Gold

[elZorro]

Gold bolted up late Friday to rest at US$1360 near enough, Silver well past $24 now. The 'Gold buys Dow' ratio still on track trending down, US$ dropped again towards its near-term low.

http://home.earthlink.net/~intelligentbear/com-dow-au.htm

http://quotes.ino.com/chart/index.html?s=NYBOT_dx&t=&a=&w=&v=s

[Skol]

Gold at $400, quite feasible I'd say.

www.thestreet.com/story/10882569/1/the-gold-bubble-is-about-to-burst.html

All the gold ever mined would a fit in a cube 67 feet each way, or you could buy all the farmland in the USA, and 10 companies the size of Exxon Mobil and still have 1 trillion left.
Which is going to create the most value?

I nearly forgot - George Soros has started selling his gold.

[Huang Chung]

I nearly forgot - George Soros has started selling his gold.

Well Skol, at least George is counting his gains after riding gold higher.

[elZorro]

Gold at $400, quite feasible I'd say.

www.thestreet.com/story/10882569/1/the-gold-bubble-is-about-to-burst.html

All the gold ever mined would a fit in a cube 67 feet each way, or you could buy all the farmland in the USA, and 10 companies the size of Exxon Mobil and still have 1 trillion left.
Which is going to create the most value?

I nearly forgot - George Soros has started selling his gold.

Skol, that's being a bit obtuse isn't it? If an investor protects savings from a lifetime of hard work by temporarily putting it into gold, who knows what use that cash will be put to later on? And are you sure Mr Soros didn't just want some spending money?



Soros Fund Management sold 341,250 shares of the SPDR Gold Trust, the largest ETP backed by bullion, in the second quarter, according to an Aug. 16 Securities and Exchange Commission filing. That still left a holding (http://www.bloomberg.com/apps/quote?ticker=ETFGTOTL:IND) of 5.24 million shares, equal to almost 16 tons. Soros declined to comment on the change, through a spokesman.

[Huang Chung]

Gold at $400, quite feasible I'd say.



Just reading the October edition of Paydirt.

Steve Parsons, MD of Gryphon Minerals states on P25:

"and this is an amazing statistic - 50% of global gold production is at more than $US900/oz."

So quite clearly, gold sustaining a fall below $1,000 an oz is going to see production drop right off.

Skol, I don't like your chances of seeing $400 gold anytime soon.

[elZorro]

The naysayers are right, Gold has been shot to hell today..down to $1362

And here's a 3 year chart of the Soros ETF fund:

[Aussie]

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.

Previously under the Washington accords the CB's annually sold around 450-500 tonnes into the market. That's not happening anymore. That's about 20% of the annual gold supply off the market. In fact, central banks are now COMPETING with investors and are now net BUYERS of gold for the first time in 30 or 40 years. The IMF has very little gold left to sell and the scrap market is not producing as much as it used to either. Mine production is NOT keeping up with demand, there are not a lot of BIG deposits being found. All the gold ever mined in the history of the world would fit into 2 Olympic sized swimming pools with room to spare - that ain't a whole lot compared to the untold $TRILLIONS of worthless paper "assets" floating around the financial world . . .

[Gasbox]

Iran attempting to avoid losses from a weakening dollar with the upcoming QE announcement in Tues/Weds FOMC.

http://www.bloomberg.com/news/2010-10-31/iran-switched-15-percent-of-foreign-exchange-reserves-into-gold-mehr-says.html

Could be a key week for a test of the previous gold high with the Indian festivals peaking this week with Dhanteras on Wed and Diwali on Friday.

"Gold sales during Oct. 31-Nov. 6, when the country celebrates Dhanteras and Diwali festivals, may rise by up to 40% on year, in turn supporting the outlook for record imports in 2010, a senior World Gold Council (WGC) official said on Thursday."

[Skol]

If you draw a graph starting in 2006, with oil and gold level-pegging, gold is now higher relative to the oil price when it crashed 76%. Not a perfect comparison though.

