Goldline, Glenn Beck pushing gold, dollar worth nothing, the usual meltdown nonsense and the suckers are buying it too, gold eagles selling like hot cakes, more in the first few months of this year than the whole of last year.
It's a real them and us scenario on HC, the goldbugs vs. the 'manipulators' and the shorters and not forgetting of course the 'illuminati'. The paranoia and conspiracy theories would keep a psychiatrist busy for months.
One goldbug refers to the opposition as the 'filth', and if you dare question their ideology you're liable to get banned because one of the moderators is a rabid goldbug and looks for anything in your post to kick you out.

After I posted there on one occasion I was accused of being an agent for the 'manipulators' or J P Morgan to demoralise them , that's how obsessed they are.

When the the whole deal finally does come crashing down the goldbugs will be blaming everyone else but themselves.
Since there's only a decent rally in gold once in a generation they've gotta make the most of this one.

There is one very amusing aspect to the goldbugs that is going to have some fairly serious consequences eventually that will be worth watching and that's that some of these guys have posted they are pushing gold on their relatives, families and mates. It's gonna be a friendless existence when the final cataclysm arrives LOL.

www.noquarterusa.net/blog/2010/05/20/a-warning-about-those-ads-selling-gold

[JBmurc]

"The Fed will announce at its next meeting that it intends to buy at least $1 trillion of Treasuries, Goldman Sachs economists led by Jan Hatzius in New York wrote after the central bank's statement was released."

"the announcement by Americans for Tax Reform that "the average American worked 231 days just to support government, which consumes 63.41 percent of national income." Yow! The government consumes two-thirds of income!

federal pay and benefits per employee now average more than twice that of private workers: $123,049 compared to $61,051

[Skol]

I actually think there could be a bit more in the gold rally JB, doesn't quite look as if it's got to meltdown stage yet.

Ironically I'm hoping there is, because I know there are punters out there who are trying to make up for losses in the GFC by buying gold.

The bigger the boom, the bigger the bust and it's very likely that many will have more allocated to gold than would normally be regarded as prudent, so there could be some tasty morsels turn up when it's all over.

One of my neighbours told me it will be $5000/oz and he has kgs of the stuff buried.

I don't have any debt, and have sufficient resources to pick up some of the pieces. My wife is keen to acquire a rental property down by the local school, they trade at a significant premium because it's a decile 9 job.

[Skol]

JB,
Berkshire Hathaway avoided the 2000 NASDAQ techwreck by refusing to believe in the 'new era' tech shares.
Here's what Charlie Munger said 2 days ago about gold.

"I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation.
If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you can become rational hoarding gold.
Even if it works, you're a jerk".

I guess he just doesn't understand, right, JB?

[ENP]

http://theinfounderground.com/forum/viewtopic.php?f=33&t=12270&start=0

Robert Prechter- Elliott Wave International

If anything, we should be buying USD right now.

[upside_umop]

http://theinfounderground.com/forum/viewtopic.php?f=33&t=12270&start=0

Robert Prechter- Elliott Wave International

If anything, we should be buying USD right now.

If anything, we shouldn't listen (http://www.sharetrader.co.nz/showthread.php?7944-Elliott-Wave-Theory&p=316428&viewfull=1#post316428) to Robert Prechter!

If you had done the exact opposite of what he advocates, with a couple of grand you would be a millionaire (of course, a lot of his losses could be to do with trading costs/slippage etc). But the point is, his losses are substantial and his comments should be taken with a grain of salt, eh?

[macduffy]

Here's someone else who's bullish on gold.

Personally, I don't worry too much about trying to predict the PoG. Just hold my goldies so long as the trend continues!

http://www.businessspectator.com.au/bs.nsf/Article/Gold-Australian-dollar-surge-pd20100926-9N7HQ?OpenDocument&src=tnb

[Skol]

All well and good but how do you know when there is a correction or if it's 'it'?

No one does otherwise the goldbugs would all be rich and the GFC would have been a minor affliction.

I know a guy who threw everything at shares prior to the '87 crash and when the 'correction' started he threw even more at it on the advice of his sharebroker.

That man is still working and he's 78.

[Lego_Man]

Might as well just all top ourselves then.

No rewards without risk.

[upside_umop]

Might as well just all top ourselves then.

No rewards without risk.

There is risk and then there is calculated risk. If you don't understand the risks (calculated somewhat)...then you shouldn't be in it.

If you can't understand that gold is speculative, and based a lot on expectation and human emotions...you shouldn't be buying it.

No gold bug has still told me what happens when the net hoard turns to zero?

By the way...I have some NAV and NAVO. They look undervalued...but I'm watching that gold price as they're a highly leveraged producer. I.e. Greater risk.

Rare Earths looks to be a bit of a bubble too, although its actually based off some fundamentals. Its hard not to be nervous when some of the REO have increased 4500% in a short space of time...it all depends how the demand will react to prices like that over the medium/long term. A general thought of my own is it shouldnt have too much effect, as they're non-subsitutable (most). NAV have some REO but like gold...I'm watching that too closely.

[Skol]

If you want to get into gold I think the best way would have to be via shares, PM too dangerous to store and illiquid.
A gold share that caught my eye some time back was RDR, should have bought some, not to worry though.
There are some signs that gold hoarding is getting out of hand.

www.sovereignman.com/finance/gold-mania-in-china

[Lego_Man]

You dont need to believe in the gold story to make money off gold speccies. Im sure most here dont hold gold ETF's. I dont care if it goes to 2000 an ounce or stays where it is, as long as i get my pound of return on my resource punts in the meantime.

[upside_umop]

You dont need to believe in the gold story to make money off gold speccies. Im sure most here dont hold gold ETF's. I dont care if it goes to 2000 an ounce or stays where it is, as long as i get my pound of return on my resource punts in the meantime.

This is true, I have the same philosphy. I think gold valuation is crazy, which is why I'm not attempting to price it. Instead, buy a gold producer which derives its income off the gold price....that doesn't mean to say you should not understand the risks surrounding the gold price. I.e. I won't try justify in my head why its going up or down....because simply I don't understand how people can value it - in other words, the price of gold is speculation and investing in gold stock use a fundamental analysis.

But yeah, you should at least understand the short comings of how people price it LM. I like that quote by Charles Munger that skol put up earlier....I assume he's reffering to the physical stuff.

I'll have a look at RDR...looks like it has taken a bit of a hit but has the trend changed now?

[Lego_Man]

I just dont think it's in the final bubble phase yet. Think oil in 2008 with its 5-10% daily moves and absolute spike of a graph. We will get there though, as everything moves in cycles....and that's the time you'd want to be going balls-short.

[Skol]

LM,
If you know when it's at the top can you let the rest of us know too, then we can all be rich.

One commentator reckons if it breaks through the 34 week EMA it's 'look out below'.

[Timo]

Wrap your heads around this one ...http://fofoa.blogspot.com/2010/09/shoeshine-boy.html

[ENP]

Hi JB, Skol and others...

I watched these 2x Mike Maloney videos this morning and am quite confused.

http://www.richerdaddy.com/10-oil-mike-maloney-schools-bankers-on-deflation-part-1-of-2/
http://www.richerdaddy.com/10-oil-mike-maloney-schools-bankers-on-deflation-part-2-of-2/

He says that soybean, corn, wheat, oil etc are going to have DEFLATION

While gold/silver are going to have INFLATION

I thought they would both inflate or deflate in the same patterns? Why is oil and grains different to gold/silver?

Appreciate everyones thoughts on this. The videos are extremely valuable and I recommend you watch them.

[elZorro]

Hi ENP, I think we covered those videos further up the page. He's a powerful speaker. But in most of these conferences time is strictly limited, and he's been pushing this news for awhile.

Try this link, China's new policy (http://www.reuters.com/article/idUSTRE68R1K920100928)is one reason why Gold is a different animal.

[inghamp]

Thanks a lot Timo. That is a really useful read. A lot to digest

[ENP]

Hi ENP, I think we covered those videos further up the page. He's a powerful speaker. But in most of these conferences time is strictly limited, and he's been pushing this news for awhile.

Try this link, China's new policy (http://www.reuters.com/article/idUSTRE68R1K920100928)is one reason why Gold is a different animal.

So from that article I got that the average working class man in China is buying some gold coins to take home.

So that's why there isn't deflation in the price? Is that what you are saying?

[Skol]

Another contrarian signal, gold vending machines to be installed in the USA. A flash in the pan for sure.

Probably got a bit to go yet though.

http://blogs.wsj.com/marketbeat/2010/09/28/gold-vending-machines-why-we-think-its-a-sell-signal/

[Skol]

Hi ENP, I think we covered those videos further up the page. He's a powerful speaker. But in most of these conferences time is strictly limited, and he's been pushing this news for awhile.

Try this link, China's new policy (http://www.reuters.com/article/idUSTRE68R1K920100928)is one reason why Gold is a different animal.

Poverty stricken places like the Chinese countryside are notorious for pyramid and get-rich-quick schemes and gold will shortly become the latest get-rich-quick-scheme.
The average Chinese peasant hasn't studied the works of Ludwig Von Mises, he's buying gold because it's trendy thing to do and it will probably end badly.
Read this about the Albanian pyramid that engulfed two-thirds of the population.

www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm

[elZorro]

So from that article I got that the average working class man in China is buying some gold coins to take home.

So that's why there isn't deflation in the price? Is that what you are saying?

It's complex. Gold tends to try to hold its value against a basket of currencies, at the least. So if the US$ is under pressure (lowers its value) then the US$ value of gold has to go up. Check the Aussie value of gold, it has been less exciting.

On top of that, will there be buying pressure from more of the masses? Most likely, and this could very easily increase the shortage of available physical gold. Most of the gold already mined is held as jewelry (about 60%) and 25% is stored as bullion. Every human on the planet would have about 23g of gold (well under an ounce) if it were to be distributed equally. Of course that isn't the case, but for many, a decision to hold some gold where they didn't have much before, would have huge ramifications. Already wealthy Chinese and Saudi Arabian clients are apparently asking for their promised physical gold that they've invested in, to be supplied to them for storage, they're not happy with the paperwork only. That has caused some back-room juggling around the world, if the rumours are to be believed.

[Skol]

I've just been reading about a guy who wants to know what some gold coins he bought 10 years ago are worth.
They were minted in 1933 and have lady liberty on the front and a flying turkey on the back.

Bad news, no gold coins were minted in the USA in 1933 except for some rare double eagles so they're fakes.

Flying turkey, get it? LOl

Yep, there's one born every minute alright.

[elZorro]

I've just been reading about a guy who wants to know what some gold coins he bought 10 years ago are worth.
They were minted in 1933 and have lady liberty on the front and a flying turkey on the back.

Bad news, no gold coins were minted in the USA in 1933 except for some rare double eagles so they're fakes.

Flying turkey, get it? LOl

Yep, there's one born every minute alright.

So Skol, ( by extension of your train of thought) anyone who is investing in gold or gold stocks must be (i) a turkey (ii) a jerk, (iii) prepared for a bursting bubble any second. I think we've all got the message.

Anyone who has helped post data on this thread knows there might be a small risk of that, but the risk is small. It's much more likely gold will keep appreciating against the US$ for a while yet. And since those who buy gold stocks are heavily influenced by the US$ gold price, gold stocks are leveraged to that situation. A case in point: gold is trading at over US$1300.

At what point will gold be overvalued Skol? Do you have a US$ figure in mind?

[Skol]

It's much more likely gold will keep appreciating against the US$ for a while yet.

At what point will gold be overvalued Skol? Do you have a US$ figure in mind?

It's probably overvalued now when people say gold will keep appreciating, meaning it's a one way bet, a sure thing, right EZ?
Mark my words, gold will be the next get-rich-quick-scheme if it's not already.

I'll be visiting Asia in the next few days so it'll be interesting to find out how far advanced the bubble is there.

I didn't say you were a jerk, Charlie Munger did.

Have you got some 'flying turkeys'?

[Huang Chung]

Saw this interview with Philip Manduca on CNBC this morning. He has an interesting take on gold.

http://www.moly.com/Moly+News/BusinessInsider/The+Business+Insider+The+Money+Game/HEADLINE239321/Philip+Manduca+Says+There+Has+Never+Been+An+Empire +So+Willing+To+Give+Its+Wealth+And+Power+Away+Like +America.htm

Make sure you watch the embedded video.

[elZorro]

ENP: I was wrong about gold holding its own amongst a basket of currencies. It's done much better than that. Maybe they have all been depreciating, and the US$ is just one of the worst.

http://www.incrediblecharts.com/tradingdiary/2010-09-30_gold_forex.php

Of more interest would be how much oil you can buy with an ounce of gold, or how many ounces to buy a new car. That can give more reliable even trends, maybe the price of land would be another good indicator.

Skol: I was hoping you had a serious comment to make. Never mind.

From another blog site frequented by economists, this looked powerful.



The confusion on gold arises from its role in discounting all FUTURE inflation (gold is the longest duration asset available -- it is permanent and has no yield).
So when deflation risk exists, additional data signaling economic weakness should make the gold price rise. The likely response to a double-dip would be further significant deflation-fighting commitments by the Fed. This might include additional QE or price-level targeting.
If the Fed formally adopts an inflation target that they will meet "at all costs", the tail risk of high or hyper inflation rises. Therefore gold should rise as the best hedge against this risk.
The enemy of gold is self-sustaining, organic (not produced by stimulus) real growth. We had that from 1983 to 2000, during which time the gold price collapsed (actually it levelled off). Since 2001, we have made repeated, global attempts at stimulating the economy. Gold and equities both worked as earnings rose, but the stimulus commitment implied higher future inflation risk. What we face now is a possible commitment to reduce leverage by reducing the real value of debt. If that occurs, then gold could go materially higher.
Gold is nothing but the longest-duration financial asset that is also not a financial liability. All of its characteristics and behavior, over the long term, stem from this fact.

Posted by: David Pearson at June 13, 2010 11:57 AM


While some of the comments on this blog look like ours, there are also some compelling and well founded arguments on both sides. As someone points out - there might well be a bubble forming. That will not stop well-informed investors from profiting from it, if they are careful.

HC, I just watched the video, see what you mean. Inflation in China, India, etc likely to be large. So they will buy gold, just like westerners did in the 70s.

[JBmurc]

[QUOTE=Skol;320844]JB,
Berkshire Hathaway avoided the 2000 NASDAQ techwreck by refusing to believe in the 'new era' tech shares.
Here's what Charlie Munger said 2 days ago about gold.

"I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation.
If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you can become rational hoarding gold.
Even if it works, you're a jerk".


I've never said one should hoard Gold not when Silver is so cheap ----I see after what nearly a year your finally coming round to see gold's bubble is a some time away 3-9yrs ,of course we will see correction's along the way --personal I never thought Gold would run as hard as it has lately but it now we are in phase 2 which will see a much stronger pull north 1500..2000 till the real madness of phase 3 gets underway (I'll be selling during this phase the short Boom boom time ,before the crash back to fair levels under a stronger Financial world )

[shasta]

[QUOTE=Skol;320844]JB,
Berkshire Hathaway avoided the 2000 NASDAQ techwreck by refusing to believe in the 'new era' tech shares.
Here's what Charlie Munger said 2 days ago about gold.

"I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation.
If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you can become rational hoarding gold.
Even if it works, you're a jerk".


I've never said one should hoard Gold not when Silver is so cheap ----I see after what nearly a year your finally coming round to see gold's bubble is a some time away 3-9yrs ,of course we will see correction's along the way --personal I never thought Gold would run as hard as it has lately but it now we are in phase 2 which will see a much stronger pull north 1500..2000 till the real madness of phase 3 gets underway (I'll be selling during this phase the short Boom boom time ,before the crash back to fair levels under a stronger Financial world )

I heard on the news last night that China were looking to bow out of the "investment" in US debt, & focus on gold, as we all know, the US owes China hundrds of billions of dollars, so even a small amount of this into gold is going to push the price up further.

Still a silver bull & think it's got a lot more to go than gold has

[JBmurc]

[QUOTE=JBmurc;321420]

I heard on the news last night that China were looking to bow out of the "investment" in US debt, & focus on gold, as we all know, the US owes China hundrds of billions of dollars, so even a small amount of this into gold is going to push the price up further.

Still a silver bull & think it's got a lot more to go than gold has

Yeah the FED will be the one taking up the shortfall the USD debt no one else in the world could get away with the massive excess of free money their going to have to use to stop the huge devalue of the USD ----------
-Heard on the radio business news that some 20% of US GDP will go to paying their huge debt interest bill even at the very low rates they'll have attached to the debt...

[elZorro]

JB, here's the link to a gold and inflation blog/commentary with David Pearson in it: fellow bloggers are well up the tree, and are talking about (at least indirectly) trying to influence FED policy with their findings.

http://www.econbrowser.com/archives/2010/06/gold_and_inflat_1.html

They suggest that the FED has some blame in the GFC situation, where the FED's policy is that everyone else is to blame.

For three days now, gold has rested at almost exactly $1310 an ounce. What are the chances that the market has decided that?

[elZorro]

It's probably overvalued now when people say gold will keep appreciating, meaning it's a one way bet, a sure thing, right EZ?
Mark my words, gold will be the next get-rich-quick-scheme if it's not already.

I'll be visiting Asia in the next few days so it'll be interesting to find out how far advanced the bubble is there.

I didn't say you were a jerk, Charlie Munger did.

Have you got some 'flying turkeys'?

Many of these links and comments we've been happy to paste in, are from people with vested interests one way or another. Scathing comments about other's points of view are bound to be noticed, and all advertising is good advertising, right? Except we're just individuals wanting to learn about the dynamics of gold. So what is behind Mr Munger's comments? any perspective? Try this link out Skol. (http://rss.goldtent.net/?p=229901)

[upside_umop]

So what is behind Mr Munger's comments? any perspective? [/URL]

At a guess, gold is completely unproductive in its hoarding form. Why would you go and spend upto $900 cash costs an ounce to get it out of the ground and then put it in a vault, pay someone to look after it, and believe its right?

That $900 would be much better spent on helping out society, bringing people out of poverty, enhancing education etc. I could write a book on this...can you eat gold? No (some people do but usually end up with health defects). Can gold make every day living easier (ie increased standard of living through direct use of hoarding)? No. Can gold be used it in electronics? Yes, but that is not where marginal demand is coming from...it's coming from hoarding.

I for one would be very dissapointed in central banks if they were to start 'hoarding' gold as that would be speculating and its completely inefficient.

[JBmurc]

Yes UU you are right you can't eat it ,it only has value because we the human race give it value like many items..-
- just like we give value to pieces of paper that the world financial powers create trillions off for free value an trade real assets for.
-yet anyone that has prospected for Gold knows it is very valuable because it so costly to get out of the ground
----we really have gone over all of the reasons 10 times over on this part of the topic ---

think we have moved on to what certain current paper value us humans believe it's worth to the ultimate tender of exhange -GOLD- respected as honest money for thousands of years--An hoarded in time of distrust of tenders of exhange-

[upside_umop]

Yes UU you are right you can't eat it ,it only has value because we the human race give it value like many items..-

Like what? Paintings would come to mind...but then paintings are bought to hang on the wall to show off, and admire the extreme skill some artists have. Gold is put away in a vault and never looked at again 'its just there.'


- just like we give value to pieces of paper that the world financial powers create trillions off for free value an trade real assets for.

The paper you talk about is a promissory note of exchange. It is perfectly logical, as it is an efficient means of trade. Much more efficient than say, bartering (i.e. it would be difficult to form a market place where you could do some accounting work for your car to be fixed....but by selling your service and receiving a form of exchange, 'paper notes', you can go and get that car serviced instantly and more efficiently). To use gold instead of paper is EXACTLY the same concept....the only difference is:
-It is costly to produce
-Harder to bend to put in your wallet.

Gold also has the flaw that its supply would be determined by the geological challenges the earth provides us. If you look back a few pages, I posted some facts, one being that we were more in recession than out of it for over 100 years when under the gold standard.


-yet anyone that has prospected for Gold knows it is very valuable because it so costly to get out of the ground

Thats a strange concept, JB. If I were to build a mountain of dirt for the rest of my lifetime, with a digger....would you consider it to have some worth just because it was costly?