How does that chart of Soros's ETF look to you EZ? Starting to curve on the top a bit?
Besides Soros is hardly likely to dump loads of gold at once, it would raise the alarm and set off a panic.

[elZorro]

If you draw a graph starting in 2006, with oil and gold level-pegging, gold is now higher relative to the oil price when it crashed 76%.

How does that chart of Soros's ETF look to you EZ? Starting to curve on the top a bit?
Besides Soros is hardly likely to dump loads of gold at once, it would raise the alarm and set off a panic.

Hi Skol, I thought that would get your attention..:)

I'm not a TA fanatic, but a trendline pointing upwards also fits the chart longer term. The last two times there was a levelling off, it shot up strongly afterwards too. Of course the other explanation for Soros holding onto most of his gold is that the operators of the fund see plenty of upside yet.

The overnight blog from Franklin Sanders, at The-Moneychanger.com (http://silver-and-gold-prices.goldprice.org/)included this:



The rumour lately driving markets was that Bonzai Bernanke would inflate the US dollar away through Quantitative Easing II. The news will be contained in the Fed's Open (actually "secret") Market Committee meeting on Wednesday. Will BB follow through, or not? What will the markets do? Suppose Republicrats win? Will that change his itty mind? Who knows, but we all know that no election will change the nature of the American economy & its monetary system, where one-half (1/2) the income of nearly every state consists of 20-25% state & local government spending, about 30% direct Federal spending, and another 5 - 15% Federal government loans & loan guarantees.

There 'tis, folks: you have no economy. You have half the people whittling, gazing at TV, indoctrinating, investigating, watching, suspecting, regulating, and writing tickets to the other half, who actually produce something. You think Republicans will change that? Right, about the same time the Devil starts selling ice-skating concessions in hell. It would take 20 years of careful maneuvering to switch back to a productive economy, or 3 years of pure hell, & a long sight of vision and statesmanship. Where will that come from?

Sure, this guy is running a business selling gold (money changing, not a bad name for it), but at least part of his message is anchored in middle America. We have enough trouble moving our own small economy here, it's not quickly moving into high-tech exports, as the politicians have been pleading us to do. (Mind you, they're sending mixed messages, like taking away the well-conceived R&D tax credits, but that's another story). Gold is a bet on uncertainty in major economies of the world. So today will be interesting to watch. (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10684911)

[elZorro]

I had to rescue the gold thread from page 2..
From its low yesterday to right now, the change has been about US$58, or 4.3% up from the low. Predictable I suppose, with QEII happening, the US$ devaluing. But a move in gold of that much in one day, someone is making some easy money. Rawden spotted this fact on One News, he's about to go and finally buy some gold. Is this the Skol warning?

[lewinsky]

Gold up to $1,393.

The US answer is to print more money.

We are experiencing a historic transfer of power, with all the old trade marks that history has shown of a power in deathroll.

Greed, printing money, trying to solve overseas problems without knowing what the history of the country is about, Vietnam, Iraq, Afganistan, importing and not producing and instant gratification.

Instead of listening to CNBC we should be focussing on what is happening in Inda, China and the Middle East.

In the meantime gold and gold shares are a sensible place to have some of your money

Personally I think Goldstein would have been as good a Treasury Head as Greenspan.

Very, very interesting times.

LEW.

[trackers]

Looks like a new high to me. Kitco has 10 year gold at a $1,381 high, and its currently trading at $1,391.

[Huang Chung]

As strange as it might seem, I'd prefer to see gold hold around current levels. Last thing I want to see is any sort of parabolic rise.

[elZorro]

Gold up to $1,393.

The US answer is to print more money.

We are experiencing a historic transfer of power, with all the old trade marks that history has shown of a power in deathroll.

Greed, printing money, trying to solve overseas problems without knowing what the history of the country is about, Vietnam, Iraq, Afganistan, importing and not producing and instant gratification.