----we really have gone over all of the reasons 10 times over on this part of the topic ---

Yes, but the fundamentals behind it don't seem to be known by many. A few of us here are just trying to point them out given the same old articles get put up.


think we have moved on to what certain current paper value us humans believe it's worth to the ultimate tender of exhange -GOLD- respected as honest money for thousands of years--An hoarded in time of distrust of tenders of exhange-

I had a look on trademe to see what the types of people were like buying gold and silver. One buyer appeared to have bought all the silver he could get his hands on...I didn't look to far down his previous trades, but the first 10 or so were all silver spoons. Another bought a gun...he was preparing to head for the hills by the looks (waterproof torch was there too).

Heres a wee tip for you: The central bank doesn't necessarily have to have the 'printing presses' on to create money. They can simply debit the cash to the balance sheet...so they don't literally always turn the printing presses on :t_up: Can't get cheaper than that mate.

[elZorro]

Like what? Paintings would come to mind...but then paintings are bought to hang on the wall to show off, and admire the extreme skill some artists have. Gold is put away in a vault and never looked at again 'its just there.'



The paper you talk about is a promissory note of exchange. It is perfectly logical, as it is an efficient means of trade. Much more efficient than say, bartering (i.e. it would be difficult to form a market place where you could do some accounting work for your car to be fixed....but by selling your service and receiving a form of exchange, 'paper notes', you can go and get that car serviced instantly and more efficiently). To use gold instead of paper is EXACTLY the same concept....the only difference is:
-It is costly to produce
-Harder to bend to put in your wallet.

Gold also has the flaw that its supply would be determined by the geological challenges the earth provides us. If you look back a few pages, I posted some facts, one being that we were more in recession than out of it for over 100 years when under the gold standard.



Thats a strange concept, JB. If I were to build a mountain of dirt for the rest of my lifetime, with a digger....would you consider it to have some worth just because it was costly?



Yes, but the fundamentals behind it don't seem to be known by many. A few of us here are just trying to point them out given the same old articles get put up.



I had a look on trademe to see what the types of people were like buying gold and silver. One buyer appeared to have bought all the silver he could get his hands on...I didn't look to far down his previous trades, but the first 10 or so were all silver spoons. Another bought a gun...he was preparing to head for the hills by the looks (waterproof torch was there too).

Heres a wee tip for you: The central bank doesn't necessarily have to have the 'printing presses' on to create money. They can simply debit the cash to the balance sheet...so they don't literally always turn the printing presses on :t_up: Can't get cheaper than that mate.

UU, that must be a record in lame posts..

Hypothetically, someone might be keen on saving some of their hard-earned money for a few years. They might not be in a position to use that money inside a business or in other productive sectors, so gold is worthy of consideration.

Do you suggest that the money could be: put in a savings account, hidden in note form around the house, invested with a finance company, invested in standard stocks as part of a fund (excluding mining sector of course), put in a super fund, used to purchase a car or a rental house, etc etc. All of these options would see the saver losing money in the current environment, by comparison with simply holding gold. If/when things come right, maybe your point of view would be easier to validate.

[JBmurc]

well the facts speak volumes UU you should head round to the NZ mint or local jewelry an rant to them how over valued an worthless GOLD is LOL tell us how you got on..

when people are talking about Gold via currency it's more so as a backing to the paper tenders of exchange so yes it will be held in the banks vaults but the ultimate is holding the PGM in your own vault -personal I'm all for free choice in holding assets IMHO holding Silver bullion will return a sizable return in years to come so far for me it's gone from $25-$35oz thats if I was trying to buy 1oz rounds in bulk

[upside_umop]

UU, that must be a record in lame posts.. How?


Hypothetically, someone might be keen on saving some of their hard-earned money for a few years. They might not be in a position to use that money inside a business or in other productive sectors, so gold is worthy of consideration.

No it's not! With a risk equivalent to that of the stockmarket and returns less than govt bonds...gold is not a worth consideration.


Do you suggest that the money could be: put in a savings account, hidden in note form around the house, invested with a finance company, invested in standard stocks as part of a fund (excluding mining sector of course), put in a super fund, used to purchase a car or a rental house, etc etc. All of these options would see the saver losing money in the current environment, by comparison with simply holding gold. If/when things come right, maybe your point of view would be easier to validate.

Savings account: Yes
Hidden in note form around the house: No...I've never advocated that. Although I do have a $100 note as a book mark for my investing books. Currently, its in 'The intelligent investor' by Benjamin Graham.
Finance company: Depends. Some offer risk free rates well in advance of the risk free rate. You do the maths and work it out with old Sharpe's ratio.
Investing in standard stocks excluding the mining industry: Depends your time frame. Stocks are inherently risky. Mining stocks more so. In saying that, the two best performing capitals markets over the last 110 years or so have been the Australian and South African markets.
Superfund: Depends how old you are. If your 62 and wanting it out when your 65, then why not. (Excludes possibility entitlement age rises).
Purchase a car: Some vintage cars go up in value. I don't know alot about investing in cars sorry. Ask Serpie/Gazprom.
Rental house: I would'nt right now. I've been advocating this for quite a while...rental houses as a whole are relatively unproductive, but I guess we still need them.
All these options lost money against gold? Wow! What foresight you have with such hindsight! lol Seriously EZ? Did you not see Strats charts in AUD over the last 6 months or so?

If you want to protect yourself against inflation (and not speculate), buy some TIPS. Then take out some forward cover over a basket of currencies. Then you have a risk-free, inflation hedge. Gold is not risk free (annual volatility around 20% with returns less than govt bonds over the long term).

I'll be waiting for the EZ-O'meter to pick when the bubble has ended...We will all be trillionaires :D :D :D

Also, given you guys are so hell bent on inflation (which was actually deflation in the last quarter), have you thought of the consequences of the decrease in Money Supply to due foreclosures? I.e. People failing to pay money on their promises? Then, work out the multiplier effect on these. Is it actually that bad then?

[upside_umop]

well the facts speak volumes UU you should head round to the NZ mint or local jewelry an rant to them how over valued an worthless GOLD is LOL tell us how you got on..

I've never said jewelry didn't have value...as it obviously does. People buy it and get joy from it. Intangible benefits if you like. But hoarding? LOL as you say.


when people are talking about Gold via currency it's more so as a backing to the paper tenders of exchange so yes it will be held in the banks vaults but the ultimate is holding the PGM in your own vault -personal I'm all for free choice in holding assets IMHO holding Silver bullion will return a sizable return in years to come so far for me it's gone from $25-$35oz thats if I was trying to buy 1oz rounds in bulk

What difference does that make? So your saying it's still ok to print money with gold as backing? I don't see what the difference is apart from having spent billions, and billions to dig the stuff up? (And of course some sense of perceived confidence...like if we were to go back to the stone ages, the central banks could trade gold with each other LOL).

Silver at least seems to be productive.

[peat]

i guess its obvious and stated already by others but the continued devaluations of all the major currencies through quantitative easing v2 is clearly a major factor in demand for PM's. BoE, Fed, BoJ, ECB have all acted in various ways to debase their currencies and the fact is they are happy to compete in the race to the bottom in an attempt to stimulate demand both internally (low interest rates) and externally (low exchange rates). Even BoJ is now resorting to selling yen to hold up USD/JPY rate and of course (and I dont know why NZ doesnt do this a bit more to be honest) if a nation state is selling their own currency to prevent its appreciation against others there is of course potentially an unlimited supply!

The alternative to fiat is hard assets and gold is the winner at the moment though I still believe silver is a better choice as it has that 'actual use' side of the demand/supply equation covered whereas gold merely glistens. I do still think theres a reasonable chance that serious deflation will knock commodity prices and that may affect gold and silver as well. I've reduced my virtual silver holdings now by selling into the rallies, possibly too soon but c'est la vie. Will only sell the physical when prices are fully parabolic or I need to so as to eat.

It seems to me that while its happening quite slowly and one would think lessons from history had been learned , the major governments are in fact repeating the same mistakes as in the 30's. USA is bitching about the yuan passing passing trade barrier legislation, China is retaliating and holding back the real earths from Japan , wide social unrest in Europe - the signs are all there for further escalations in tension at all levels. The bottom line is when everyone is feeler poorer they become more insular and self centred especially politicians who are not focussed on the long term good but only the retention of power.

Stock markets and currencies seem to be doing a lot more of 'the megaphone pattern', a broadening wedge shape with both higher highs and lower lows indicating a fundamental uncertainty with volatile swings in sentiment brought about from fleeting factors - a kind of speculative schizophrenia.

Have a good weekend ;+)

[elZorro]

How?

No it's not! With a risk equivalent to that of the stockmarket and returns less than govt bonds...gold is not a worth consideration.

Savings account: Yes
Hidden in note form around the house: No...I've never advocated that. Although I do have a $100 note as a book mark for my investing books. Currently, its in 'The intelligent investor' by Benjamin Graham.
Finance company: Depends. Some offer risk free rates well in advance of the risk free rate. You do the maths and work it out with old Sharpe's ratio.
Investing in standard stocks excluding the mining industry: Depends your time frame. Stocks are inherently risky. Mining stocks more so. In saying that, the two best performing capitals markets over the last 110 years or so have been the Australian and South African markets.
Superfund: Depends how old you are. If your 62 and wanting it out when your 65, then why not. (Excludes possibility entitlement age rises).
Purchase a car: Some vintage cars go up in value. I don't know alot about investing in cars sorry. Ask Serpie/Gazprom.
Rental house: I would'nt right now. I've been advocating this for quite a while...rental houses as a whole are relatively unproductive, but I guess we still need them.
All these options lost money against gold? Wow! What foresight you have with such hindsight! lol Seriously EZ? Did you not see Strats charts in AUD over the last 6 months or so?

If you want to protect yourself against inflation (and not speculate), buy some TIPS. Then take out some forward cover over a basket of currencies. Then you have a risk-free, inflation hedge. Gold is not risk free (annual volatility around 20% with returns less than govt bonds over the long term).

I'll be waiting for the EZ-O'meter to pick when the bubble has ended...We will all be trillionaires :D :D :D

Also, given you guys are so hell bent on inflation (which was actually deflation in the last quarter), have you thought of the consequences of the decrease in Money Supply to due foreclosures? I.e. People failing to pay money on their promises? Then, work out the multiplier effect on these. Is it actually that bad then?

UU, your post is lame because you haven't bothered to spend any time reading previous posts, where most of your arguments have been slaughtered several times over.

In the last few months the Aussie dollar has climbed against the US$, and so the gold performance over the ditch has been relatively flat. But go back a year or three and look at the plot then, as I posted just the other day. And don't try the old contrarian trick of showing graphs for the last 100 years. My post was a comment on what to do for the next few years, based on what has happened in the last few years.

In the last few years many people were hoodwinked in NZ with finance companies, giant ponzi schemes most of them, fed by brokers. Bluechip etc, property investments. Tower Super has/had the most outrageous penalty fees for funds withdrawal before due date. And they got away with it.

How many investors are proactive like you guys, who are able to use TA etc to sell shares on the market when they dip too much. I've seen the effect when all of you are twiddling your thumbs, all on the sidelines. How is that an investment? It's gambling, just like the goldbugs must be doing, according to you.

We have to stop looking at gold through Western eyes. In India and China, possibly Africa later, are hundreds of millions of small investors who will buy some gold for very good reasons, and there is your demand, and your insurance, up to a certain point.

[JBmurc]

That's the thing with the anti-golders they've been proven wrong for a very long time an will continue to be they just don't get it or care to get it which is fine I personal wouldn't hoard Gold bullion when silver is a much better investment for that purpose -I respect Gold as a valuable asset just as I see a well built house as being a asset

[upside_umop]

Just remember when its all falling around you EZ....EZ come, EZ go! LOL

Here's a good article for you.

http://www.smartmoney.com/investing/economy/5-hidden-costs-of-gold/

5 Hidden Costs of Gold

ROCKVILLE, Md. (MarketWatch) There?s a lot of talk right now about how gold is booming, and how gold bugs who have been stashing bullion under their mattresses over the last decade or so have made a killing.

That may be true if you look at the price of the yellow stuff per ounce. The price of an ounce of gold is up about 30% in the last year, or over 400% in the last 10 years. How does that relate to actual returns for investors?
The truth is that gold has steep hidden costs, and that looking at the numbers on paper doesn?t tell the whole story. Here are big costs many investors overlook.

Higher taxes

The affinity for gold investing and a dislike of the government seem to go hand in hand, from predictions that massive government debt will render the dollar worthless to conspiracy theories that there will be another Executive Order 6102 in which Uncle Sam loots your safe deposit box and seizes your gold.
But the biggest reason for gold investors to get mad at the feds is their tax bracket. The IRS taxes precious metal investments ? including gold ETFs like the SPDR Gold Trust (GLD: 127.91, -0.04, -0.03%) and iShares Silver Trust (SLV: 21.31, -0.09, -0.42%) ? as collectibles. That means a long-term capital gains tax of 28% compared with 15% for equities (20% if and when the Bush tax cuts expire next year).
While you may see your gold as a bunker investment, the IRS will treat you the same as if you were hoarding Hummel figurines. And that means a bigger portion of your gold profits go to the tax man.

Zero income

Just as the math game on gold price appreciation doesn?t tell the whole story, the lack of regular payouts is another reason why the long-term profits quoted in gold are incomplete. Many long-term investors can?t afford to stash their savings in the back yard for 20 years. Income is a very valuable feature of many investments and gold simply doesn?t provide that. Read about seven dividend stocks with better than 11% yield.
Remember, simply looking at returns in a vacuum can?t tell you whether an investment is ?good? or ?bad.? Is it a good idea for a 70-year-old retiree on a fixed income to bet on penny stocks because they could generate huge profits? Even if those trades pay off, 99 out of 100 advisers would say something akin to ?You got lucky this time, but don?t tempt fate. Quit while you?re ahead and don?t be so aggressive.?
Similarly, the volatile and income-starved gold market is not a place for everyone. Just because past returns for gold have been so stellar, that does not mean that gold is low risk or that investors who need a secure source of regular income will be well-served.

Gold scams take a toll

In a previous article, I detailed gold coin scams in detail. They include false gradings on the quality of the coins, the use of cheaper alloys instead of pure gold and even brazen scams where you don?t actually even own the gold that you buy. And that?s just on the coins front. Scams abound in pawn shops and ?cash for gold? enterprises that refuse to give you a true value for your jewelry or other gold items. Read about five gold coin scams.

You?d think it would be obvious that precious metals should never be purchased from anyone other than a broker or seller of good repute who provides proper documentations. But many investors fail to do their homework, or worse, can?t tell forged documents from real ones.
Gold is ready-made to be a retail sales item, and with that comes all manner of unscrupulous activity. Vigilant investors can protect themselves, but do not underestimate the very real price of being taken to the cleaners by a gold scam if you don?t do your homework.

High ownership and storage costs

Maybe through some creative accounting or selective amnesia at tax time you can mitigate the tax burden of gold. But one expense you can?t as easily avoid is the high ownership cost of gold. After all, it?s not like you mined it yourself ? and all those middlemen between the ore and you want to get paid.
The first is that old tightwad Uncle Sam again. Even if you can avoid him going on the capital gains front, he gets you coming into gold via sales tax on most jewelry and coins. And then there are the high transaction costs and commissions that gold can carry. Anyone who has bought jewelry knows significant markups are part of the precious metals trade, and that?s the same for investment gold as it is for engagement rings. The bottom line is that some of your initial buy-in goes towards the business of gold and you?ll never get it back, not unlike realtor fees or broker fees.
And then there?s the additional cost of storing your gold. You have to pay a fee for a safe deposit box, and if you have a lot of gold, that can run you a few hundred bucks a year for a good-sized box. Of course if you?re afraid of that Order 6102 scam pulled by FDR you likely have your gold at home in a safe ? so that?s a one-shot deal. But are you really foolish enough to distrust the government but trust your gold stash to be safe without insurance?
The presumed ?safety? of gold is good on paper, but obtaining the actual metal and keeping it safely stored is a costly endeavor.

Yes, gold can lose value

Proponents of gold love to claim that gold has never been worthless like Lehman Bros. or GM. And while this is true on its face, it is actually a half-truth. While gold may never become worthless, it is foolish to think it will never lose value.
Consider that after reaching a record high of $850 per ounce in early 1980, gold plummeted 40% in two months. The average price for gold in 1981 fell to a mere $460 an ounce ? and continued nearly unabated until bottoming with an average price of around $280 in 2000. For those folks in their 40s and 50s who bought gold at that 1980 high, it took them 28 years to reclaim the $850 level. That?s hardly much of a retirement plan, unless they lived to be 80 or 90 and just cashed out recently.
Gold is an investment, period. And no matter how gold bugs spin the metal as a hedge against inflation and a sure thing that will only go up, gold can lose its value ? sometimes in a hurry, as in the early 1980s.


Jeff Reeves is the editor of InvestorPlace.com . Follow him on Twitter at twitter.com/JeffReevesIP

EZ, my arguments are inline with those like Warren Buffett and Charles Munger. Your saying they're arguments have been slaughtered too? I.e. The most successful investors of all time?

That was a well balanced post Peat. Keep it up. :t_up:

[STRAT]

In the last few months the Aussie dollar has climbed against the US$,.Hi elZorro.

Been a little bemused by the passion in the last few pages from everyone and no body in particular but I think you have inadvertently pointed to the key which may be the flaw in everyones argument. Has the Aussie dollar climbed or has the US dollar fallen.

The most important number to anyone in NZ with gold under the bed in NZ is the NZ/US exchange rate I would have thought.

Sill reckon you fellas are all accidental FX traders with Armageddon insurance :p but if you are making a dollar, power to you.

Hi Oooomop.
Nothing like playing the morality card for stirring things up eh?:lol:

[elZorro]

Hi UU, at least I've got you thinking about backing up your comments, but that latest cut/pasted article might apply to an uninformed American investor, but not to someone out this way who buys certified gold/silver at the right price, and stores it in a discreet home safe. But I've said all along, if you believe the gold/silver story will continue, holding gold (and prospective gold) in the ground in the form of producing miner shares is probably a much smarter investment, and it has many productive aspects. Jobs, service industry, tourism, upskilling, etc.

JB has already pointed out several times that the peak gold price in 1980 was only there for a few hours, and very few investors would have been stuck with those prices, or anything near them. What about many NZ finance company investors, how did that compare? They'll never get their money back, it's gone.

Maybe you didn't look at the Munger feedback article, but anyone who writes a story about the hazards of gold hoarding, while being evasive about their firm's recent heavy interest in silver hoarding for several years, has to be a big jerk himself.

Strat, thanks for your comments. I don't have ready access to a chart of gold price in NZ against the NZ$ value against a basket of currencies. That would be interesting to see, for the last few years.

[inghamp]

Nicely said :)


i guess its obvious and stated already by others but the continued devaluations of all the major currencies through quantitative easing v2 is clearly a major factor in demand for PM's. BoE, Fed, BoJ, ECB have all acted in various ways to debase their currencies and the fact is they are happy to compete in the race to the bottom in an attempt to stimulate demand both internally (low interest rates) and externally (low exchange rates). Even BoJ is now resorting to selling yen to hold up USD/JPY rate and of course (and I dont know why NZ doesnt do this a bit more to be honest) if a nation state is selling their own currency to prevent its appreciation against others there is of course potentially an unlimited supply!

The alternative to fiat is hard assets and gold is the winner at the moment though I still believe silver is a better choice as it has that 'actual use' side of the demand/supply equation covered whereas gold merely glistens. I do still think theres a reasonable chance that serious deflation will knock commodity prices and that may affect gold and silver as well. I've reduced my virtual silver holdings now by selling into the rallies, possibly too soon but c'est la vie. Will only sell the physical when prices are fully parabolic or I need to so as to eat.

It seems to me that while its happening quite slowly and one would think lessons from history had been learned , the major governments are in fact repeating the same mistakes as in the 30's. USA is bitching about the yuan passing passing trade barrier legislation, China is retaliating and holding back the real earths from Japan , wide social unrest in Europe - the signs are all there for further escalations in tension at all levels. The bottom line is when everyone is feeler poorer they become more insular and self centred especially politicians who are not focussed on the long term good but only the retention of power.

Stock markets and currencies seem to be doing a lot more of 'the megaphone pattern', a broadening wedge shape with both higher highs and lower lows indicating a fundamental uncertainty with volatile swings in sentiment brought about from fleeting factors - a kind of speculative schizophrenia.

Have a good weekend ;+)

[STRAT]

Strat, thanks for your comments. I don't have ready access to a chart of gold price in NZ against the NZ$ value against a basket of currencies. That would be interesting to see, for the last few years.Let me know the time frame and which currencies you want and I will whip one up later for ya

[peat]

[/URL]

[URL="http://www.infomine.com/investment/charts.aspx?mv=1&f=f&r=10y&c=cgold.xnzd.uoz#chart"]Chart of Kiwi/Gold 10yr (http://www.infomine.com/investment/charts.aspx?mv=1&f=f&r=10y&c=cgold.xnzd.uoz#chart)
go from there. (http://www.infomine.com/investment/charts.aspx?mv=1&f=f&r=10y&c=cgold.xnzd.uoz#chart)

[inghamp]

well the facts speak volumes UU you should head round to the NZ mint or local jewelry an rant to them how over valued an worthless GOLD is LOL tell us how you got on..

when people are talking about Gold via currency it's more so as a backing to the paper tenders of exchange so yes it will be held in the banks vaults but the ultimate is holding the PGM in your own vault -personal I'm all for free choice in holding assets IMHO holding Silver bullion will return a sizable return in years to come so far for me it's gone from $25-$35oz thats if I was trying to buy 1oz rounds in bulk


Speaking of NZ mint and the like (e.g. Perth Mint). Their prices in fractions of an ounce are not very competitive and supply is variable.

I now get mine from here: http://goldsave.co/

[JBmurc]

just sold some Silver bullion 1oz rounds the other day just freeing up some cash with GST increasing are house building costs up 10k ended up getting average sell price after costs $34ea paid $27ea inc all costs earlier in the year(25% return for 6months),only selling a small amount of my Silver bullion as Silver will go much higher , wish I didn't have to sell any be worth another 25% more early next year at the worst IMHO ..

Now what have you anti bullion guys been getting at the bank for the last 6months ?

[Skol]

That's the thing with the anti-golders they've been proven wrong for a very long time an will continue to be they just don't get it.

A real sign of a bubble, they "just don't get it".

The exact words Jeffery Skilling of Enron fame and now incarcerated for many years used to scold his employees with when they expressed reservations about the firms accounts, and you all know what happened to Enron.

[upside_umop]

Now what have you anti bullion guys been getting at the bank for the last 6months ?

That's ridiculous comparing silver bullion vs bank deposits. The relative risks are completely different!

It's just like old EZ here trying to saying that gold is a store of value and advocates it over TIPS? I just don't get it.

What you guys don't seem to get is that investing in bullion...is actually speculating.

I speculate sometimes too (MEO at the moment, oh and also some AUD on iPredict :scared::scared:), but I don't try and compare its returns vs the bank, as they're not comparable.

Where do you think we are now on the chart?
2955

[robo]

probably somewhere between anxiety and hope !!

[Skol]

Nice work there UU, goldbugs feeling very excited about their punt at the moment if you read between the lines.
The euphoria stage is where the punters feel they're invulnerable and on the road not to riches but super-riches and find it impossible to cash out because they're right and everyone else is wrong.
I actually don't think we're close to the euphoria stage but it's not that far off and JB with his guess that it's got a few years to go could prove to be his undoing.

[JBmurc]

A real sign of a bubble, they "just don't get it".

The exact words Jeffery Skilling of Enron fame and now incarcerated for many years used to scold his employees with when they expressed reservations about the firms accounts, and you all know what happened to Enron.

Yeah that's right I'm wrong 1095 gold will be the high going lower from here...

What you guys don't seem to get is that investing in bullion...is actually speculating an

giving your funds to a- bank ,bonus bond,property,blue chip,bridgecorp it pays a yield it's safe right...not speculating safe..

buying Bullion is speculating!---- it's only a precious metal to human kind ( 25% in 6months is 25% more in my book "speculating" assets are assets IMHO some go up more than others some investor think a countries tender of exchange with some yeild is a safe different investment than a precious metal or land, etc I think a assets is a assets as long as another wants it.
I use to own 7 very rough sections of titled land in invercargill paid 15k ea sold 42k They only months ago sold for 15kea again at auction some 14-16 months after I sold them..

[POSSUM THE CAT]

What do you Gold Bugs think of the Paynes Find Gold Ltd. IPO tenements Please

[lewinsky]

i am not too convinced about Bonus Bonds providing a yield. Mine certainly haven't and pale into comparison with a share like IGR which has doubled in the last three months.

Research Capital Report release a very good commentary quarterly on gold. Their quote from friday's report is worth noting here.


"So how does one go about predicting the gold price from here? In this
Review, we argue it is no longer about analysing gold’s fundamentals,
but more about analysing market psychology, the almost total lack of
trust in most asset classes, and the predominance of a ‘crisis mentality’.
At the moment it seems that gold (and other precious metals), as safe
havens, are virtually the only investment vehicles that can be trusted.
If other asset classes start to regain the market’s trust, the need for a
safe haven is reduced. In this scenario gold’s fundamentals look
precarious. That will happen in time, and we believe gold will eventually
come off and re-test US$1,000/ounce. However, it is hard to bet on this
happening in the short-medium term, particularly with the US dollar
under renewed pressure and sovereign debt fears that won’t dissipate
for some while. So we think gold could continue to set records. Our
expectation for the balance of calendar 2010 is US$1,325/ounce. Into
2011, higher prices could prevail in the first half, but eventually the
gold’s unique safe haven appeal will start to dissipate, our guess (and it
is only a guess!) in the second half of 2011."


I agree the speculation is not so much on gold prices but on the speculation that the US will print more money and thus the greenback will continue to fall, and the number of middle class Indians and Chinese will increase so increasing the demand for a metal that is harder to find.

Speculation?????? More like analysing the market and making an informed decision.

Happy holder of IGR,OGC and RMS.

LEW.

[upside_umop]

i am not too convinced about Bonus Bonds providing a yield. Mine certainly haven't and pale into comparison with a share like IGR which has doubled in the last three months.

I agree the speculation is not so much on gold prices but on the speculation that the US will print more money and thus the greenback will continue to fall, and the number of middle class Indians and Chinese will increase so increasing the demand for a metal that is harder to find.

Speculation?????? More like analysing the market and making an informed decision.Happy holder of IGR,OGC and RMS.

LEW.

LEW.

Bonus bonds are as safe as having money in the bank. The reason your not experiencing abnormal returns is due to the distribution of such returns. As you can see below, most of the distribution is in large sums. To get an 'average return' you would need a sufficiently large deposit to make an appropriate size of the population, and even then you won't be guaranteed the return. Individuals buying Bonus bonds will be exposed to risk, as by definition, the expected return will usually differ from actual return. However, if you were to buy all the bonus bonds outstanding, the risk would be substantially reduced.

I'm not advocating buying BB. As far as I'm aware the average return is actually lower than normal bank deposits. It's a hell of a lot better than lotto though, where your expected return is cents in the dollar rather than $1+cents as with BB.

Bonus bonds (http://en.wikipedia.org/wiki/Bonus_Bonds)

Bonds are invested in safe assets such as corporate securities, government bonds (http://en.wikipedia.org/wiki/Government_bond) and securities issued by banks. NZ$ (http://en.wikipedia.org/wiki/New_Zealand_dollar)7.9 million, consisting of 248,000 random (http://en.wikipedia.org/wiki/Random_number_generation) tax-paid cash prizes is awarded monthly based on the amount invested, with three top prizes: 1x $1,000,000, 5x $100,000 and 5x $50,000. A minimum $20 is required to be eligible for the draw, and investors must have held bonds for a full calendar month.[1] (http://en.wikipedia.org/wiki/Bonus_Bonds#cite_note-BonusBonds-0) As of 30 September 2007, Bonus Bonds have paid out NZ$2,921,000 (almost $3 billion NZD) in more than 3 million tax-paid cash prizes.

Speculation. Does gold meet the definition per below? I would say probably. Gold has the risk of equity with returns of less than quarter the real returns of capital markets over the long run.

Intro from wikipedia. (http://en.wikipedia.org/wiki/Speculation)

In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum (http://en.wiktionary.org/wiki/principal#Noun).[1] (http://en.wikipedia.org/wiki/Speculation#cite_note-Graham.2C_Benjamin_1951-0) Speculation typically involves the lending of money or the purchase of assets (http://en.wikipedia.org/wiki/Assets), equity (http://en.wikipedia.org/wiki/Stock) or debt (http://en.wikipedia.org/wiki/Bond_(finance)) but in a manner that has not been given thorough analysis or is deemed to have low margin of safety (http://en.wikipedia.org/wiki/Margin_of_safety_(financial)) or a significant risk of the loss of the principal investment. The term, "speculation," which is formally defined as above in Graham (http://en.wikipedia.org/wiki/Benjamin_Graham) and Dodd (http://en.wikipedia.org/wiki/David_Dodd)'s 1934 text, Security Analysis, contrasts with the term "investment," which is a financial operation that, upon thorough analysis, promises safety of principal and a satisfactory return.[1] (http://en.wikipedia.org/wiki/Speculation#cite_note-Graham.2C_Benjamin_1951-0)

I'm going to stop answering silly statements on relative risks, as I thought/think they are quite apparent.

[inghamp]

Hi Guys,

Just curious to know what you all think will be the side effects of the coming inflationary cycle in the US and other countries..

I realise it's hard to quantify :)

[Skol]

I've just been reading an article in a Thai newspaper about the spike in the gold price by Kenneth Rogoff, professor of economics at Harvard University.
Rogoff's at a loss to explain the gold price, and put it down to possibly new financial instruments making it easier to speculate on gold or emerging market populations buying gold.
He refers to 1980 as a 'freak peak' and says that at $1300 todays price is probably more than double very long term, inflation adjusted, average gold prices.
Says its a risky bet but says it makes sense if you want to insure yourself against extreme events, but an inflationary episode could cause gold to plummet.

[lewinsky]

Gold up to over $1,340 per ounce overnight.
As per my earlier post, this is a reaction to the fact that the US Economy is doggy doo, along with a few others.
So is investing in gold or gold shares speculation.
My answer is no, if you do your research and analysis and then invest. The same applied to Uranium about three years ago, and applies to Rare Earths now.

My previous post about Bonus Bonds stands. Bonus Bonds do not provide a yield. Their marketing blurb refers to prizes not providing a yield. It is a gamle that you are going to get a prize and your neighbour isn't.

If you are wanting a similar investment that does provide a yield go for the OMH Capital Guarantee Funds. Your $ is protected and the guarantee increases as the fund performs.

Gold will adjust, at which stage some other commodity will appear, wheat, gas,uranium?

In the meantime, enjoy the ride it has a little way to go yet in my view.

LEW.

[trackers]

Gold reaching new highs, amazing..

Glad I've got decent exposure to goldies.

Skol, gold looks to have risen about 40% since you started saying it would fall?

[Huang Chung]

I've just been reading an article in a Thai newspaper about the spike in the gold price by Kenneth Rogoff, professor of economics at Harvard University.
Rogoff's at a loss to explain the gold price, and put it down to possibly new financial instruments making it easier to speculate on gold or emerging market populations buying gold.
He refers to 1980 as a 'freak peak' and says that at $1300 todays price is probably more than double very long term, inflation adjusted, average gold prices.
Says its a risky bet but says it makes sense if you want to insure yourself against extreme events, but an inflationary episode could cause gold to plummet.

Skol, we know you WILL be right...eventually.

In the mean time, you keep searching high and low for reasons not to go with the flow, and make some decent coin along the way.

[Lego_Man]

Skol, we know you WILL be right...eventually.

In the mean time, you keep searching high and low for reasons not to go with the flow, and make some decent coin along the way.

Yeah, it's almost like he's angry at gold.

[asc4]

http://www.cnbc.com/id/39518770

Forget the Bears and Their Gold Bubble
Published: Tuesday, 5 Oct 2010 | 6:16 PM ET

By: Drew Sandholm

The Dow closed up 193 points and the S&P climbed 2.1 percent Tuesday, Cramer said, yet the bears don't care if they kept you out of the rally. Instead, they're busy talking about a bubble in gold, which Cramer discounted.

To better understand who these "perma bears" are, Cramer considered their psychology during "Mad Money."

The bears are those individuals who missed the whole run, Cramer said. Since the generational lows of Dow 6,500, they've told you to get out of stocks. Every tick higher, they've recommended avoiding or even shorting gold. For the last $300 of upside, they've described the precious metal as a "bubble." They get out their negative views in articles published online or on television programs that seek to explain gold's single-day decline. In doing so, they discount the difficulty of finding and mining gold. There is no consideration of its scarcity and the precious metal is said to have speculative, not natural demand.

The gravitas of the bears never ceases to amaze Cramer.

"Do you really want to hear from someone who missed the whole move, especially when that move was so large and so lucrative?" he asked. "It should be embarrassing for anyone who told you to bet against the rally in gold to come out and talk about it on TV. ... They should be hiding their heads in shame, kicking themselves for being so wrong. Instead they go on television and act like they have all the credibility in the world."

The problem, he said, is that interviewers fail to press the bears on their failed calls.

Cramer said the propensity to call everything a bubble is a public relations "work of genius" on their behalf. For them, any time anything goes up, it’s a bubble. Nouriel Roubini, for example, has gotten plenty of mileage out of this "bubble" call ahead of the Great Recession. Had the markets gone up in late 2008, he still could have said it was a bubble.

"In the vernacular, that’s known as ‘great TV.’ The bubble call is a homerun," Cramer said. "If you get a big decline, you're clearly a genius. But if the market does nothing or even goes higher, you’re not wrong, you’re 'controversial.'"

Cramer discounted the idea of a gold bubble. Mining executives have expressed the difficulty in extracting the precious metal. Even as the price continues to climb, gold has become more difficult to mine. Of course, Cramer said the bubble-calling bears don't consider these concerns. Furthermore, Cramer said from terror alerts to political uncertainties to monetary easing, it makes sense that people would be buying more gold now. The factors that caused gold to underperform in the past are no longer there, like miners hedging and central banks selling mass quantities of the stuff.

"Forget the bubble talk," Cramer said. "I think this stock market's going to go up significantly by year end, maybe double the 4 percent that it's up for the year right now."

Within the next two years, Cramer said, gold could climb to $2,000 an ounce.

[elZorro]

Let me know the time frame and which currencies you want and I will whip one up later for ya

Hi Strat, been away from computer: how about the last 8-10 years, NZ,AUS and US currencies. Cheers.

[Skol]

Yeah, it's almost like he's angry at gold.

Hardly, I like my wealth and try to preserve it the best I can along with a reasonable degree of risk.
The gold price is increasing daily and it seems to me that everyone's piling in and it's going to reach the euphoric stage much earlier than expected.
There's a new generation of goldbugs that have never been caught in a crash and think they're bulletproof. Many are naive enough to think they can get off the train in time or if you check goldbug websites you'll see that in the event of a correction they'll top up, but it doesn't work like that, so we'll eventually see an new underclass of povertystricken goldbugs like 1980.
The government won't come to the rescue on this one like SCF.
I think it's going to get ugly much sooner than expected.

I got the same stick when I predicted the oil bubble will pop, but up $50 or so in a week?
This bubble is getting very exciting and I follow it on the news every day, Jim Rogers guessing it'll be $2000 and punters who follow these psychics becoming more confident they're on the road to riches.
History repeats itself all the time, I see it in the business I'm in, management changes so often there's no collective memory, so they're constantly re-inventing the wheel and doing things that have all been done before.

[macduffy]

Well of course an alternative strategy has been to buy a few gold mining shares and to take profits from time to time. It's worked well for me with IGR and OZL - more copper than gold, that one - although arguably I've sold too many too soon.

Hanging on to the rest meanwhile.

[inghamp]

I don't think we are even close to the bubble yet.

This increase is mostly due to those in the know. I talk about gold and silver at work all the time. Have been saying to people for at least a year now.. buy gold.. they think i am a looney lol

When that attitude changes I will definitely start watching for the bubble mania.

But right now we aren't even close. The effects of stimulus have yet to kick inflation into high gear.. The buying right now is directly related to fed etc continuing their quantitative easing. The average Joe doesn't have clue how all this works.

When the inflation kicks in they will all jump on board. That's when the mania will occur. Not yet.

And yes I am hoping for a correction. Starting to doubt we will get one though.

Skol you are admirably ever the pessimist with regards to gold.. Your thoughts on what could cause a correction (other than traders profit taking)?

[Skol]

Skol you are admirably ever the pessimist with regards to gold.. Your thoughts on what could cause a correction (other than traders profit taking)?

All the experts have different reasons why gold is going up, currency, the dreaded QE, USD, there's a plethora of them, but I can definitely tell you why gold is going up.
Gold is going up because gold is going up. How's that, the real reason.
It's called herd instinct, but if you check with the goldbugs, it's not 1980, 'it's different this time'.

Whaddya reckon JB?

[stevo1]

Hardly, I like my wealth and try to preserve it the best I can along with a reasonable degree of risk.
The gold price is increasing daily and it seems to me that everyone's piling in and it's going to reach the euphoric stage much earlier than expected.
There's a new generation of goldbugs that have never been caught in a crash and think they're bulletproof. Many are naive enough to think they can get off the train in time or if you check goldbug websites you'll see that in the event of a correction they'll top up, but it doesn't work like that, so we'll eventually see an new underclass of povertystricken goldbugs like 1980.
The government won't come to the rescue on this one like SCF.
I think it's going to get ugly much sooner than expected.

I got the same stick when I predicted the oil bubble will pop, but up $50 or so in a week?
This bubble is getting very exciting and I follow it on the news every day, Jim Rogers guessing it'll be $2000 and punters who follow these psychics becoming more confident they're on the road to riches.
History repeats itself all the time, I see it in the business I'm in, management changes so often there's no collective memory, so they're constantly re-inventing the wheel and doing things that have all been done before.

Here is something from todays Australian on "bubbles" for you skol.

"The surge in global liquidity now underway is likely to provide further fuel to the next major asset bubble which is likely already in the process of forming," he said.

"Potential candidates are gold and commodity prices, emerging markets and resources shares."
comments made by AMP head of investment strategy Shane Oliver
full aritcle here http://www.theaustralian.com.au/business/city-beat/savvy-advice-on-the-next-bubble/story-fn4xq4zx-1225934983381

[Skol]

Hey JB,
What's up with NAV and NAVO?
Gold up $50 and they're headed south.

$1353 - if it keeps going like this the Pog is gonna implode way before Xmas and you'll owe me the red, none from down your way though thanks, I've heard the reds from down south aren't that good this year.

[inghamp]

No where near a bubble in gold

We can't rely on previous statistics around gold. The whole supply/demand equation has changed. The whole supply/demand equation has changed for all commodities..

Emerging markets buying more + currency wars + government debt = long term resurgence in gold and silver.

Don't want to hype it.. I want to buy more next pay at a lower price. Looks like I am gonna luck out there lol

[Skol]

No where near a bubble in gold

We can't rely on previous statistics around gold. The whole supply/demand equation has changed. The whole supply/demand equation has changed for all commodities..

You're probably correct, it's different this time, right? A completely different scenario from 1980.
$1361, wow, we're definitely in euphoria territory, this is very exciting, and I don't own any gold but the consequences are gonna be well worth the wait.
As a student of speculative manias, when this one pops there's going to be books written about it.
And I thought some dude on HC who said gold would be $1366 at years end was a dreamer, the curve must nearly be exponential, rising at $10/day.

Jim Rogers says "right now gold is going straight up, but I'm not selling my gold".

[Huang Chung]

Is gold really in a bubble???

Has it gone up 10 fold, 20 fold?? No.

Is every cabbie and office worker talking about the POG?? No.

Tin is now trading at around $26,000 a tonne...is tin in a bubble also??

[Skol]

I'm in Asia, it was on TV last night, tin's in a bubble.

[shasta]

I'm in Asia, it was on TV last night, tin's in a bubble.

You sure its just not in short supply due to the low number of Tin producers?

[Skol]

As I've mentioned I'm in Asia, and I've just watched a programme on the Australia Channel called 'Mind Over Money' about financial bubbles, efficient market hypothesis, the Tulip craze, the 1929 crash, the leveraging of real estate and the social contagion that followed -watch it if you can.
Experiments carried out at universities with students given money to manage and the subsequent bubble and they ended up with nothing, it's fascinating.

[trackers]

I'm in Asia, it was on TV last night, tin's in a bubble.

Tins not the only thing in a bubble Skol..

:)

[JBmurc]

Yeah, it's almost like he's angry at gold.

LOL he's certainly got issues with hard assets like Gold/Silver personal I enjoy making money an will invest in any asset I believe will increase my wealth be it -Property,Shares,PGM's or Cash


Gold Price Change due to Weakening of US Dollar +2.40
Gold Price Change due to Predominant Buying +11.00
Gold Price: Total Change+13.40
------1347----

Silver-23.22

[JBmurc]

Hey JB,
What's up with NAV and NAVO?
Gold up $50 and they're headed south.