Instead of listening to CNBC we should be focussing on what is happening in Inda, China and the Middle East.

In the meantime gold and gold shares are a sensible place to have some of your money

Personally I think Goldstein would have been as good a Treasury Head as Greenspan.

Very, very interesting times.

LEW.

Lew, couldn't agree more.

[Lego_Man]

Definitely feeling a little frothy at the moment. All this market uncertainty because of currency debasement is generating all sorts of weird market pricings.

I cant put an exact timeframe on it, but i would expect a correction to the 1200-1250 level within the next few months.

[Huang Chung]

Definitely feeling a little frothy at the moment. All this market uncertainty because of currency debasement is generating all sorts of weird market pricings.

I cant put an exact timeframe on it, but i would expect a correction to the 1200-1250 level within the next few months.

No problems with that. Stronger for longer.

[upside_umop]

Some say this is a transfer of power etc etc to Asia, India etc. Lets put this into perspective.

The US:

-Are circa 25% of the global economy
-Have a bigger navy than the next 11 biggest navy's of the world combined.
-Have the largest stock markets in the world, still making up by far the largest proportion of the global market capitalisation.

Some say the Chinese have been the master planners. Perhaps they look like it, but they have:
-4 times as many people to feed/power as the US.
-Much less diversified economy
-Second largest stockmarket in the world (recently overtook Japan, which has a tenth the population of China).
-1/3 the GDP of the US and earn 12 times less per capita.

To me, the USA are now playing hard ball. Some think they don't know what they are doing - of course they do. They're the country that will benefit the most in the world by debasing their currency. I've given reasons before, and another one is, that China will be forced to decrease their standard of living given the CNY is 'largely' tied to the USD. From Strats last chart, it looked to have start to change.... What is important about this, is that USA are getting their desired effect. The Chinese are revaluing the Yuan to maintain their standard of living.

To me, this doesn't appear to be the demise of the 'giant,' more like the 'giant' showing what they've got.

I hope this wasn't too off topic, but yeah, couldn't help myself. Gold looks to be moving, lets hope my only gold share NAV picks up, eh?

Updated chart of the CNY/USD Strat?

[inghamp]

Playing hardball? Nah.. I think that behind the scenes both the US and Chinese power brokers know this was going to happen (devaluing US currency).. The US has always paid off its debt with funny money. They aren't stupid... the Chinese know this. All the media/politics is just show ponying for the public to take the attention off what really is happening (I won't speculate as to what that is..) This was planned..

Regarding relative economy/military.. agreed China is still far behind the US.. BUT. The rate of improvement means their catchup will be swift. China only needs to double its current middle class (still small relative to the billion odd peasantry) and it will be THE largest single consumer market on the planet. With wealth comes many things.. such as an increase resources for research etc. It is on the way to doubling its middle class.. Hence its buying up resources overseas...

So back to gold..

[Skol]

This could be the vertical spike before the fall but who knows?
Where's the inflation I've been hearing about for years, I keep hearing it's coming, so's Xmas, but gold keeps going up.
IMO you're way better off with a selection of stocks, an imbalance of your portfolio toward gold could be deadly.
As far as Asia goes, they've got lots of cheap labour, but they've hardly ever had an original idea ever. All the innovation comes from the West and the Asians cash in by producing it more cheaply. e.g. The USA has been operating aircraft carriers since the '30's but China has yet to build and operate one, and that won't be happening anytime soon. Be good to watch when they do.
Check out Japanese WW2 machine guns, all copies.

Sorry Huang, that's the way it is.

Everyone makes a big deal out of US debt. The UK and Japan have worse problems.