$1353 - if it keeps going like this the Pog is gonna implode way before Xmas and you'll owe me the red, none from down your way though thanks, I've heard the reds from down south aren't that good this year.

Yes NAV been hit down a bit not a big issue my large CFE holding made it a very profitable week ,I am glad to have sold my NAVO at a good price an in turn load up in the NAV at 16.5c this time next year we'll see how NAV's doing they are well placed to be well re-rated on profit /assets IMHO 40c+

[inghamp]

Thought that would get your attention lol

Bubble..

When the likes of Skol says buy gold is when we are truly in bubble territory. The same applies when at a market bottom. When the eternal optimists give up and sells we know we are near the bottom. Same applies here..

So Skol when you start changing your tune is when i start considering selling. haha

[Huang Chung]

I'm in Asia, it was on TV last night, tin's in a bubble.

Skol, I'll bet you The Machine is glad he doesn't share your hyper-sensitivity to alleged bubbles (in this case, tin). He's masterfully ridden KAS from around 5c to over 30c, AND taken profits along the way.

[Huang Chung]

Whoa!

I thought Jim Cramer was a bit unusual. Check Max Keiser out!

http://www.youtube.com/watch?v=00uCbUWG9aE

[JBmurc]

Whoa!

I thought Jim Cramer was a bit unusual. Check Max Keiser out!

http://www.youtube.com/watch?v=00uCbUWG9aE

Yeah max is funny bugger --but his clips are well worth a watch--Jim Cramer wouldn't waste my time watching that drop kick

[Skol]

Well HC one of the most fascinating aspects of the sparring on the Pog is that of all the thousands of posts I've read on here and other forums there isn't a single post anywhere from anyone admitting there's a possibility they'll get their fingers burnt.

By deduction that means 100% of punters expect to get out in time, but you and I are both smart enough to know that in the event of a sudden, unexpected reversal, a 'black swan' if you like, that's not possible.

In fact it's much more likely that 99.9% recurring will suffer losses.
Crashes can happen like a slow motion train wreck like the real estate contagion or at the speed of light where no one survives unscathed.

Such a 'black swan' happened about 25 years ago, largely unknown in the antipodes because not many were affected by it but some guys I know suffered very large losses and there wasn't even any element of herd instinct involved.

In the 1980's interest withholding tax was introduced, so to circumvent this small problem some guys I know sent very, very large sums of money to a bank in London. They would then visit this bank and transfer the money to the Channel Islands where there was no tax, the interest if my memory serves me correctly being about 5.5%.

A harmless enough adventure, even if it did smack of tax evasion, but then the 'black swan' suddenly and unexpectedly appeared.

George Soros took on the Bank of England and won, the Exchange Rate Mechanism fell apart and the pound sterling crashed, so when my mates repatriated their money they got about half of it back.

Who could possibly have anticipated such an event, and is it possible such a 'black swan' could suddenly appear given the acrimonious debate over currencies?

PS.Where have you been JB? Probably trying to flog off some of that silver.

[JBmurc]

PS.Where have you been JB? Probably trying to flog off some of that silver.

busy working Skol I have sold a very small amount for some cash having some major cost over runs on our new house costing a mint still inflation isn't going to hide for much longer building cost wise..

As for you constent bubble warning on Gold .... at what price is it a bubble $1090oz........$1348oz USD... $2000... or is it just aways "now"

I see the FED will soon be the biggest holder of US debt notes ....wish I could just make money out of thin air to take over my debts..

[inghamp]

I would say we are in that right now. ONLY it's for the US dollar. Writings on the wall. They need a game changer to dig their way out of this.

Paper money (US dollar) is brittle and it's breaking. How will they pay that 1 Trillion stimulus off when the interest rates must eventually rise.

They love inflating to keep their economy afloat in recessions but will they raise interest rates to the required levels to stifle the inflation in the economy when it heats up.

It always heats up. It's the business cycle.

They can't raise rates too high. If they do they will not be able to meet their bond payments. Its quite simple.

So inflation comes either way. Raise interest rates to cool economy = Have to do more bond buybacks with newly printed money.
Keep interest rates low = stimulus money causes spike in inflation and the economy will overheat. Bubbles on many asset classes will occur.

So the only logical option is to raise interest at the same time as printing new money.

This is the math investors are doing right now. But its not THE bubble. What will happen when the average person loses faith in the dollar as a store of wealth?

Will they simply stop saving their money? NO. Saving is a human absolute.

[upside_umop]

So the only logical option is to raise interest at the same time as printing new money.

This is the math investors are doing right now.

??


I'm certainly not doing that math!

[elZorro]

UU, I think more are worried about the dollar crashing than you think.. some are even taking great trouble to cover their actions in the meantime. e.g. Skol: aka Brit Alan Simpson.. (http://www.stuff.co.nz/waikato-times/news/4214136/Vaults-built-to-hide-Brits-stash) :)

[Hoop]

Price of gold from an American point of view ....a great rise, nearly doubled in value :):) so it must be a bubble!!!..careful:scared::scared:

http://i458.photobucket.com/albums/qq306/Hoop_1/goldinUS08102010.png

Price of gold from an Australian point of view.....A small unspectacular rise gone up 33%:mellow::mellow:..cant see that bubble you guys are sayin...looks more like a small pair of tits to me, mate....:):):)

http://i458.photobucket.com/albums/qq306/Hoop_1/goldinA08102010.png

[Skol]

This increase is mostly due to those in the know. I talk about gold and silver at work all the time. Have been saying to people for at least a year now.. buy gold.. they think i am a looney lol

And I know who's gonna have the last laugh too.

[JBmurc]

And I know who's gonna have the last laugh too.

I'll be laughing drinking my new bottle of Veuve with gold over 1400 an NAV breaking 30c thanks to Skol LOL

[JBmurc]

UU, I think more are worried about the dollar crashing than you think.. some are even taking great trouble to cover their actions in the meantime. e.g. Skol: aka Brit Alan Simpson.. (http://www.stuff.co.nz/waikato-times/news/4214136/Vaults-built-to-hide-Brits-stash) :)

Yes Crash the dollar wipe the slate clean of debt start again

Now UU whats you true position on USD Gold you have an avatar that shows dollars as toilet paper yet you come across anti bullion the only true opposite store of wealth that's easy trad able

[Skol]

Gold's gone up about 5 times in 10 years in USD.
Oil went up 6 times before it crashed from $147 to $32 and everyone still needed oil, they don't need gold to survive.
When the hoarding stops you better take cover because the reversal will be so quick with modern technology and buy/sell programmes it'll be all over before you get up in the morning.

[Skol]

I'll be laughing drinking my new bottle of Veuve with gold over 1400 an NAV breaking 30c thanks to Skol LOL


hahahahah,
LOL, NAV's at 18c, in the real world JB that's what's called 'hoping' and it's an unfortunate fact of life that 'hope' won't make the share price rise.

[JBmurc]

hahahahah,
LOL, NAV's at 18c, in the real world JB that's what's called 'hoping' and it's an unfortunate fact of life that 'hope' won't make the share price rise.

you should know your,ve been hoping gold will crash for awhile now during that time I've made over 12k profit on NAV now thats a fact

[Skol]

Punters love to flout their gains JB, lets see how many admit their losses when the black swan turns up.

This forum will turn deathly quiet, like HC does when gold starts to head south.

I won't mention who these people are JB but there is a group I associate with who are always into the latest financial craze, invariably they get cleaned out, I've seen it several times in my career.
They're still licking their wounds following the property crash but the moment I hear the word 'gold' mentioned I'll let you know, because that's way past exit time.

[JBmurc]

yes the property crash was a slow moving crash here anyway my last spec here took some time to sell an was well an truly over investing in property many months before it was a losing investment -
I don't believe this current Gold bull market is anywhere near the end of it's run yet but it will come one day as for Silver it will be the one many wished they'd invested in--- a once in a lifetime investment with major growth on the horizon

Punters love to flout their gains JB, lets see how many admit their losses when the black swan turns up.

well it's all on here to read I've nothing to hide I've had bad investments an good ones as of the last 2yrs I'm an others are more than happy with the returns with confindence of more to come

[elZorro]

JB, hypothetically, if I were to diversify into a silver miner, do you have a suggestion at the moment? Cheers.

Also: Why the black swan is some time off appearing (the value of the US$ takes a nosedive). (http://quotes.ino.com/chart/index.html?s=NYBOT_dx&t=&a=&w=&v=dmax)

[Huang Chung]

Hugh Hendry is always worth listening to:

Audio interview embedded.

http://www.businessinsider.com/hugh-hendry-2-billion-bet-asia-2010-9

[JBmurc]

[QUOTE=elZorro;322432]JB, hypothetically, if I were to diversify into a silver miner, do you have a suggestion at the moment? Cheers.

well I hold SVL which looks to be sitting on a sizable resource
also-ARD looking at getting some gold production underway next year has a great silver assets with north of 20moz silver resource in the ground owns 50% will rise to 70% in talking with MD who also sits on the board of the other J.V partner sounds like they will be happy for ARD to take upwards of 90% ownership of the kempfield silver discovery
both are micro caps with risk have penalty info on their threads

TRY has silver production LRS another one to keep an eye on both in the right part of the world for large Silver resources

[lewinsky]

I was going to start a new thread called "there's something about Mary" but decided I had better add her weekend Herald comments here.

"LETS NOT GET MANIC OVER METALS"

"Even if gold and silver prices keep climbing I won't be in any hurry to suggest readers climb aboard"

So Mary, Oceania Gold have predicted they will mine 270,000-290,000 ounces this year. At US$1.330 that makes a pretty compelling investment I would have thought, let alone investments in Tin, Copper and Rare Earths.

Is Mary related to Skol?

Is Mary Skol?

I wonder whether Mary's mattress is packed with $US and she is waiting for a bounceback?

LEW

[macduffy]

But perhaps someone should tell Mary that it's not really a matter of jumping aboard at this stage, but one of getting in early and staying for the ride.

But I guess she'd have a problem writing an article along those lines.

Meanwhile, IGR up again today!

[JBmurc]

I also see in today's local paper NZ tax payers have paid out some 1.9billion to investors that made bad investment decisions an invested into the so-called safe retail deposits
-after today deposits will no longer be protected by the NZ taxpayers-

[inghamp]

And we haven't even started to really see the demand jump in the China. They are marketing this heavily over there from Chinese govt banks of all places. Chinese are cautious like anyone else.. They will be watching these price rises and they (the middle class) have a lot of sidelined capital (majority savers).

ON that note.. I am biased.. I just bought another 1kg silver from here: http://goldsave.co/

Storing it at Viamat Switzerland to save on shipping costs.

[airedale]

But perhaps someone should tell Mary that it's not really a matter of jumping aboard at this stage, but one of getting in early and staying for the ride.

But I guess she'd have a problem writing an article along those lines.

Meanwhile, IGR up again today!

Mary has been droning on about diworsification for years. She is never going to change. She probably still has her original Post Office Savings Account. But there again.....it is suitable for a newspaper not wanting to upset their readers.

[JBmurc]

And we haven't even started to really see the demand jump in the China. They are marketing this heavily over there from Chinese govt banks of all places. Chinese are cautious like anyone else.. They will be watching these price rises and they (the middle class) have a lot of sidelined capital (majority savers).

ON that note.. I am biased.. I just bought another 1kg silver from here: http://goldsave.co/

Storing it at Viamat Switzerland to save on shipping costs.

Why not just buy the 1kg here in NZ ?

[peat]

Why not just buy the 1kg here in NZ ?

because the link is to his own company and he's using the forum to promote it.

[upside_umop]

I was going to start a new thread called "there's something about Mary" but decided I had better add her weekend Herald comments here.

"LETS NOT GET MANIC OVER METALS"

"Even if gold and silver prices keep climbing I won't be in any hurry to suggest readers climb aboard"

So Mary, Oceania Gold have predicted they will mine 270,000-290,000 ounces this year. At US$1.330 that makes a pretty compelling investment I would have thought, let alone investments in Tin, Copper and Rare Earths.

Is Mary related to Skol?

Is Mary Skol?

I wonder whether Mary's mattress is packed with $US and she is waiting for a bounceback?

LEW

Perhaps because Mary is a long term investor? It wouldn't be prudent, nor suitable for many risk profiles to invest in gold. For example, imagine Airedale here, invests all (because he doesn't like diversification) his money into OGC prior to the GFC, because gold has increased every year for the last 8 years.

Although Airedale would be sitting alright now, imagine the roller coaster ride he would have gone through? I can imagine there would have been some very, very, sleepless nights in along the way.

I would 'invest' in gold when its marginal demand is very nearly being met by jewelry. In all other times, I would be 'speculating.' It's important to know the difference.

[STRAT]

because the link is to his own company and he's using the forum to promote it.lol
Though not totally covert, still a bit sneaky I reckon.

Bit of a ramp there Paul?

[lewinsky]

Here is my reply to Mary,

I would never suggest that anyone puts all their investment in gold.

I do not believe that putting 20% of your investment into a gold producer is speculation.

Gold is in demand from emerging countries and you are prudently saying that the US Economy is weak.

I have spread my own investments between IGR,RMS and OGC.

I also have GXY and LYC as Rare Earths Investments.

I suspect that Mary may not have heard of Rare Earths.

Letter follows- Aren't i polite?


Hi Mary,

I found the answer to your reader regarding gold a little disappointing.

You have long been a proponent of spreading risk, and I totally support this.

At a time when the US Economy is failing due to greed, corruption and excess, also parralleled by European countries whose economic fundamentals are poor, investment of part of your portfolio in gold, silver and other minerals falls should fall within your recommendation of spreading risk.

Rather than buying physical gold, investors should look to some of the listed gold producers. An investment in Oceania Gold a year ago would have seen a capital appreciation of over 300%. This is not speculation,the company is highly profitable and predicts to mine between 270,000 to 290,000 ounces of gold this year. A rough calculation shows a projected profitability of close to $100 million dollars.

Unfortunately New Zealanders have an obsession with investing in property. This does nothing for the economy, other than allow overpaid real estate agents to drive around in imported BMW's and pat themselves on the back as to how good they are.

I would be recommending to your readers that in this climate they should be investing between 10-20% in mineral shares and not purely gold.

As an example there is a huge demand in Rare Earths and shares such as Lynas Corp (LYC) are well poised to benefit from this demand.

[Skol]

Also: Why the black swan is some time off appearing (the value of the US$ takes a nosedive). (http://quotes.ino.com/chart/index.html?s=NYBOT_dx&t=&a=&w=&v=dmax)
If we knew when the black swan was going to arrive we'd all be rich, for all you know it might arrive tomorrow morning.
When punters are gung-ho the black swan has a habit of turning up.

[STRAT]

I would 'invest' in gold when its marginal demand is very nearly being met by jewelry. In all other times, I would be 'speculating.' It's important to know the difference.
Hi Oooomop.
Speaking of speculating is that a trend line break in the POG in Aussie Dollars?
Even so I still reckon the POG in USD is a very distorted picture.

[upside_umop]

Yes Crash the dollar wipe the slate clean of debt start again

Now UU whats you true position on USD Gold you have an avatar that shows dollars as toilet paper yet you come across anti bullion the only true opposite store of wealth that's easy trad able

JB, I have had this avatar for a while now. My true position on the USD (at the time I posted) is that it will decline in value over the medium term. My basis of opinion comes from the fact that the US will have to rebalance its economy from its boom years of consumption - just like any other economy that has over consumed. This was/has been my opinion for the last 3 years....however, I haven't paid too much attention lately as to the trade deficits etc by the US to gain a fundamental perspective.

As you know, the US currency is perceived to be the safest, as evidenced by the flight of safety in the midst of the GFC...so it has been a rocky ride over the last while.

The reason the US won't crash is:
1) It raises debt on the international market in it's own currency - the almighty USD.
2) When their currency declines, their debts stay relatively the same.
3) When their currency declines, their investments in other currencies appreciate.
4) They have no such premium for interest rates either. Think Greece, think Ireland...think Iceland.

Therefore, the equation is that no matter how much debt the US have, when their currency declines they incur no real risk premium and they have a net increasing effect in real assets values. That is the power of the USD and that is why as long as they are the reserve currency they will be OK.

[Skol]

UU, Nice post,
You've thrown the cat amongst the pigeons there, all the goldbugs reckon it's gonna be worthless but the first black swan that shows up you watch everyone dive into the USD.

[upside_umop]

Strat, it certainly does look that way...go the AUD goldies! haha

One thing that people can't deny is that a momentum effect exists - it's empirically proven.

Momentum is usually why bubbles exist.

On random note, and talking of an awesome bubble, did anyone see VW during the GFC (not momentum though I don't think)? Porcshe tried to take it over and all the shorters had to cover...liquidity dried up and the stock was at the time a 400% and the most valuable company in the world. Still, some academics would argue that wasn't a bubble! :eek2:

[STRAT]

,
Strat, it certainly does look that way...go the AUD goldies! haha

One thing that people can't deny is that a momentum effect exists - it's empirically proven.

Momentum is usually why bubbles exist.

On random note, and talking of an awesome bubble, did anyone see VW during the GFC (not momentum though I don't think)? Porcshe tried to take it over and all the shorters had to cover...liquidity dried up and the stock was at the time a 400% and the most valuable company in the world. Still, some academics would argue that wasn't a bubble! :eek2:I must confess to looking hard at a few Aussie Gold Specs myself right now.:scared:

Regarding VW. That was quite a spike. But the fall was even more impressive. Mind you, VW is getting back up there again. Would have been good buying when the bubble popped.

I see we have Gold Merchants peddling their wares on this thread now. Thats got to be a sign

[JBmurc]

Yes UU how much longer can the USD hold it's reserve currency status more Q.E coming up the US heading the way of Japan
Quantitative easing was used unsuccessfully[8] by the Bank of Japan (BOJ) to fight domestic deflation in the early 2000s


The term quantitative easing (QE) describes a form of monetary policy used by central banks to increase the supply of money in an economy when the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

A central bank does this by first crediting its own account with money it has created ex nihilo ("out of nothing").[1] It then purchases financial assets, including government bonds and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money by the process of deposit multiplication from increased lending in the fractional reserve banking system.
The increase in the money supply thus stimulates the economy. Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to pocket the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.[1]

"Quantitative" refers to the fact that a specific quantity of money is being created; "easing" refers to reducing the pressure on banks.[2] However, another explanation is that the name comes from the Japanese-language expression for "stimulatory monetary policy", which uses the term "easing".[3] Quantitative easing is sometimes colloquially described as "printing money" although in reality the money is simply created by electronically adding a number to an account. Examples of economies where this policy has been used include Japan during the early 2000s, and the United States and United Kingdom during the global financial crisis of 2008–2009.



Read more: http://www.businessinsider.com/what-is-quantitative-easing-2010-8#ixzz121npcB00

[STRAT]

I see this as a bigger sell signal than the simple break of a trendline or long term support failing. :rolleyes:Hi Yankiwi.
Does that mean you will be selling your HGD? :p:eek2::lol:

[JBmurc]

A good point raised by UU on Gold is the fact 95% of all the gold produced up to the present time is still here Jewelry the biggest user of gold isn't increasing fast as the price so the rise is speculating ---this is true an is why my PGM investment are very bias towards Silver which for the last 15yr+ hasn't been able to meet ever increasing demand an looking forward the price can only go higher
The reason I have a investment with NAV gold producer is the fact I believe Gold would price higher in USD(yes I know NAV sell gold in AUD) as the US economy is far from fixed an heading towards enough or any true economic growth to pay down debt without using Q.E type measures

Marco to Micro- if USA was a listed share it would be the one that keeps raising cash to help meet the ballooning debt as it's business model doesn't in present form work you can't spend your way out of debt you can't create more government workers an cut exporter jobs an the same time increasing importing an expect things will work out fine

[shasta]

JB, I have had this avatar for a while now. My true position on the USD (at the time I posted) is that it will decline in value over the medium term. My basis of opinion comes from the fact that the US will have to rebalance its economy from its boom years of consumption - just like any other economy that has over consumed. This was/has been my opinion for the last 3 years....however, I haven't paid too much attention lately as to the trade deficits etc by the US to gain a fundamental perspective.

As you know, the US currency is perceived to be the safest, as evidenced by the flight of safety in the midst of the GFC...so it has been a rocky ride over the last while.

The reason the US won't crash is:
1) It raises debt on the international market in it's own currency - the almighty USD.
2) When their currency declines, their debts stay relatively the same.
3) When their currency declines, their investments in other currencies appreciate.
4) They have no such premium for interest rates either. Think Greece, think Ireland...think Iceland.

Therefore, the equation is that no matter how much debt the US have, when their currency declines they incur no real risk premium and they have a net increasing effect in real assets values. That is the power of the USD and that is why as long as they are the reserve currency they will be OK.

What happens if the Chinese stop pegging there Yuan to the $US, given the hundreds of billions of $ the US owes China?

That could crash the $US, especially if China back out of US debt & buys more gold, who will buy the US debt, the Middle East?

[upside_umop]

What happens if the Chinese stop pegging there Yuan to the $US, given the hundreds of billions of $ the US owes China?

That could crash the $US, especially if China back out of US debt & buys more gold, who will buy the US debt, the Middle East?

Good questions Shasta. There has to be a lot of assumptions when considering things like this, but those assumptions have to be made from sound logic given so many people are at stake (and you would assume China would think logically!).

If the Chinese stop pegging to the USD, the US will be able to rebalance more quickly as a more equitable exchange rate develops. The US is the largest debtor to China and a lower exchange rate will enable that imbalance to be somewhat sorted (I don't see the Chinese being in debt to the US for a long time). The Chinese, as much as they say, wouldn't dare dump the USD, for if they were they would instantly lose tens of billions of dollars and could be detrimental to global confidence and the Chinese economy given their heavy reliance on exporting.

So in essence, I don't think the Chinese would dump the USD or simply unpeg it. The Chinese have too much to lose! In the end, every country strives to have a higher standard of living - it's their bottom line much like profit of a company.

The way I see it playing out, is that there will be threats on all sides with the Western world winning. The Chinese will succumb and raise the Yuan at a faster rate than currently, that won't disrupt their economy too much. This is the best option, as their concern is valid that an instant appreciation would cause damage (more so to them locally...not the rest of the world).

The Chinese are both smart and dumb in pegging their currency. Smart, as it creates certainty for their exporters (think NZD as an opposite). Dumb, as they aren't rising the yuan fast enough therefore:
1) Making their people live below the standards they could be living at.
2) Accumulating huge foreign reserves which they will eventually lose money on anyway.
Their inefficiencies create a 'deadweight loss' as it is known in economics, which in my eyes is not offset by their 'smartness.' It could be if they let the Yuan appreciate more quickly though.

However, if logic didn't prevail...I'd say those with gold would probably do alright. Not because of logic or reason (for investing in gold), but because fear would set in and people aren't logical when in fear.

[JBmurc]

Yuan appreciate more quickly---- just on CNBC analyst believe China will allow a slow appreciation of the Yuan round 5% per yr over the next decade

[airedale]

Nice letter, Lewinsky, and if Mary ever deigned to reply she would tell you that you can't do better than putting your money in to one of those nice balanced funds. That is all she ever says. At least she is consistent.
I don't think that the people who read these pages are her target audience.

[Huang Chung]

If we knew when the black swan was going to arrive we'd all be rich, for all you know it might arrive tomorrow morning.
When punters are gung-ho the black swan has a habit of turning up.

We know you like your airlines Skol.

I think the black swan overflew the gold mines, and landed over at Virgin Blue's HQ....

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01106583

[elZorro]

If we knew when the black swan was going to arrive we'd all be rich, for all you know it might arrive tomorrow morning.
When punters are gung-ho the black swan has a habit of turning up.

C'mon Skol, that USD 'basket case' is in a very solid downward trend at the moment, it's been down lower before, and is not correcting at the moment. Maybe UU has a point about the loans the US obtains, being in their own dollars. They still have to be repaid, or depreciated out of existence. When I'm importing goods from China, I would be happy to pay in Yuan or USD, I'd simply convert it back to what I'd paid last time, to check. If the Chinese change their mind on which currency they'd like payment in, most would comply.

Agreed, Mary Holmes treads a very safe line, as do most in the papers. Scared of being sued probably..
Lewinsky, thanks for the info on IGR, I see Baker Steel are buying in, a very good sign for us. Watch out if they start selling though, a pattern I saw with OGC. I think they shop around for the quickest movers.

[COLIN]

Yes UU how much longer can the USD hold it's reserve currency status more Q.E coming up the US heading the way of Japan
Quantitative easing was used unsuccessfully[8] by the Bank of Japan (BOJ) to fight domestic deflation in the early 2000s


The term quantitative easing (QE) describes a form of monetary policy used by central banks to increase the supply of money in an economy when the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

A central bank does this by first crediting its own account with money it has created ex nihilo ("out of nothing").[1] It then purchases financial assets, including government bonds and corporate bonds, from banks and other financial institutions in a process referred to as open market operations. The purchases, by way of account deposits, give banks the excess reserves required for them to create new money by the process of deposit multiplication from increased lending in the fractional reserve banking system.
The increase in the money supply thus stimulates the economy. Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to pocket the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.[1]

"Quantitative" refers to the fact that a specific quantity of money is being created; "easing" refers to reducing the pressure on banks.[2] However, another explanation is that the name comes from the Japanese-language expression for "stimulatory monetary policy", which uses the term "easing".[3] Quantitative easing is sometimes colloquially described as "printing money" although in reality the money is simply created by electronically adding a number to an account. Examples of economies where this policy has been used include Japan during the early 2000s, and the United States and United Kingdom during the global financial crisis of 2008–2009.



Read more: http://www.businessinsider.com/what-is-quantitative-easing-2010-8#ixzz121npcB00

I wonder if anyone can give me a (short) definition of the difference between "Quantitative Easing" and "Social Credit"? For the benefit of younger members I should perhaps explain that the latter was a philosophy which spawned a political party in NZ. a few decades ago, and they even had representatives in Parliament. Alberta, in Canada, in fact had a Social Credit Government at one stage. We don't hear anything about it, these days, at least not in NZ, but it strikes me that this QE is exactly what the old Social Creditors were espousing, and they were (rightly) ridiculed by the majority of economists who pointed out that the issue of "money" which is not backed by goods and services is simply inflationary.

So, why should "Social Credit" now be respectable , in the world's major decision-making arenas?

[JBmurc]

CORRECTION: Our editorial staff regrets that this story may appear misleading. The release this was taken from states "regional" headquarters not "international" headquarters.

The fact remains that all major multinationals are investing heavily in China and Asia, and progressively less in the U.S. - which preserves the underlying premise of the article. Our thanks to a reader for catching our hasty mistake.

The original article.remains below.

Our apologies for any confusion.
AP Staff

The boat is leaving for China. Disney, Kraft Foods, and four more Fortune 500 companies are on board to move their Headquarters to Shanghai.

The mass exodus of American companies which will surely take thousands of jobs with them, is now commencing with mind-twisting irony. Apparently, America is no longer capitalistic enough to invest in, even for U.S-based companies.

The globalists love to quote free-market capitalistic principles, except when it comes to small things like competition and having your headquarters in a Communist quasi-enemy nation. A CNTV press release and accompanying video gloated:

24 multinational companies, have decided to move their regional headquarters to Shanghai, including 6 Fortune 500 companies such as Vale, Walt Disney and Kraft Foods.
This will push the total number of companies with regional headquarters in Shanghai to nearly 300. Nearly 500 have regional research and development centers there.
Shanghai has been China's top destination, for multinationals. Even during the world economic slump, the city's foreign direct investment still increased. Data shows Shanghai's foreign direct investment has already surpassed more than 5 billion US dollars in the first half of this year.
Presumably, for a truly global economy to transpire, all nations must play on a level playing field. Which would stand to reason that the same standard of living will eventually equalize around the globe. In other words, the U.S. way of life would have to be dramatically reduced to be on the same plane as China’s, India’s, or Central America’s under the globalist agenda.

Granted, the level of India and China is being raised slightly from dirt floors to cell phones and televisions in a single generation. So, no matter how bad things may get in the coming Greatest Depression by design, we can always hope to still have finished flooring and a telescreen, right? Stay Tuned!

[Jaa]

If the Chinese stop pegging to the USD, the US will be able to rebalance more quickly as a more equitable exchange rate develops. The US is the largest debtor to China and a lower exchange rate will enable that imbalance to be somewhat sorted (I don't see the Chinese being in debt to the US for a long time). The Chinese, as much as they say, wouldn't dare dump the USD, for if they were they would instantly lose tens of billions of dollars and could be detrimental to global confidence and the Chinese economy given their heavy reliance on exporting.

So in essence, I don't think the Chinese would dump the USD or simply unpeg it. The Chinese have too much to lose! In the end, every country strives to have a higher standard of living - it's their bottom line much like profit of a company.

The way I see it playing out, is that there will be threats on all sides with the Western world winning. The Chinese will succumb and raise the Yuan at a faster rate than currently, that won't disrupt their economy too much. This is the best option, as their concern is valid that an instant appreciation would cause damage (more so to them locally...not the rest of the world).

The Chinese are both smart and dumb in pegging their currency. Smart, as it creates certainty for their exporters (think NZD as an opposite). Dumb, as they aren't rising the yuan fast enough therefore:
1) Making their people live below the standards they could be living at.
2) Accumulating huge foreign reserves which they will eventually lose money on anyway.
Their inefficiencies create a 'deadweight loss' as it is known in economics, which in my eyes is not offset by their 'smartness.' It could be if they let the Yuan appreciate more quickly though.

This isn't quite right. The Renminbi has been pegged to a basket of currencies for a while now and does fluctutate within a 0.5% band against these currencies according to wikipedia.


The PRC has stated that the basket is dominated by the United States dollar, Euro, Japanese yen and South Korean won, with a smaller proportion made up of the British pound, Thai baht, Russian ruble, Australian dollar, Canadian dollar and Singapore dollar.
http://en.wikipedia.org/wiki/Renminbi#Depegged_from_the_U.S._dollar

You are also forgetting that large countries have the power to bend supply and demand in their favour thus making what would otherwise be ruinous tariffs/subsidies/currency interventions worthwhile.

A lot of the noise we are hearing and the momentum in gold it is causing may be as a result of the US mid-term elections. Lots of votes in blaming a foreign country for your poor economy.

[upside_umop]

This isn't quite right. The Renminbi has been pegged to a basket of currencies for a while now and does fluctutate within a 0.5% band against these currencies according to wikipedia.


http://en.wikipedia.org/wiki/Renminbi#Depegged_from_the_U.S._dollar
You are right, everyone says in general conversation that it is pegged to the USD - and for good reason. Since the USD began an agressive devaluation of the dollar, they have fallen 10% vs the Yen but only 3% vs China. What's that telling you? It's largely pegged to the USD.


You are also forgetting that large countries have the power to bend supply and demand in their favour thus making what would otherwise be ruinous tariffs/subsidies/currency interventions worthwhile.

I'm not quite getting you with this one. Worthwhile for the protectionist country/regime, yes. But in the long run, there is a deadweight loss on all of those mentioned above. I.e. Think the USA vs NZ dairy (tariffs) . Think the USA vs China manufacturing (Exchange rate advantage). Both these examples as a whole are inefficient as between the countries, trade could be more efficient....but because of protectionism, they don't.


A lot of the noise we are hearing and the momentum in gold it is causing may be as a result of the US mid-term elections. Lots of votes in blaming a foreign country for your poor economy.

3) Do you hoard gold?

[STRAT]

You are right, everyone says in general conversation that it is pegged to the USD - and for good reason. Since the USD began an agressive devaluation of the dollar, they have fallen 10% vs the Yen but only 3% vs China. What's that telling you? It's largely pegged to the USD.
Something in their policy has changed recently. The Chinese dollar has lifted after flat lining against the USD for a long period

[elZorro]

Strat, certainly that chart looks highly significant. Currently the yuan is at an alltime high against the USD (so I read on the Interweb).

This can have a complicated effect, as an article from August 2010 covers: (http://www.proactiveinvestors.com/companies/news/7512/chinese-trade-surplus-climbs-to-massive-287-billion-in-july-7512.html)

[STRAT]

Strat, certainly that chart looks highly significant. Currently the yuan is at an alltime high against the USD (so I read on the Interweb).

This can have a complicated effect, as an article from August 2010 covers: (http://www.proactiveinvestors.com/companies/news/7512/chinese-trade-surplus-climbs-to-massive-287-billion-in-july-7512.html)Perhaps while the CHD was in free fall strapped to the back of the USD some one in the Chinese Government realized the US dont have a parachute and pulled their own rip cord. :p

More likely giving in to US demands of course

[lewinsky]

Gold up over $1,350 overnight.
Still concerns over the US Economy.
Growing demand, US concerns, harder to extract.
Count me in.

[upside_umop]

Cheers Strat. I thought you might pop up with a chart!

They have virtually been 'pegged' to the USD for the last 2 years. Starting to drop off now, so things must be changing - perhaps being rationale and giving in to pressures? Don't want to drop their standard of living?

I'm not expert on the USD/CNY, so take what I say with a grain of salt. I just try to use logic behind what I think, that's all!

Back to some gold, eh? But before we go, do you have a chart for Yen/CNY, EUR/CNY?

[inghamp]

noted lol.

Not really sneaky. Same name etc. And in the post i said I am biased etc.

Won't mention it again. Really enjoy this forum. Very helpful

[STRAT]

But before we go, do you have a chart for Yen/CNY, EUR/CNY?Probably but FOREX isnt something I look at often. So.... CNY is the ticker for ???:blush:

[STRAT]

noted lol.

Not really sneaky. Same name etc. And in the post i said I am biased etc.

Won't mention it again. Really enjoy this forum. Very helpfulHaha You took that slap on the wrist with a wet tissue very well Paul:lol:

[STRAT]

Probably but FOREX isnt something I look at often. So.... CNY is the ticker for ???:blush:Strike that I got it:ohmy:
I will put em in the FOREX section Oooomop. Getting off topic a bit

[Jaa]

I'm not quite getting you with this one. Worthwhile for the protectionist country/regime, yes. But in the long run, there is a deadweight loss on all of those mentioned above. I.e. Think the USA vs NZ dairy (tariffs) . Think the USA vs China manufacturing (Exchange rate advantage). Both these examples as a whole are inefficient as between the countries, trade could be more efficient....but because of protectionism, they don't.

I agree with you that with regards to the global economy it is ineffecient and there is a clear deadweight loss to the world as whole but to the large country causing the distortion it can be quite profitable. With the collapse of the Doha WTO talks we can unfortuately expect more of this.


3) Do you hoard gold?

Hardly! I couldn't think of anything more ridiculous to do with my savings.

I do own a couple of up and coming gold producers in the developing world though. e.g. BDR & NMG on the ASX. Both are making good progress re-starting production at abandoned gold mines and drilling out larger resources. By the time their gold comes online end of next year I fear Skol's prediction of a price collapse may well come true. At least their cash mining costs are around $550-$600/oz.

[JBmurc]

Well end of next year is along time away for this Sharetrader in the meantime I'm still very bullish PGM when that changes I'll be sure to say

Major Bank fraud in the USA
http://www.msnbc.msn.com/id/21134540/vp/39582228#39582228

[Skol]

A sure sign of a bubble is when new lisitings begin.
A new gold ETF is starting in China, the gold will be stored in China rather than the usual strongrooms in New York or London.

I'm not that interested in the economic minutiae, I'm a big picture man. You can argue to to the nth degree that gold or anything else should be higher than it is but at some stage something's gonna give.

Was it Keynes that said "the market can remain irrational longer than you can remain solvent"?

Or words to that effect.

[lewinsky]

US Banking system strikes again

http://www.cnbc.com/id/39617381

They securitized bad loans then forgot or couldn't work out who to assign them to.

[JBmurc]

Worth keeping an eye on the Silver:Gold ratio is now down at 57:1 was a high as 70:1 long long term average 16:1 - geologic est 8:1 more silver in the earth than gold

So Gold could hold these levels an Silver could well go many multiples to $90oz-$150oz if the long term average ratio value was once again reached

[macduffy]

Was it Keynes that said "the market can remain irrational longer than you can remain solvent"?

Or words to that effect.

Yes, that's it.

That's why it makes sense to invest with the trend and be prepared to bail out when the trend reverses.

Meanwhile, investment in gold miners has been a winner for some of us!

[Skol]

That's why it makes sense to invest with the trend and be prepared to bail out when the trend reverses.

Very very few will make it out, more likely they'll get cleaned out. Who knows when it's a reversal or a minor correction, others will pile in thinking it's hit rock bottom.
It's all a matter of risk, simple as that, the same as smokers don't think they're the one that's gonna die of lung cancer or emphysema or the local boy racer thinks he's gonna be the next one in the morgue.

[elZorro]

Very very few will make it out, more likely they'll get cleaned out. Who knows when it's a reversal or a minor correction, others will pile in thinking it's hit rock bottom.
It's all a matter of risk, simple as that, the same as smokers don't think they're the one that's gonna die of lung cancer or emphysema or the local boy racer thinks he's gonna be the next one in the morgue.

But aren't we the early adopters? We've done some research, we'll be a bit more careful than most. Here's a paraphrase from goldprice.org for yesterday:

Silver and Gold Prices are NOT in a Bubble


Gold Price (http://goldprice.org/spot-gold.html) Close Today : 1345.70
Change : (7.60) or -0.6%

Silver Price (http://silverprice.org/) Close Today : 23.147
Change : (0.200) cents or -0.9%

Gold Silver Ratio (http://goldprice.org/gold-silver-ratio.html) Today : 58.14
Change : 0.173 or 0.3%

Silver Gold Ratio Today : 0.01720
Change : -0.000051 or -0.3%

Platinum Price (http://platinumprice.org/) Close Today : 1680.00
Change : -2.00 or -0.1%

Palladium Price (http://palladiumprice.org/) Close Today : 588.00
Change : 0.00 or 0.0%

S&P 500 : 1,169.77
Change : 4.45 or 0.4%

Dow In GOLD$ : $169.29
Change : $ 1.12 or 0.7%

Dow in GOLD oz : 8.189
Change : 0.054 or 0.7%

Dow in SILVER oz : 472.78
Change : -2.85 or -0.6%

Dow Industrial : 11,020.40
Change : 10.06 or 0.1%

US Dollar Index : 77.29
Change : -0.148 or -0.2%

Frankly, market are out so far off the edge of the curve that it's very difficult to make any intelligent statement about them. No matter what everybody may think, a falling dollar is not the universal penicillin for economic disease.

As always, Wall Street is getting it wrong. They are honking about silver and gold being in a bubble and at a top. Now why should we believe that the same dullards who missed calling the Stock Market Bubble, the Dot Com bubble, the Real Estate Bubble, and even the soap bubble can accurately spot one in silver and gold? Alas, their over-sized Harvard-trained crania have overlooked the most fundamental principle of investing: always identify the primary trend and align your investment with, not against it. But then, they have stocks to sell, stocks that are locked in a bear market (primary down trend), so maybe they cannot afford to meditate on primary trend, let alone mention it.

The MBAs in the skyscrapers are confusing a runaway bull market (primary uptrend) in a third wave up with a bubble. Not only are silver and gold NOT in a bubble, but they will grow wilder, furrier, and more unpredictable, all in one direction: up. Now beware, and overlook not the metals' short-term oversold condition, which could fall off in a sharp, sudden, but shallow correction any time. I don't mean that silver and gold will perpetually rise. The last 60 days or so have been very unusual, fuelled by more than bull fever alone, and that same force is pushing stocks up, too.

Stocks, on the other hand, are locked in a primary down trend (bear market). Remember, primary trends run 15 to 20 years, so this stock bear market won't end before 2015, maybe 2020.

Oh, wow. Did I neglect to mention that the US dollar is also imprisoned in a hopeless primary downtrend, and beyond the technical picture is doomed by the institutional and political framework of central banking and government spending? Well, it is, so Wall Street's other investment offering, bonds, are also a Killer Investment -- that is, they will kill any purchasing power you still retain.

Okay -- anybody confused about where I stand? Good, then let's look at today's market.

Before I say anything about the US DOLLAR INDEX, I want to remind you that under our central banking system, all currency exchange rates are government- manipulated. All means all. Thus if the dollar is falling, it's falling because somebody -- Treasury or Fed Reserve or more likely both -- has decided to let it fall. Ditto if it rises. Not true only if the currency escapes their nasty, damp clutches, and usually that means heads into a collapse.

Thus the buck continues to fall, but here just below 77, from 76.90 to 77.50, the dollar seems to be trying to begin -- maybe -- a little rally. Technically a small bit of support lies in the past around 76.60, but it's not huge. Keep your eyes peeled for a dollar rally. It will wreck the party fearsomely, especially in stocks.