[elZorro]

Article in WSJ: (http://online.wsj.com/article/BT-CO-20101104-722461.html)momentous movements in gold and esp. silver, looks like you were right JB?
That wine at Christmas is going to taste mighty fine I'm sure. :t_up:

[JBmurc]

Article in WSJ: (http://online.wsj.com/article/BT-CO-20101104-722461.html)momentous movements in gold and esp. silver, looks like you were right JB?
That wine at Chistmas is going to taste mighty fine I'm sure. :t_up:

yeah should do have been drink a few here in Fiji very nice

[Skol]

yeah should do have been drink a few here in Fiji very nice

In todays 'USA Today' page 8B, full page advertisement


"US GOVERNMENT
GOLD RELEASE

GOLD EXPLODES PAST $1340oz.

Experts predict $15,000/oz.

All Americans are advised to buy Govt. issued gold.
Smart individuals are moving up to 30% of their assets into US Govt gold coins."

etc etc etc etc.
And if any of you are big enough suckers, here's the phone number. 1-888-408-0811.

Stock up JB.

[JBmurc]

In todays 'USA Today' page 8B, full page advertisement


"US GOVERNMENT
GOLD RELEASE

GOLD EXPLODES PAST $1340oz.

Experts predict $15,000/oz.

All Americans are advised to buy Govt. issued gold.
Smart individuals are moving up to 30% of their assets into US Govt gold coins."

etc etc etc etc.
And if any of you are big enough suckers, here's the phone number. 1-888-408-0811.

Stock up JB.

No thanks If I had some spare funds I'd be buying silver bullion or good diverse PGM&base metals explorers/producers-ARV,HLX,CFE,NAV,ARD
NAV just had a good ann. mill over on production of 7,224oz+ gold for the month costs $950oz-980AUD(100oz extra cost because of clean-up of slip)
so for the the month NAV had a EBIT of 2.5m+ looking forward 30m+ EBIT per ann looks likely not bad for a company worth only 97mill that also has a Rare earth discovery worth 20-30mill so for round 60-70mill your getting a 30mill gross after costs to produce Gold miner very cheap

[fungus pudding]

yeah should do have been drink a few here in Fiji very nice

Ummmm .... yep. Sounds like it!

[trackers]

In todays 'USA Today' page 8B, full page advertisement


"US GOVERNMENT
GOLD RELEASE

GOLD EXPLODES PAST $1340oz.

Experts predict $15,000/oz.

All Americans are advised to buy Govt. issued gold.
Smart individuals are moving up to 30% of their assets into US Govt gold coins."

etc etc etc etc.
And if any of you are big enough suckers, here's the phone number. 1-888-408-0811.

Stock up JB.

Hey Skol, With gold hitting fresh all time highs what would you suggest to invest in? Qantas shares?

[Skol]

Hey Skol, With gold hitting fresh all time highs what would you suggest to invest in? Qantas shares?

You should invest in gold - where I am Glen Beck is pushing gold on TV-again.

Weimar Republic, debt, all that crap.

[JBmurc]

You should invest in gold - where I am Glen Beck is pushing gold on TV-again.

Weimar Republic, debt, all that crap.

$1400 soon then SKOL hows those TLS shares going

[Skol]

$1400 soon then SKOL hows those TLS shares going
Buy what the market hates, not what the market loves.

Why is NAV dead in the water with gold price 'exploding' as the USA Today calls it?

Also have DOW & TOL, check them out.

[tricha]

In todays 'USA Today' page 8B, full page advertisement


"US GOVERNMENT
GOLD RELEASE

GOLD EXPLODES PAST $1340oz.

Experts predict $15,000/oz.

All Americans are advised to buy Govt. issued gold.
Smart individuals are moving up to 30% of their assets into US Govt gold coins."

etc etc etc etc.
And if any of you are big enough suckers, here's the phone number. 1-888-408-0811.

Stock up JB.

The only Sucker around here seems to be you Skol :eek2: The yanks are broke. The Dollar is junk status and anyone holding them is, holding paper, nothing more, nothing less.

[Skol]

The only Sucker around here seems to be you Skol :eek2: The yanks are broke. The Dollar is junk status and anyone holding them is, holding paper, nothing more, nothing less.

Haven't heard from you for a while tricha, I assumed that you were still licking your wounds from the POO crash.

[Huang Chung]

Meanwhile, Qantas blows ANOTHER engine....

Skol, I think it was you who referred to Black Swan events????

[inghamp]

Lets not rub it in to Skol here. He/She provides a necessary skepticism for we goldbugs.. Although I am starting to think that he is secretly a gold bug who purposely takes the other side lol. Just too consistently anti gold.

So.. QE2 the kicker for gold mania? Personally I don't think so. I think we need interest rates to be on the rise internationally not just in Aussie for gold to really move.. Gotta love all that hot money floating round now. Wait till this starts changing hands:

http://finance.yahoo.com/news/US-companies-hoarding-almost-rb-2687745036.html?x=0&.v=1

That's just in the US..

[Skol]

Meanwhile, Qantas blows ANOTHER engine....

Skol, I think it was you who referred to Black Swan events????

Don't let that put you of airlines HC, it's booming, I'm working harder all the time.
There's an article in todays FT saying that while gold has its place, those investing in it should remember 1980.

[upside_umop]

So.. QE2 the kicker for gold mania? Personally I don't think so. I think we need interest rates to be on the rise internationally not just in Aussie for gold to really move.. Gotta love all that hot money floating round now. Wait till this starts changing hands:

http://finance.yahoo.com/news/US-companies-hoarding-almost-rb-2687745036.html?x=0&.v=1

That's just in the US..

Interest rates rising - that would imply tightening of money supply, and therefore less money.

Hot money? The FED can sterilize if need be. Plus, I don't think they will mind their largest creditor having their funds diluted lol. The Chinese have a thing or two to learn...I think the US have learnt from the last few years what has been happening and are now acting. A lot that $1 trillion in cash could be used on acquisitions, which will ultimately flow back to investors. Some will reinvest, some will spend. It's funny how they forgot Apple in that line up...I thought they have the biggest cash pile of the all!

Gold will go down one day...I just find it extremely hard to price given 'hoarding' has virtually no intrinsic value. Some say it's 'real' money. How?

[elZorro]

Interest rates rising - that would imply tightening of money supply, and therefore less money.

Hot money? The FED can sterilize if need be. Plus, I don't think they will mind their largest creditor having their funds diluted lol. The Chinese have a thing or two to learn...I think the US have learnt from the last few years what has been happening and are now acting. A lot that $1 trillion in cash could be used on acquisitions, which will ultimately flow back to investors. Some will reinvest, some will spend. It's funny how they forgot Apple in that line up...I thought they have the biggest cash pile of the all!

Gold will go down one day...I just find it extremely hard to price given 'hoarding' has virtually no intrinsic value. Some say it's 'real' money. How?

UU, I think gold is perceived as real because in every country in the world, artisan miners have laboured to produce it from alluvial workings. They intrinsically know its worth, because the easiest gold is now mined already in most cases, and even then only a few made a serious income.

This article from the Herald about China is interesting: and I've heard direct from Chinese manufacturers: their margins are extremely tight. I never cease to be amazed at the quality products they can provide, at low cost. How long will this continue?

Superior know-how key to China

By Brian Fallow (http://www.nzherald.co.nz/brian-fallow/news/headlines.cfm?a_id=16) 5:30 AM Saturday Nov 6, 2010


http://media.nzherald.co.nz/webcontent/image/jpg/SCCZEN_A_250510NZHCCFONTERRA09_220x14797554.JPG (http://javascript<b></b>:ExpandArticleImage();)

China needs the milk from New Zealand's genetically superior cows. Photo / Christine Cornege