STOCKS have climbed above 11,000. Today the Dow augmented by 10.06 to 11,020.40 and the SYP500 embraced another 4.45 points to rest at 1,169.77. Great, great, great, it's broken above the previous high and headed into a new rally! Not quite. It is completing the right shoulder of a gigantic head and shoulders top that measures out a target around 8,000. I am nothing more than a natural born fool, an ignorant ridge runner from Tennessee, but heed my warning and stay away from stocks.

GOLD and SILVER pulled another trick today. Both dropped, silver by 20c to 2314.7c and gold by $7.60 to $1,345.70. So what? Yesterday silver gained 26c and gold $9.10, so for the two days both have netted a rise. I have been observing for the last 2 months or so that instead of indicating weakness, silver and gold often jump -- and high -- the day after a little fall. Maybe they will repeat that performance again tomorrow. (yes, they did -EZ)

I feel like I have ants crawling in my bones when I say this, but I would keep on buying silver and gold. This well-muscled and determined rally has set its eyes on $1,600 and 3400c.

After the Comex closed silver rose again, higher than yesterday's close. Right now it's trading at 23.31. Silver has thrice bumped against 2045c, looking like a helium balloon searching for a way out. It will pierce the ceiling.

Gold has risen back to $1,352. Both silver and gold appear to have made some sort of high and correction last Thursday. Now they are making good the fall, recovered to rise again. Gold needs to clear $1,355 resistance.

Gold and silver are safe down to $1,325 and 2230c. If they break those levels then a correction has begun. Otherwise, they are headed for the sky. That bunching up on the 6 month gold and silver charts leaves me a bit uneasy, but other than that the fury will continue until it ends.


Maybe Skol should get a case of this ready for the bet with JB: (http://www.bartonbrands.com/skolgold.html)

[upside_umop]

But aren't we the early adopters? We've done some research, we'll be a bit more careful than most. Here's a paraphrase from goldprice.org for yesterday:

EZ. If gold was to reverse quickly, I'd say you would have quite a lot of trouble getting out of OGC. Did you see what 8k shares did to the price today?!

Also:
What makes you think you're an early adopter? Gold has been going up for the last 10 years.
What makes you think your research is better than anybody elses, or even better...the markets? The theory is you can't beat the market. Don't give me 'theory is bullcrap...I beat the market all the time blah blah.' Because....on average, people don't beat the market. The average return is the market! Then...take away your fees and you make less than the market...on average. If you beat the market, you haven't, you have just taken on more risk. Its a bit like that survey that went out where 90% of drivers said they were better than average!

I'm not being doom or gloomy. Just the way it is. There are proven techniques to beat the market...not sure if they're still valid as they may have been arbitraged away:
-Small firm effect. Small firms outperform larger firms as they are perceived to be more risky. So the question is...have you really beaten the market for the relative risk?
-Value effect. Stocks with higher book to market ratios (value) outperform stocks with lower book to market (growth).
-Momentum effect. If a stock has risen for the 6 months, it has a higher chance of continuing that rise for the next 6 months. The opposite is also true. The trend is your friend is actually true. Some say this exists in the commodity markets too.

Just some things to think about.

[elZorro]

Thanks for fair comment UU. As far as I'm aware, the only NZ blog site talking about OGC is here, and despite over 60 of us reading each post, no-one rescued OGC today. I think Direct Broking wouldn't have allowed that sale, it was way out of line. But the point is that the traffic is too light over here some days, and since I have bought most of my OGC locally, I might be in a bad spot if the worst happened. Can't help wanting to support a local business - even if the managers are in Aussie and determined to raise some funds at our temporary loss. But this share is a lot stronger than many others (try GEL or HGD).

I'm a very slow adopter of most things, only started with shares 3-4 years ago, and I'm a slow learner. But I'm like a speeding bullet compared to Skol, in his attitude to Gold. In a few year's time, Skol will be proved right, and gold will drop back a bit from its high. Hopefully by then I'll have made my gold investments pay off, and in any case I'm making far easier money outside the sharemarket, while it holds. I couldn't agree more, I find it hard to beat the market, but I don't mind risk at the moment.

[inghamp]

Hey all,
Not sure if you have noticed of late the large number of companies marketing gold as a secure store of wealth. The public are clearly slow on the uptake. This is likely to change as they see the consequences (lost wealth via inflation) of leaving savings in banks. Remember, people will always want to save.

It doesn't even have to happen to the US dollar. Just one rich nation's currency needs to experience major problems..

Do you think this will be enough to make a percentage of risk averse people the world over save some of their money in gold and silver?

I haven't done the numbers. Has anyone here?

[Skol]

Hey all,
Not sure if you have noticed of late the large number of companies marketing gold as a secure store of wealth.

Sure have, we're in bubble territory, what do you expect, meantime is the black swan on the wing?

There was an article in the FT yesterday calling on the Obama administration to sell gold. You know what's gonna happen then?




1980. C-R-A-S-H

Good idea-buy low, sell high.

If such an event occurred, as I've said before, it's all about market forces, not economic trivia.

There's lots of very indignant posts following this article from the goldbugs because they know the consequences.

The article itself could be the black swan.

Lots of people who own lots of gold read the FT, a widely read, very influential publication not some trashy goldbug website.

[inghamp]

The chances of the FED selling virtually zero? Would Obama do a Gordon Brown? Would that really defeat the gold bugs this time round.
1980 = US had small amount of debt.
2010 = US heavily in debt.

= 1980 unlikely to happen again. If central banks the world over are buying gold why would the US sell? They would destroy what confidence is left in the dollar. I don't really trust the media that much, even FT. It's too fickle. Negative news on gold right now goes against the fundamentals of QE. Its more likely someone powerful wants the price to drop a bit so they can make an easy trade... i know i know.. conspiracy theory.. but it does happen all the time. The fundamentals the US debt and QE can't be denied. The consequences will/are making themselves self evident.

Black swan would be an event that destabilises the entire global economy. Such an event would cause gold and silver to increase not decrease in value. Fingers crossed that doesn't happen. Would rather get just an inflation spike.

[STRAT]

Hey all,
Not sure if you have noticed of late the large number of companies marketing gold as a secure store of wealth. The public are clearly slow on the uptake. This is likely to change as they see the consequences (lost wealth via inflation) of leaving savings in banks. Remember, people will always want to save.

It doesn't even have to happen to the US dollar. Just one rich nation's currency needs to experience major problems..

Do you think this will be enough to make a percentage of risk averse people the world over save some of their money in gold and silver?

I haven't done the numbers. Has anyone here?You havent done the numbers Ingham?

Really?

Your blog directs people to a site where they can buy Gold which is also yours and you havent done the numbers?

Are you pulling our chains?

[inghamp]

lol Strat I'm not promoting :-).. but I am biased.

When I say the numbers I mean:

What percentage of people would be likely to make the shift? How much money would be involved? I would say this is impossible to quantify. But some of you guys are awesome on the technicals etc. Thought I'd attempt to leverage the knowledge here :-)

Am postulating an idea more than anything.. Any links out there answering this kind of question?

Is anyone else thinking this is "too up in the clouds"?

[STRAT]

lol Strat Thought I'd attempt to leverage the knowledge here :-)

Haha,
There you go.
Be careful. A lot of us are full of it;)
:lol::lol::lol:

[inghamp]

So I was honest. I haven't done the numbers lol

No links on this anyone?

[STRAT]

So I was honest. I haven't done the numbers lol

No links on this anyone?Sorry mate. No link from me.
I dont research gold. I just come on this thread to be a nuisance.

JB and Skol would be your men. And you would have both camps covered passionately. :D

[lewinsky]

Attached are the average Gold prices from 1850 to 2008.

http://www.nma.org/pdf/gold/his_gold_prices.pdf

Skol keeps refering to a 1980 crash. This looks more like a correction to me.

If you had purchased gold at the average price in 1979 and sold at the average in 1981 you would have still been 50% ahead. (simplistic I know)

A crash in my mind is when you own Robt Jones, Ariadne, Renouf shares which went from the $20 to the 20 cents.

Our the internet bubble where companies were floated on a pipe dream.

Whilst there could be breathers, and an ultimate correction there seems to be too much uncertainty at the moment so gold is seen as a less risk option.

The same FT website page refers to Gold going to $1,450 per ounce or was it $14. 50 an ounce.

LEW

[Skol]

Attached are the average Gold prices from 1850 to 2008.

http://www.nma.org/pdf/gold/his_gold_prices.pdf

Skol keeps refering to a 1980 crash. This looks more like a correction to me.

LEW
It wasn't a correction to the suckers at the time, many of whom lost their shirts. I was there although not dumb enough to buy into it.

[inghamp]

So Skol. What is your take on why the gold bugs got destroyed in 1980?
Similarities and differences.. Simply stating it was a bubble doesn't really add value.
e.g. what did the fed do?

[Skol]

So Skol. What is your take on why the gold bugs got destroyed in 1980?
Similarities and differences.. Simply stating it was a bubble doesn't really add value.
e.g. what did the fed do?

Punters thought there would be inflation, there was the Soviet invasion of Afghanistan, trivial things I thought. There was US debt, not as much as now but an article I was reading in the Economist yesterday believes the current US debt is manageable.
If you talk to goldbugs "it's different this time", a contrarian warning.

Herd instinct was afoot in the late 70's and lots of suckers thought they were on the road to riches.
Unfortunately following the 1980 gold crash I was not in a financial position to sift through the wreckage.

[inghamp]

Further evidence of more QE to come.

listen to Bernake's clip.. http://money.cnn.com/2010/10/13/markets/oil_gold/index.htm?eref=mrss_igoogle_business

Rightly or Wrongly.. They just want to keep up the expansionary environment. Expect further Fed purchases.

None of this was happening in late 70's and 80's. Plenty of articles out there saying the US will have a problem dealing with the debt.. they have no choice but to monetize. I would if I were them. Other wise government services such as welfare would grind to a halt etc. They locked into this pattern with no way out.

Game changer needed. Wishfull thinking.

[p2r]

BCD down 60% today so not all goldies have the mias touch.

[elZorro]

I just received this article from Colin Twigg (http://www.incrediblecharts.com/tradingdiary/2010-10-14_gold_forex.php)at Incrediblecharts: some background, graphs and TA assumptions, with all data heading in the goldbugs direction. Direct Broking also sent a writeup implying NZ stocks in general are overbought, and to expect a near-term drop in value.

Would it be fair to say that many of these factors are represented by the gold price, which makes it a compelling watch. In the last 24 hours gold has risen $30 or more against the US$, it's at an all-time high in dollar terms. We are seeing sharetrading history being made. Can we make a dollar out of it?

[STRAT]

Hi EZ
From that article by Colin Twiggs
Convincing China and other major exporters to accept a substantial upward revaluation of their currencies will not be easy.
Not only not easy but unreasonable to boot I reckon.

,
You guys seriously need to start looking at the POG in another currency though. Getting more American $ for your Gold Bars aint making you that much richer.

These charts are a day behind,Trend line break or trading range? I will let you guys decide.

[elZorro]

Thanks for the work on these graphs Strat. The only physical gold I own is my wedding ring, so why are we interested in the US gold price? Most of the bigger miners are on the TSX, the strongest exchange for goldminers, that's why they list there. Those share prices are strongly related to the US$ gold price, which you can prove by plotting their changes alongside the gold price, both at close and during the day's trading (all other factors remaining the same of course). The big funds on the TSX set the price, the other markets have to follow.

I'm not so impressed by a trendline drawn on a gold price chart, but I am taken with the price for OGC (for example) following the US gold chart. Please don't tell the Canadians that OGC is mining in NZ, headquartered in Aussie, so the US$ gold price is not so important..although they probably bought their new digger in US$. Most of their capital raising also comes in US$ or CAD$. Most miners are benchmarked and compared to their peers, and this helps to reinforce treatment relative to the US$ gold price.

Have you been able to find the NZ$ gold price charts? Certainly the Aussie dollar is better than gold at the moment. We still beat them at netball!! Cheers.

[inghamp]

I think we all are forgetting the psychological effects this deterioration in the dollar will do to those whose stores of wealth greatly decrease. If the US$ drops in real value then this will cause many (non finance expert/average job bloggs) to consider gold/silver as serious store of wealth.

Therefore: inflation in the US dollar = increased demand = increased price in real terms. All theory of course. Make no claim to being a fortune teller.. Given the US is the reserve currency of the world means this effect will be more pronounced.

[STRAT]

Hi inghamp.
I will leave emotional/psychological reactions to inflation to others and their shrinks.
I see the POG rising and I confess to owning a few spec gold miners. Will it reach previous highs. No one knows. What is clear to me is that the POG increase that everyone is getting so excited about is mostly about the $US colapsing, not gold being re rated. IM not interested in climbing ladders that are standing/sinking in quicksand pits.

Hi EZ
Dont have GTold/$NZ data or I would have posted it. I could give you NZ to Aussie dollars but you would have to do the math from there. Let me know if you want it and I will post it in Oooomps thread in the FOREX section.


By the way anyone who had invested in Gold at the bottom ( ie perfect timing ) in July would have made around 7% on their money.

I would think people in stocks are mostly doin better than that. A hell of a lot better.

[Skol]

By the way anyone who had invested in Gold at the bottom ( ie perfect timing ) in July would have made around 7% on their money.

I would think people in stocks are mostly doin better than that. A hell of a lot better.

In general, correct, especially if you owned Aussie stocks. XJO up by around 9% since July and $NZ exchange rate down by 6%, total about 15%, but again depends on your selection of stocks, could be better or worse.

[STRAT]

In general, correct, especially if you owned Aussie stocks. XJO up by around 9% since July and $NZ exchange rate down by 6%, total about 15%, but again depends on your selection of stocks, could be better or worse.Hi Skol.
Ive had a ripper of a month or two. Best ever. Im sure there are quite a few here at Share Trader who have beaten 7% by a huge margin

[Skol]

Just been watching an interview with an investment manager on Bloomberg, Harvey Eisen.
Says real estate, natural gas and income producing stocks are cheap, gold is "grossly overpriced, but probably will go higher on momentum".

[upside_umop]

Just been watching an interview with an investment manager on Bloomberg, Harvey Eisen.
Says real estate, natural gas and income producing stocks are cheap, gold is "grossly overpriced, but probably will go higher on momentum".

One thing the goldies are all on about is the increase in money supply. Has anyone looked at the effect that the decrease in house prices in the US have had on 'money dissappearing into thin air'? I.e. There is a multiplier effect the other way too....

Thought it was time, so a new avatar for me. 'Milking the cow'

[Skol]

Hi Skol.
Ive had a ripper of a month or two. Best ever. Im sure there are quite a few here at Share Trader who have beaten 7% by a huge margin

Hi Strat,
Yeah it's been good alright, e.g. I've got some dosh in the BT Natural Resources Fund, up 36% in NZ$ since July 1st.

[inghamp]

I've also considered this. No idea how to quantify. However I will comment in the hopes others can clarify.


The value of the properties was already inflated? Not sure of the technical term sorry. But the appreciated price (property bubble) does not necessarily equate to actual money in the bank (for long term property holders). Credit ratings hit yes? Contraction of money increasing supply that way.. but not a decrease in existing money supply?

I am sure this is the biggest problem for economists. But we do know they tend to miss the target to the too much money added side of things..

[inghamp]

The markets are an extension of human collective conciousness? Isn't guessing the direction of the herd a key ingredient of trading? Or do you follow that price fully reflects this.. Not saying one way is better..

"IM not interested in climbing ladders that are standing/sinking in quicksand spits. " Awesome metaphor lol.. but the herd of middle class Americans are interested. And they are still wealthy over all.. hence it matters I think

I have also had a good year with my stocks.. Nuplex was the best punt I have made in some time!

[upside_umop]

I've also considered this. No idea how to quantify. However I will comment in the hopes others can clarify.


The value of the properties was already inflated? Not sure of the technical term sorry. But the appreciated price (property bubble) does not necessarily equate to actual money in the bank (for long term property holders). Credit ratings hit yes? Contraction of money increasing supply that way.. but not a decrease in existing money supply?

I am sure this is the biggest problem for economists. But we do know they tend to miss the target to the too much money added side of things..

Think of the massive impairments that banks had to make to their balance sheets --> the multiplier effect is in full force reducing money supply (banks have capital adequacy ratios).

[ENP]

One thing the goldies are all on about is the increase in money supply. Has anyone looked at the effect that the decrease in house prices in the US have had on 'money dissappearing into thin air'? I.e. There is a multiplier effect the other way too....

Thought it was time, so a new avatar for me. 'Milking the cow'

Exactly. The latest $10 trillion dollar money printing is only about $33,000 per each person in the USA (there are roughly 300 million people in the USA)

I'm sure as a whole, the average person has either lost money in a foreclosure, paid back debt, etc so the average of $33,000 per person. When you put the numbers into perspective, 10 trillion doesn't seem too big per person.

As long as I did my maths right... 10 trillion divided by 300 million is $33,000 roughly right?

[STRAT]

Exactly. The latest $10 trillion dollar money printing is only about $33,000 per each person in the USA (there are roughly 300 million people in the USA)

I'm sure as a whole, the average person has either lost money in a foreclosure, paid back debt, etc so the average of $33,000 per person. When you put the numbers into perspective, 10 trillion doesn't seem too big per person.

As long as I did my maths right... 10 trillion divided by 300 million is $33,000 roughly right?Might be if you consider that say 9 out of 10 people have never had or seen 33k in one lump.

[inghamp]

http://www.usdebtclock.org/

critique?

[JBmurc]

Exactly. The latest $10 trillion dollar money printing is only about $33,000 per each person in the USA (there are roughly 300 million people in the USA)

I'm sure as a whole, the average person has either lost money in a foreclosure, paid back debt, etc so the average of $33,000 per person. When you put the numbers into perspective, 10 trillion doesn't seem too big per person.

As long as I did my maths right... 10 trillion divided by 300 million is $33,000 roughly right?

Yes 33k new debt per person add onto the 43k already per person or 122k per tax payer which will head much higher for the already under pressure tax payer

[elZorro]

Hi inghamp.
I will leave emotional/psychological reactions to inflation to others and their shrinks.
I see the POG rising and I confess to owning a few spec gold miners. Will it reach previous highs. No one knows. What is clear to me is that the POG increase that everyone is getting so excited about is mostly about the $US colapsing, not gold being re rated. IM not interested in climbing ladders that are standing/sinking in quicksand pits.

Hi EZ
Dont have GTold/$NZ data or I would have posted it. I could give you NZ to Aussie dollars but you would have to do the math from there. Let me know if you want it and I will post it in Oooomps thread in the FOREX section.


By the way anyone who had invested in Gold at the bottom ( ie perfect timing ) in July would have made around 7% on their money.

I would think people in stocks are mostly doin better than that. A hell of a lot better.

Hi Strat, here is a site that has NZ gold price charts from 10 years or so to today..
(http://goldsurvivalguide.co.nz/gold-prices/)
I think the 10 year graph is useful: for the last 5 years NZ gold has trended solidly upward, never breaking downwards. It has broken strongly positive twice. Over the same 5 years, general stocks would not have fared well. So stocks would only be great over the short term, if you applied TA to them and were careful. Stocks with more gold exposure like OGC? Well, using the same tactics, most producers would have given phenomenal returns, and should continue to do so. Now I just have to practice what I preach...

[Skol]

Gold's in the news everywhere you look, new listings, the internet, psychics like Jim Rogers predicting gold prices, and the usual codswallop from the goldbugs telling everyone to get on board in Mary Holm's column in the Herald.
The herd is definitely on the march.

I can see it now, like after every mania, suckers not concerned about the return on their money, just the return of their money.

[STRAT]

Hi Strat, here is a site that has NZ gold price charts from 10 years or so to today..
(http://goldsurvivalguide.co.nz/gold-prices/)
Thanks EZ. I wont be needing it but I hope you found what you need there.

Im still of the opinion investing in solid gold is a FOREX play and from what I see going on with FOREX these days it all looks way to risky/scarey to me. :scared:I will stick to safer stuff like speculative mining microcaps and the like:lol:

Gold should do well, or at least look good next week fellas. The FED will be printing more of the monopoly money that golds value is measured in.

[elZorro]

Thanks EZ. I wont be needing it but I hope you found what you need there.

Im still of the opinion investing in solid gold is a FOREX play and from what I see going on with FOREX these days it all looks way to risky/scarey to me. :scared:I will stick to safer stuff like speculative mining microcaps and the like:lol:

Gold should do well, or at least look good next week fellas. The FED will be printing more of the monopoly money that golds value is measured in.

I think we're on the same page there. Here is a basic chart of OGC against All ords for three years, the worst in OGC's history. A belief in the premise of gold prices, along with some basic TA work, would have achieved spectacular returns especially in the last year and a half, and even a crude buy/hold would beat the main index over three years.

[JBmurc]

Gold's in the news everywhere you look, new listings, the internet, psychics like Jim Rogers predicting gold prices, and the usual codswallop from the goldbugs telling everyone to get on board in Mary Holm's column in the Herald.
The herd is definitely on the march.

I can see it now, like after every mania, suckers not concerned about the return on their money, just the return of their money.

Yeah you said that 10 months ago I guess if you keep saying it one day your be right in the mean time I'll keep some of my investments funds in Silver an gold

[elZorro]

Here is my reply to Mary,

I would never suggest that anyone puts all their investment in gold.

I do not believe that putting 20% of your investment into a gold producer is speculation.

Gold is in demand from emerging countries and you are prudently saying that the US Economy is weak.

I have spread my own investments between IGR,RMS and OGC.

I also have GXY and LYC as Rare Earths Investments.

I suspect that Mary may not have heard of Rare Earths.

Letter follows- Aren't i polite?


Hi Mary,

I found the answer to your reader regarding gold a little disappointing.

You have long been a proponent of spreading risk, and I totally support this.

At a time when the US Economy is failing due to greed, corruption and excess, also parralleled by European countries whose economic fundamentals are poor, investment of part of your portfolio in gold, silver and other minerals falls should fall within your recommendation of spreading risk.

Rather than buying physical gold, investors should look to some of the listed gold producers. An investment in Oceania Gold a year ago would have seen a capital appreciation of over 300%. This is not speculation,the company is highly profitable and predicts to mine between 270,000 to 290,000 ounces of gold this year. A rough calculation shows a projected profitability of close to $100 million dollars.

Unfortunately New Zealanders have an obsession with investing in property. This does nothing for the economy, other than allow overpaid real estate agents to drive around in imported BMW's and pat themselves on the back as to how good they are.

I would be recommending to your readers that in this climate they should be investing between 10-20% in mineral shares and not purely gold.

As an example there is a huge demand in Rare Earths and shares such as Lynas Corp (LYC) are well poised to benefit from this demand.

Hi Lewinsky, based on many letters to Mary Holmes, (maybe you sent yours too?) there was a slightly more informed treatment in the next week's column (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10680828). I think some comments had her on the back foot, her replies being a little terse. Mary Holmes and Skol seem to be in the same camp: if there are indeed large profits to be made, they must be at huge risk, and therefore one should stay away. Better to take those 10% TA gains, invest in bank deposits, pay off the house before investing, stick with the steady plan.

Perhaps neither Mary nor Skol have experienced the extreme risk of starting a business with their house mortaged for security, and come out the other end smiling several years later. People with that background must see gold investments for what they are, a singularly straightforward investment in today's climate. With a simple high return formula, PGM returns will only be halted when the world's economies have corrected themselves, and that's a while off.

A quote from Ryan Jordan, see Depression USA thread:


It may be the case that American investors have forgotten about real money, having been lulled to sleep by a (formerly) strong dollar, but I highly doubt that this is the case with African, Middle Eastern, southeast Asian, or central or eastern European investors, many of whom have had direct, first hand experience with a currency collapse. These investors understand that in a depression cash is king, and the king of cash is gold.

[Skol]

Your condescending comments are not true EZ, I took some big risks in my 30's and 40's which has resulted in the very fortunate financial position I am in now.
Gold, the risk vs reward doesn't stack up.
If you want to try some real risk, try aviation.

You know how to make a small fortune in aviation? Start off with a big one.

[denpal]

Mine was one of the responses.

It appears Skol wouldn't recognize a trend if he fell over one. To be honest I think he just enjoys winding up those who are profiting from a trend, in this case gold and silver.

Goodness knows what he thinks of the Rare Earths trend. If he'd been attuned to it he could have pocketed a handsome gain these last two months alone in the ASX REE sector.

[Skol]

Mine was one of the responses.

It appears Skol wouldn't recognize a trend if he fell over one. To be honest I think he just enjoys winding up those who are profiting from a trend, in this case gold and silver.

Goodness knows what he thinks of the Rare Earths trend. If he'd been attuned to it he could have pocketed a handsome gain these last two months alone in the ASX REE sector.

I own RDR which I bought recently.
There's always plenty of geniuses trumpeting their gains, but losses, well lets not talk about that, right?

[elZorro]

Your condescending comments are not true EZ, I took some big risks in my 30's and 40's which has resulted in the very fortunate financial position I am in now.
Gold, the risk vs reward doesn't stack up.
If you want to try some real risk, try aviation.

You know how to make a small fortune in aviation? Start off with a big one.

Skol, I'm sorry you took it that way. I was trying to make a point that running your own business can be extremely risky, but is also a valid investment process. From my point of view, goldmining stocks look easier, less risky and just as rewarding. I'd like to try both for now.

Er, isn't that your thread, on the positive side of aviation?

[Skol]

From todays FT.

.Few silver linings when gold bubble bursts
By Mark Williams

Published: October 17 2010 20:37 | Last updated: October 17 2010 20:37

Beware of bubbles. Tulips, the dotcom boom and pre-credit crunch real estate have a lot in common; they are assets that were in vogue, became overbought and eventually fell to earth. And now it’s gold.

Historically, two-thirds of gold demand comes from the jewellery industry and from countries like India and China. The remaining demand is generated by investors, manufacturing and the dental industry. But over the last four years, gold has staged a spectacular price rise and won many new investors. Everyone from hedge funds to individuals has jumped in, seeing gold as a way to improve portfolio diversification. Today portfolios often allocate 5 per cent or more to gold. A decade ago such an allocation in sound investment circles would have been heresy.
Market dynamics have changed too, with investors playing a larger part in what is driving prices higher. Now private investors hold over 30,000 tons of gold, more than the entire holdings of all the central banks on the planet. In short, gold fever has arrived on both Wall Street and Main Street. But all fevers eventually break.

The 2010 gold bubble is fuelled by a combination of five main factors: historically cheap cost of borrowing, a prolonged bull market, early profiteers, marketing hype and the risk being ignored. Investors claim that the current market high of $1,380 an ounce is not overpriced, but a reflection of global economic uncertainty, high unemployment and a decline in currency values. Gold is acting, as it should, as a hedge.

Investors also point to the 1980 bubble, when gold peaked at $850 an ounce and plummeted by 60 per cent in one year, as an aberration. Inflation was then over 13 per cent and short-term interest rates were above 16 per cent. Today none of this exists. Gold enthusiasts note the 1980 pre-bust price in today’s dollars and say gold must climb to $2,100 before hitting such dangerous levels. But such logic is flawed in that it assumes that 1980 is a good benchmark for the future. Ignored is the 20-year period from 1980 to 2000 when money invested in gold was dead money.

Today price is increasingly being determined by investors’ insatiable appetite for gold. But what happens when the shine wears off? It is always tricky to know when a bubble is set to burst, although price and investor sentiment can sometimes help to cut through this fog. And investor demand has now reached mania levels. In early October the Daily Sentiment Index of futures traders indicated that while only 3 per cent were bullish on the US dollar, 95 per cent were bullish on gold. When everyone in the market is on the starboard side of the boat, you should watch out.

Despite their human origins, most bubbles are not easily spotted until it is too late. The dotcom bubble took four years to burst; the real estate bubble six. The last speculative gold bubble, in 1980, took four years to implode, while this latest reincarnation is seven years in the making. This bubble will likely be pricked only when economic outlooks improve and unemployment figures in countries like the US drop below 8 per cent. This might come in 2011, but it could take much longer.

Unlike previous asset bubbles gold is a tiny fraction of total global investment capital. When the bubble pops, it will represent less than 2 per cent of the world’s total. Those most hurt will be the investors who are the last ones out. These tend to be the smaller investors – just as in the real estate bubble, those who can least afford to lose. However, in the aftermath of the credit crunch we have entered into an era in which global systemic risk is high and unpredictable. Even small events, seemingly unrelated, can trigger larger financial events.

If there is a silver lining to this bubble, when it does go bust, and gold prices plummet, it will be a sign that the global economy has snapped back from economic chaos to prosperity. This will signal job growth, stable currencies, a stop to US Federal Reserve quantitative easing. Then there will be little reason to own gold. In the end, speculators will relearn an age-old lesson: gold in times of financial stability is hazardous to investor health. Like tulips, it is pretty to the eye but does not provide lasting sustenance.

The writer teaches finance at Boston University School of Management and is author of Uncontrolled Risk: The Lessons of Lehman Brothers and How Systemic Risk Can Still Bring Down the World Financial System.

[lewinsky]

For every commentator saying gold will go down, there is another saying it will go up.

Thats what makes the markets go round.

Refer friday's Money Morning by Kris Sayce "Can Gold Get Higher? Abso...lutely "

I respect your caution Skol, however I remain comforatble with my gold shares that are part of my overall portfolio.

[elZorro]

What he said:


This bubble will likely be pricked only when economic outlooks improve and unemployment figures in countries like the US drop below 8 per cent. This might come in 2011, but it could take much longer.


That's what I think too, but I think it's taken a long time for the USA to get to this low point, and will take quite a while to climb back out.

[skid]

From todays FT.

.Few silver linings when gold bubble bursts
By Mark Williams

Published: October 17 2010 20:37 | Last updated: October 17 2010 20:37

Beware of bubbles. Tulips, the dotcom boom and pre-credit crunch real estate have a lot in common; they are assets that were in vogue, became overbought and eventually fell to earth. And now it’s gold.

Historically, two-thirds of gold demand comes from the jewellery industry and from countries like India and China. The remaining demand is generated by investors, manufacturing and the dental industry. But over the last four years, gold has staged a spectacular price rise and won many new investors. Everyone from hedge funds to individuals has jumped in, seeing gold as a way to improve portfolio diversification. Today portfolios often allocate 5 per cent or more to gold. A decade ago such an allocation in sound investment circles would have been heresy.
Market dynamics have changed too, with investors playing a larger part in what is driving prices higher. Now private investors hold over 30,000 tons of gold, more than the entire holdings of all the central banks on the planet. In short, gold fever has arrived on both Wall Street and Main Street. But all fevers eventually break.

The 2010 gold bubble is fuelled by a combination of five main factors: historically cheap cost of borrowing, a prolonged bull market, early profiteers, marketing hype and the risk being ignored. Investors claim that the current market high of $1,380 an ounce is not overpriced, but a reflection of global economic uncertainty, high unemployment and a decline in currency values. Gold is acting, as it should, as a hedge.

Investors also point to the 1980 bubble, when gold peaked at $850 an ounce and plummeted by 60 per cent in one year, as an aberration. Inflation was then over 13 per cent and short-term interest rates were above 16 per cent. Today none of this exists. Gold enthusiasts note the 1980 pre-bust price in today’s dollars and say gold must climb to $2,100 before hitting such dangerous levels. But such logic is flawed in that it assumes that 1980 is a good benchmark for the future. Ignored is the 20-year period from 1980 to 2000 when money invested in gold was dead money.

Today price is increasingly being determined by investors’ insatiable appetite for gold. But what happens when the shine wears off? It is always tricky to know when a bubble is set to burst, although price and investor sentiment can sometimes help to cut through this fog. And investor demand has now reached mania levels. In early October the Daily Sentiment Index of futures traders indicated that while only 3 per cent were bullish on the US dollar, 95 per cent were bullish on gold. When everyone in the market is on the starboard side of the boat, you should watch out.

Despite their human origins, most bubbles are not easily spotted until it is too late. The dotcom bubble took four years to burst; the real estate bubble six. The last speculative gold bubble, in 1980, took four years to implode, while this latest reincarnation is seven years in the making. This bubble will likely be pricked only when economic outlooks improve and unemployment figures in countries like the US drop below 8 per cent. This might come in 2011, but it could take much longer.

Unlike previous asset bubbles gold is a tiny fraction of total global investment capital. When the bubble pops, it will represent less than 2 per cent of the world’s total. Those most hurt will be the investors who are the last ones out. These tend to be the smaller investors – just as in the real estate bubble, those who can least afford to lose. However, in the aftermath of the credit crunch we have entered into an era in which global systemic risk is high and unpredictable. Even small events, seemingly unrelated, can trigger larger financial events.

If there is a silver lining to this bubble, when it does go bust, and gold prices plummet, it will be a sign that the global economy has snapped back from economic chaos to prosperity. This will signal job growth, stable currencies, a stop to US Federal Reserve quantitative easing. Then there will be little reason to own gold. In the end, speculators will relearn an age-old lesson: gold in times of financial stability is hazardous to investor health. Like tulips, it is pretty to the eye but does not provide lasting sustenance.

The writer teaches finance at Boston University School of Management and is author of Uncontrolled Risk: The Lessons of Lehman Brothers and How Systemic Risk Can Still Bring Down the World Financial System.

How many of you out there feel that the global economy is about to SNAP back from economic chaos to prosperity??

[upside_umop]

How many of you out there feel that the global economy is about to SNAP back from economic chaos to prosperity??

It's not about 'snapping' back...its about future expectation. I.e. What situation will we be in, in 10 years or so?

When 95% of people are bullish on gold..it's quite scary. Emotion could turn that herd mighty quick...especially when that marginal demand is hoarding.

I read varying degrees of information on gold....some say we have 200 years supply in stock (vaults) for productive uses? Crazy.

[JBmurc]

It's not about 'snapping' back...its about future expectation. I.e. What situation will we be in, in 10 years or so?
I agree no snapping back in western economic prosperity overnight 10yrs out could well see the western powers once again growing healthy

When 95% of people are bullish on gold..it's quite scary. Emotion could turn that herd mighty quick...especially when that marginal demand is hoarding.
Maybe of metal investors I don't think the general public are 95% bullish on gold I'd say less than 5% of the western population would own any PGM bullion


I read varying degrees of information on gold....some say we have 200 years supply in stock (vaults) for productive uses? Crazy.
Yes 95% of all the gold ever mined by man is still here in vaults jewelry etc Unlike Silver which 95% of all mined is gone wasted away with micro usage depletion

[COLIN]

The article clipped by Skol from the FT probably encompasses the view of the majority of us here. It is summed up by the statement that "gold in times of financial stability is hazardous to investor health." There are very few of us who believe that we are currently living in"times of financial stability", hence the lure of the shiny, untarnishable, metal which has been regarded as the ultimate store of wealth for millenia.

I do like to reduce an issue to its bare bones!

[elZorro]

The article clipped by Skol from the FT probably encompasses the view of the majority of us here. It is summed up by the statement that "gold in times of financial stability is hazardous to investor health." There are very few of us who believe that we are currently living in"times of financial stability", hence the lure of the shiny, untarnishable, metal which has been regarded as the ultimate store of wealth for millenia.

I do like to reduce an issue to its bare bones!

I agree Colin, I think that after many hours of exhaustive research on the 'Interweb' and using our life experiences, we have figured out the importance of gold as an investment (or not, if standard stocks are the be-all and end-all). I went back a few pages to some of my research that I hope is correct:

Most of the gold already mined is held as jewelry (about 60%) and 25% is stored as bullion. Every human on the planet would have about 23g of gold (well under an ounce) if it were to be distributed equally. Of course that isn't the case, but for many, a decision to hold some gold where they didn't have much before, would have huge ramifications.

I hope that puts gold hoarding into perspective: on average it's done on a small scale.

[Huang Chung]

Quite happy to see gold down another $10. Doesn't hurt to let some steam out of the pressure cooker every now and then, as it probably helps keep gold stronger for longer.

Much rather see orderly buying and selling rather than a parabolic rise followed by a crash.

[hal]

It's not about 'snapping' back...its about future expectation. I.e. What situation will we be in, in 10 years or so?

When 95% of people are bullish on gold..it's quite scary. Emotion could turn that herd mighty quick...especially when that marginal demand is hoarding.

I read varying degrees of information on gold....some say we have 200 years supply in stock (vaults) for productive uses? Crazy.

I think 95% might be exagerrating. I don't even think 5% of people are bullish on Gold. Most people would be looking on wondering what it is all about.

[elZorro]

This uncertainty in world economies is behind gold's price rise. Here's a section of today's opinion piece from Colin James, which will appear in the ODT. He was covering the Labour Conference, and their policy proposals.



Certainly, Labour has been emboldened to act on the plausible premise that neoliberal economics is no longer convincing politics. The enemies of capitalism who lurk multitudinously within capitalism and who, in precipitating the GFC, did such wide and deep and still persisting damage have brought that about. Labour sees its economic nationalism as fitting this "changed world".

The damage those enemies of capitalism did to capitalism has set in train actions which will for a time curtail capitalism and diminish its capacity to enrich.

Around the rich world a number of governments are beset by an irresoluble conundrum.

They have had to bail out banks. They have put their budgets heavily in the deficit and their central banks have printed money wildly. None of this accords with neoliberal principles.

Do they keep pumping imaginary money into their economies in the hope of "recovery"? If they do, how do they deal with the huge government debt they are accumulating? If they slash state spending, will that still-birth the "recovery", cut revenue and compound their problem? Should they, dare they (and New Zealand), attack the looming fiscal impossibility of pensions and health care for the baby-boomer bulge in over-70s?

Many countries, like New Zealand, need to "rebalance" from rampant debt-fuelled consumer spending to exports. But who can buy these exports if everyone wants exports to exceed imports?

Worse, that need to export is leading some large countries to try to drive down their exchange rates to get competitive advantage. China thinks it can sit this out and still get rapidly richer. It might find that doesn't work out.

The spectre is universal economic nationalism. The much-travelled Goff was in good international company when he claimed: "No country I can think of would find the rules I am proposing unusual."

Shadow finance minister David Cunliffe puts it this way: "We want to own our own future."

Can we? The global economy is now densely interconnected, so much that if the United States penalises Chinese imports to force it to raise its exchange rate, that will hurt many United States firms making goods in China for sale in the United States.

Goff himself told the conference: "The future is in the connected, global, high-wage, high-skill growth industries of the twenty-first century."

That sounds like the economy of the future. But is it economic nationalism?



'No answer' came the stern reply.
I'm not sure who the enemies of capitalism are either.. but some in the business/finance world are just plain greedy, too busy looking after No.1. We've probably all met some of them.

The Gold Buys Dow chart (http://home.earthlink.net/~intelligentbear/com-dow-au.htm) isn't looking much better, still trending down towards a predicted '6oz gold buys the Dow'.

[macduffy]

I saw an interesting chart of the POG in Aussie dollars yesterday - sorry, I can't reproduce it - which showed that gold is currently AUD200 lower than it was five months ago.

Particularly significant when considering that Aussie goldies' costs are virtually all priced in AUD.

OK, I admit I'm still justifying my decision to sell out of IGR yesterday.

[macduffy]

I saw an interesting chart of the POG in Aussie dollars yesterday - sorry, I can't reproduce it - which showed that gold is currently AUD200 lower than it was five months ago.

Particularly significant when considering that Aussie goldies' costs are virtually all priced in AUD.

OK, I admit I'm still justifying my decision to sell out of IGR yesterday.

Here it is.

http://www.infomine.com/investment/charts.aspx?mv=1&f=f&r=6m&c=cgold.xaud.uoz#chart

[JBmurc]

I saw an interesting chart of the POG in Aussie dollars yesterday - sorry, I can't reproduce it - which showed that gold is currently AUD200 lower than it was five months ago.

Particularly significant when considering that Aussie goldies' costs are virtually all priced in AUD.

OK, I admit I'm still justifying my decision to sell out of IGR yesterday.

Yes but many costs are affected by the USD like Oil/diesel,Generators,mining Plants,Diggers loaders,plus other mining equipment
IMHO for Gold explorers looking at moving into production present USD/AUD is very favourable when you think a mining plant could cost you round 30mill

[inghamp]

http://www.marketwatch.com/story/brynjolfsson-bets-on-inflation-2000-gold-2010-10-20?siteid=rss&rss=1

[JBmurc]

hahahahah,
LOL, NAV's at 18c, in the real world JB that's what's called 'hoping' and it's an unfortunate fact of life that 'hope' won't make the share price rise.

Really well we will see SKOL I'm very confindent NAV will be over 30c before the years out don't know about your TLS going anywhere in a hurry though lucky you BT funds guys know where to invest

[Skol]

Lets see if its good news or bad news first.
Tim Geithner made a statement in the last couple of hours that the yen, euro and dollar are roughly in alignment.
On CNBC, gold and silver are falling and the dollar is rising.

and:

TA dude Darryl Guppy has just been on saying sell gold.

[JBmurc]

Good for Guppy I'll be keeping my Gold,REE shares for abit yet till early next year prob

I did sell my last SVL-@28c paid 10.5c

You should have brought NAV cheap 16c-17c SKOL instead of bagging them LOL 30c next week

[frostyboy]

I originally brought gold to take a holiday, not worrying about money. See this video http://broadcast.ino.com/education/goldengulfaff/%20?campaignid=3
such patterns which are now volatile would suggest a change in trend unless it is a bubble, which I don't know how to handle

[elZorro]

JB, looks like that was a good selling point with SVL, I'm still waiting for it to start trading to see what happens. Gold and silver dropped sharply overnight, as per Frostyboy's video prediction.

But gold is still a bet on instability and uncertainty. What will happen at the November G20 (http://online.wsj.com/article/SB10001424052702304011604575564661615005500.html)f or instance? Those holding physical gold can't easily sell some on a daily basis, so as with slow and/or optimistic stock traders like me, we'll have to give some profit back to the market. But it has been a great run.

[JBmurc]

Yeah USD Gold had a good size pull backs over the last week AUD Gold no so bad,think we'll see a base form in the low 1300's before making it's march towards 1500 early next year

[STRAT]

Good morning FOREX investors :D
Heres the Gold to USD and
Gold to Aussie D
Last nights action not included

[STRAT]

Heres one that puts it all in perspective

[inghamp]

What else can Geithner say? lol You are the eternal skeptic (I'ts something I appreciate about your posts)... Where is your skeptism right now? Alignment?? pfft... this is just rhetoric.. how can anyone not take that with a large grain of salt??

[Huang Chung]

A fairly balanced report from Kitco on gold going forward.

http://www.kitco.com/ind/Media/images/header_news.jpg
http://www.kitco.com/ind/Media/images/tagline.jpg
http://www.kitco.com/ind/Media/images/Debbie_news.jpgMETALS OUTLOOK: Gold To Watch Dollar, G-20 Outcome
22 October 2010, 2:46 p.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/

(Kitco News) - For the first time in six weeks, gold posted a lower weekly close, pressured by the strengthening dollar, and the dollar’s direction will guide the metal’s way again next week.

As gold posted its lower close weekly in a month and a half, the dollar posted its first weekly rise in that timeframe, showing the strong divergence between the two.
December gold on the Comex division of the New York Mercantile exchange settled at $1,325.10 an ounce, up/down 3.8% on the week. December silver ended at $23.118 an ounce, up/down 4.8% on the week.

A surprise rate hike by the Chinese central bank and uplifting words from U.S. Treasury Secretary Tim Geithner stoked the rise in the dollar for the week. Gold’s sell-off in dollar terms was greater than it was in other currencies, but the yellow metal witnessed its biggest pull back in recent weeks.

Ed Meir, analyst at MF Global said, for the short-term it seems commodities in general are pulling back significantly whenever the dollar rises, even modestly. Still, he said, the strategy to sell the dollar and buy dips in commodities will remain, at least until the Federal Reserve meeting in early November is completed.

Next week’s direction in gold could be influenced by what comes out of the G-20 ministerial meeting in Seoul, South Korea this weekend and the potential impact on the dollar.

Currencies will be discussed at the meeting, but market watchers don’t expect much more than a “bland deal,” said Aroop Chatterjee, at Barclays Capital. “It is hard to see any significant policy changes coming out of the G20 this weekend given that the differences between the various groupings seem especially wide and their incentives diverse,” Chatterjee said.

If that’s the case, Meir said, it could lead to a weaker dollar on Monday, which could push prices higher next week.

But analysts at BNP Paribas have a little more favorable outlook toward the buck. They said with the Fed taking a less aggressive approach to quantitative easing, it allows more negotiations at the G-20 meeting and an agreement on currencies. They suggest if there is a favorable outcome from the Seoul show, the dollar could bounce versus the euro and British pound. They add currencies that have rallied because of “expectations of increased liquidity are now likely to become increasingly vulnerable to at least a corrective pullback.”

Meir said what’s more important for the dollar is the decision on quantitative easing by the Fed which is expected at the Federal Open Market Committee meeting. “At that time, the markets will know how much quantitative easing will actually be coming through, and if the amount is less than expected - which is what we expect will be the case - we could see a sizable dollar short-covering rally ensue,” Meir said.

Rich DeFalco, president of West Cooper Asset Management, said it’s likely gold will see a more choppy trade going into next week and the next few weeks because of the upcoming Fed meeting and the U.S. mid-term elections. Stronger equities – which have given gold support up until this week – could continue next week as the second batch of corporate earnings is released. Earnings have been relatively healthy so far.

“Right now I see gold fluctuating. People say if it breaks $1,300 it could go to $1,250 and if gets back above $1,350 it could go to $1,450. To me, though it’s still in a trading range. In the short-term, I think the downside is limited,” DeFalco said.

Ken Morrison, founder and editor of online newsletter, Morrison on the Markets, said he believes financial markets in general might experience a bit of a pullback ahead of the FOMC meeting as ideas of that the Fed will be more measured toward quantitative easing need to be removed. “There might be a little nervousness that too much has been baked into the cake,” he said.

With that idea, gold and silver prices for that matter, might have seen their highs for the year. “Everyone who wants to be in gold is probably in gold,” he said. “The only thing that will carry gold further is investment demand; it certainly won’t be jewelry demand.”

In the very short term Morrison said the $1,300 level is pivotal for gold and he said gold could bounce between $1,300 and $1,350, but eventually he expects to see gold slip through that psychologically important area. His three month target is $1,250 to $1,225.

He said one area to watch is long-term interest rates. Short-term rates remain low, but he noted the 10 year and 30 year rates are starting to creep back up. If that continues, it could mean an outflow from fixed income and perhaps to more risky assets like equities. “In that case, gold is the odd person out. That can translate to parting with some gold. After all, if you’re comfortable with buying equities, why hold gold?” he said.

[Skol]

You guys always tell me there's no bubble and it's going much higher.
There's only one thing to do - buy more gold.

[Huang Chung]

You guys always tell me there's no bubble and it's going much higher.
There's only one thing to do - buy more gold.

Skol....I presume you are being sarcastic here.

Personally, I wouldn't be buying physical gold here (but the gold diehards probably would). I am though, fully exposed to a couple of gold juniors with excellent growth prospects over the next 12 months. I'm happy as long as gold stays at or higher than $1,150 oz or thereabouts. Market should look favourably upon all by the highest cost gold plays at this level or better. Any fall off in the POG is likely to be accompanies by a drop in the AUD vs the USD, so in AUD terms, the fall in the POG would be somewhat muted.

There will be swings and roundabouts in the price of gold, but it's hard to see the debt issues across the world getting fixed anytime soon, or the economic situation improving greatly....so it's hard to see gold falling off a cliff.

[Skol]

Here's a few things you might want to consider that have dominated the finance news for the last couple of days.

Treasury yields are up:
Dollar is up a little:
G20 meeting:
Elections:
Stock indexes up, best Sept. since 1939:
Goldbugs favourite words "QE", might not happen:
Nervous traders and hedge funds - psychology of traders if you like:

Ever see any of those Dirty Harry movies? - "Well, are ya feelin' lucky punk?"

Barrons magazine reckons gold will average $1500 in 2015.

[hal]

Here's a few things you might want to consider that have dominated the finance news for the last couple of days.

Treasury yields are up:
Dollar is up a little:
G20 meeting:
Elections:
Stock indexes up, best Sept. since 1939:
Goldbugs favourite words "QE", might not happen:
Nervous traders and hedge funds - psychology of traders if you like:

Ever see any of those Dirty Harry movies? - "Well, are ya feelin' lucky punk?"

Barrons magazine reckons gold will average $1500 in 2015.

Any idea what Barron's record is like?

In 2005 what GOLD price were they predicting for 2010 .

If they were accurate then maybe we can take notice.

[Skol]

Any idea what Barron's record is like?

In 2005 what GOLD price were they predicting for 2010 .

If they were accurate then maybe we can take notice.

The reason Barrons say $1500 in 2015 is because it's a fallacy to say that gold is 'rare'. More gold is being mined because the price makes it worthwhile and if the price climbs further more jewellery will be melted down.

[hal]

The reason Barrons say $1500 in 2015 is because it's a fallacy to say that gold is 'rare'. More gold is being mined because the price makes it worthwhile and if the price climbs further more jewellery will be melted down.

What is your source for that assumption?

[Skol]

What is your source for that assumption?

Barrons magazine, much more reliable than goldbug websites that you've got to take with a grain of salt.

[Skol]

Really well we will see SKOL I'm very confindent NAV will be over 30c before the years out don't know about your TLS going anywhere in a hurry though lucky you BT funds guys know where to invest

A share placement in NAV JB, very exciting news. LOL

[trackers]

A share placement in NAV JB, very exciting news. LOL

Gold 1338.90 +13.80 +1.04%

[Skol]

Gold 1338.90 +13.80 +1.04%

Yeah, I see that but I'm not sure why, amateurs getting in I think.
On CNBC there are 2 articles, one indicating there is a surprising amount of co-operation at the G20, and the other saying the dollar may have bottomed out.

[inghamp]

Bang on there Skol. We wont see a bubble in gold and silver until amateurs (in droves) start transfering their wealth to gold and silver... When the US version of the local pak n save's workers start buying etc..

Is that really happening? (yet)?

[Skol]

Bang on there Skol. We wont see a bubble in gold and silver until amateurs (in droves) start transfering their wealth to gold and silver... When the US version of the local pak n save's workers start buying etc..

Is that really happening? (yet)?

Of course it is, there was a half page article in the USA today 3 days ago entitled "So You Want To Buy Gold", all about how to get into it. It's a bubble all right.

[asc4]

Bang on there Skol. We wont see a bubble in gold and silver until amateurs (in droves) start transfering their wealth to gold and silver... When the US version of the local pak n save's workers start buying etc..

Is that really happening? (yet)?

I find it interesting that some people think Gold could be in a bubble or even some say that the the US is deflationary (the USD goes down..thats inflationary isn't it?), anyway I notice when I might mention Gold and the ****e that the world is in with my mates and family, no-one knows what is going on, and what the price of gold is doing and to be frank most of them don't care. Now this is across alot of different age groups and professions, which does surprise me. I suppose this could be a little ongoing experiment that could be my own way of knowing when I might sell.

So I'll just wait for my mum to bring it up over some homemade scones :)

[peat]

So I'll just wait for my mum to bring it up over some homemade scones :)

shame we dont have shoeshine boys these days. ;+)

[inghamp]

I find it interesting that some people think Gold could be in a bubble or even some say that the the US is deflationary (the USD goes down..thats inflationary isn't it?), anyway I notice when I might mention Gold and the ****e that the world is in with my mates and family, no-one knows what is going on, and what the price of gold is doing and to be frank most of them don't care. Now this is across alot of different age groups and professions, which does surprise me. I suppose this could be a little ongoing experiment that could be my own way of knowing when I might sell.

So I'll just wait for my mum to bring it up over some homemade scones :)

This is same for me.. No one cares about gold.. no one is talking about gold.. And like all kiwis I interact with multiple sections of society. No bubble at all yet. People are extremely wary of all things financial these days. Including gold and silver.. It will take a lot to move that attitude into bubble territory.. INFLATION in the US anyone? Enough to kick mania into gear? We all know the US will get it soon.. it's just a matter of when and how much.

In the meantime.. all my mates mildly mock me for my gold bug tendencies..

[elZorro]

This is same for me.. No one cares about gold.. no one is talking about gold.. And like all kiwis I interact with multiple sections of society. No bubble at all yet. People are extremely wary of all things financial these days. Including gold and silver.. It will take a lot to move that attitude into bubble territory.. INFLATION in the US anyone? Enough to kick mania into gear? We all know the US will get it soon.. it's just a matter of when and how much.

In the meantime.. all my mates mildly mock me for my gold bug tendencies..

Never mind, we have to take it on the chin.. Here's a chart we might have seen before, describing a general bubble. The text with it is also useful, showing that the move to gold is very minor, compared to bonds for example. Some timing ideas for runs on gold included.

http://www.marketwatch.com/story/the-gold-bubble-isnt-here-just-yet-2010-10-22?pagenumber=1

There are some shaky gold explorers around, who are managing to stay afloat in the current environment. Unless they get very lucky, we can do without them. But those who are sound junior or mid-tier producers will have great quarterly reports this year. Goldmining is a relatively straightforward business, the books can be worked out well in advance, no problem with inventory, assuming the gold price holds.

And has gold/silver inflated any more than many other common commodities this year in US$? No.
http://www.ob-research.com/Chart_of_the_Week_Inflation_in_the_Real_World

[sheepy]

http://www.marketwatch.com/story/the-gold-bubble-isnt-here-just-yet-2010-10-22?pagenumber=1

Hey Elzorro, looking at the marketwatch graph on the link you have found what stage of the cycle do you think we are at yet. Must be almost the bear trap, or getting towards media attention stage. Hasnt hit greed or dilusion yet. I have OGC shares and have being following your posts with intreast. I cant see the american dollar picking up that much, any country can print more money, gold is the reserve currency at least till the smoke clears.
This site wouldnt be the same if it didnt have a skol, Prc site has several.

[Aussie]

The reason Barrons say $1500 in 2015 is because it's a fallacy to say that gold is 'rare'. More gold is being mined because the price makes it worthwhile and if the price climbs further more jewellery will be melted down.

Barron's . . ? Ha. What planet are you on . . ? Worldwide output is in decline. Gold production is falling because no new major deposits have been discovered or brought into production. Central banks have stopped selling and are now net buyers, competing against retail investors and the jewelry market. Investment gold is generally held in "strong hands" and in this current economic climate it's going to take MUCH higher prices to shake more onto the market. China is buying 100% of it's own output plus more, the COMEX is a manipulated joke. Are you one of the people on this board who earlier in the year were calling for a retreat from the US$1,100 area . . ?

[Aussie]

I've given it some thought JB:
Bet you a $100 bottle of wine, (to be provided with receipt) gold will end lower at the end of 2010 than at the end of 2009.
End of 2009 price $1095.

Is it a deal?

Doh! That's lookin' like a real bad call . . . JB's gonna get nice Christmas present this year . . .

[Skol]

Doh! That's lookin' like a real bad call . . . JB's gonna get nice Christmas present this year . . .

Plenty of time yet, when gold heads south it won't just fade away. Gold down $22 in 2 days and dollar on the way up. On Yahoo Finance says buy the dollar, about time I would have thought.
How about some proof that gold production is falling, it's a goldbug fantasy from shonky goldbug websites.
According to one report, QE might be on the back burner. The hedge funds are probably unloading right this minute, you get to find out about it a few weeks time.

[elZorro]

Plenty of time yet, gold down $22 in 2 days and dollar on the way up.
How about some proof that gold production is falling.
It's a goldbug fantasy from shonky goldbug websites.

Skol, there has been a falling production since 2000 or so, on average, but newly released 2009 figures show a 10% increase in production to a recent near peak (http://www.goldsheetlinks.com/production.htm). Have to give you that one. It's probably an indication that there are some previously mothballed mines or resources that can make a dollar out of the current gold price. Production will drop back if the gold price falls, because a lot of the easy gold would have been extracted when the price was only $300/oz or less.

I still think you'll be needing to put aside some moolah for a good bottle of wine though.

[elZorro]

http://www.marketwatch.com/story/the-gold-bubble-isnt-here-just-yet-2010-10-22?pagenumber=1

Hey Elzorro, looking at the marketwatch graph on the link you have found what stage of the cycle do you think we are at yet. Must be almost the bear trap, or getting towards media attention stage. Hasnt hit greed or dilusion yet. I have OGC shares and have being following your posts with intreast. I cant see the american dollar picking up that much, any country can print more money, gold is the reserve currency at least till the smoke clears.
This site wouldnt be the same if it didnt have a skol, Prc site has several.

Hi Sheepy, I agree that it feels like bear trap territory, if we believe gold will go out of control into a bubble. Looking at the chart just now, I see that soon (in theory) smart money and institutional investors will stop putting in fresh capital (or does it mean they will sell down positions?) leaving the public or retail investors to it. There were no time or value scales to the graph. Those of us who are into mining shares are fairly insulated from the downside worst of this anyway, as long as gold holds some sensible value longer term.

You're welcome to post on the OGC thread Sheepy, kick some ideas around.

[Skol]

A 'perfect storm' for stocks, nothing about gold.

www.cnbc.com/id/39436305

[Aussie]

A 'perfect storm' for stocks, nothing about gold.

www.cnbc.com/id/39436305

You get your news from CNBC . . .? Oh Boy!

[Skol]

You get your news from CNBC . . .? Oh Boy!

Let me guess where you get yours from - Kitco, right.
In the meantime here's something for the sheep. It was considered a bubble a year ago.


BEWARE THE GOLDBUG.
David Frum
Early in the financial crisis, the satirical website The Onion published this fake news story, titled “Recession-Plagued Nation Demands New Bubble To Invest In.”

WASHINGTON — A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest. “What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future,” said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. “We are in a crisis, and that crisis demands an unviable short-term solution” …

That bubble has now arrived here in the real, non-satirical world: It’s gold.

The price of gold has zoomed past US$1,000 an ounce, reaching an all-time record of US$1,070 on Wednesday. Suddenly, talk radio and cable television are jammed with ads urging small investors to buy coins and bars. One vendor pushes its product with this amazing slogan: “Gold has never been worth zero!” (You’d think the more relevant question might be: “Has gold ever been worth less than I’m about to pay for it?”)

Gold is a strange investment vehicle. If the typical small investor were to hear a pitch for investment in copper, zinc or molybdenum, he or she would probably react negatively. “The metals market? Are you crazy? That’s no place for me.” But if the metal is gold, suddenly everybody wants to play.

People think of gold not as a metal, but as an alternative form of money. $1,000 worth of copper will weigh as much as a sub-zero refrigerator. Molybdenum makes a lousy Christmas present. Gold is sold in coin form, and looks and feels like cash.

Unfortunately, also like cash, gold yields no return. If you put a roll of coins in a safety deposit box, a decade from now you’ll have the same roll of coins — and in the interim, you’ll have paid 10 years’ rent on the box.

That may be a price worth paying for a hedge against inflation. At today’s prices, however, investors should ask themselves some hard questions about how real the inflation risk is — and how much it is worth paying to insure against that risk.

Most U.S. indices continue to warn of deflation ahead, not inflation.

Consumer price indexes are dropping, not rising. Average weekly wages are dropping too. For the first time since 1975, there will be no cost-of-living increase in U.S. Social Security payments to retirees. (President Obama is proposing to distribute an additional $250 per retiree anyway, but this largesse will require a vote in Congress.)

Even once the recession ends, price pressures will remain weak.

The last economic cycle was powered by consumer spending: Increases in personal consumption accounted for fully 79% of the increase in U.S. GDP between 2000 and 2007. That consumption was financed by debt, and now the time has come for consumers to repay.

Consumers are saving more and spending less. Spending has dropped at the fastest rate since the Second World War. Savings rates have jumped.

Demand is dropping for just about everything consumers buy. On the supply side, meanwhile, labor will be in excess supply for years: Both the Congressional Budget Office and the Office of Management and Budget project unemployment rates over 7% through 2012.

In such an environment, how are prices to rise?

Gold buyers insist that prices must rise. They argue that there is something fundamentally unsound about paper money. In time, the whole system must collapse — and only gold will be recognized as a safe store of value. In this argument, gold becomes something more than an investment. It becomes an ideological protest against the consumer-led modern economy — the equivalent of dumping Canadian dollars to register a complaint against medicare’s waiting times.

But what we are seeing now is not a protest. It’s a stampede. The market stampeded into stocks in 1998, houses in 2005 and now gold in 2009. The stampede leaders whooped for everyone to follow — and then quietly made their escape before the crash. It’s happening now again with gold.

Here’s perhaps the beginning of wisdom. Folks at home: Don’t speculate. Save. Maybe you regret that you didn’t buy gold when everybody else was buying houses? It won’t help to buy gold when everybody else is buying gold!

If you must speculate, do yourself at least this favour: Don’t buy what the market loves. Buy what the market hates. Sell your gold — and buy a foreclosed condo in Florida.

©David Frum

[JBmurc]

buy a condo in florida LOL

Gold bounces back $18.40 after USD falls