What's the difference between a Kiwi cow and a Chinese one? About 100 per cent more milk, apparently.
Capitalising on superior agricultural technology, know-how and livestock genetics will be the key to expanding New Zealand's trade with China, says David Mahon.
The expatriate New Zealander has lived in China since 1984 and his merchant bank, Mahon China, numbers Fonterra among its clients.
"China has a 16th century agricultural system supplying a 21st century consumer market," he said.
Moving to mechanised, larger-scale farming was the only way China was going to get the greatest value out of its land and maintain a balanced relationship with the limited resources of its agricultural sector.
"Also, the genetics of Chinese livestock is pretty exhausted."
Put a New Zealand cow into an open feedlot system in China, as Fonterra is, and it can produce twice as much as its Chinese sisters, Mahon says.
Expanding New Zealand's trade with China can't just consist of shipping more wood and wool and whole milk powder. Our ability to increase production of those commodities is limited, and in any case the country needs to be careful of becoming overreliant on any single market.

"So to increase our trade we have to trade our technology and intellectual capital. In doing that it is a matter of creating businesses in China so that that technology and know-how are encompassed in entities that we have control and influence over."
The processes of urbanisation and industrialisation still have a long way to run, when at least two-thirds of the population is still rural.
"China is moving inland, it is moving west, in terms of its production base. Its coastal cities, one could say, are like developed countries and they are investing in China's interior, as the West used to invest in China's coastal provinces when it was all a developing country."
The Chinese economy is expected by the World Bank to grow 10 per cent this year, boosted by a swift recovery in net exports. Investment spending continues to outstrip consumption and its trade and current account surpluses are rising.
But Mahon believes we can take the Chinese leadership at their word when they talk of the need to rebalance the economy, in the opposite direction to the Anglo economies, towards one that relies more on domestic consumption.
"Despite the big numbers in exports and the historical appearance that China has been dependent on exports, it is not really what defines the economy.
"The amount of value that China derives from exports is small if you look at both exports and imports. It imports a lot of the inputs needed to create all the stuff they export to the West," Mahon said .
"China has recognised that the extent to which exports contributed to GDP growth each year was not actually healthy and that they had to create or allow a more dynamic economy and domestic consumption to evolve. It is happening. We are seeing measurable shifts towards domestic consumption. So the consumer revolution that is China has only just begun."
The process of rebalancing the Chinese economy to one more focused on domestic markets, with a greater appetite for imported goods, would be assisted by a stronger currency, but the Chinese authorities are taking a cautious and gradual approach to appreciation of the renminbi.
"The Chinese Government doesn't know what the value of the renminbi should be. Therefore it won't make any major move in respect of it," Mahon said.
"Unless it can to some extent forecast the ramifications of, let's say, an appreciation of 30 per cent, it is not going make that choice. It is gradually feeling its way forward with an incremental revaluation of something like 5 per cent a year."
When Premier Wen Jiabao on a recent trip to Europe was getting a hard time about an undervalued currency, his response was that many Chinese exporters "have profit margins of only 2 to 3 per cent, 5 per cent at most".
"Should the yuan appreciate by 20 to 40 per cent, as demanded by some people, a large number of Chinese export enterprises will go bankrupt, the workers will lose their jobs and the migrant workers will have to go back to the rural land, making it hard for society to remain stable."
With China having contributed half the growth in the global economy last year, a crisis there would be "disastrous for the world", Wen said.
Mahon agrees: "And what he could have added is that a large minority of exports are generated by foreign companies in China. American multinationals are very concerned that a sudden appreciation of the renminbi will hurt their international profits.
"In many cases the only profit centre for these companies worldwide is China."
By Brian Fallow (http://www.nzherald.co.nz/brian-fallow/news/headlines.cfm?a_id=16) | Email Brian (http://dynamic.nzherald.co.nz/feedback/author/index.cfm?a_id=16&objectid=10685664)

[skid]

As far as I can see,the whole monetary system is based on Trust. Why else would you go out and work for 40 hrs a week for some bits of paper,or some ink on the bank statement?
If gold begins to acqire our trust and money starts to lose it,then why not see it as money?
If you deduct trust you have a piece of paper verses a lump of precious metal.
Its something to base our trust on..something that is finite.
Im sure other things could be used but the difference with gold is that it has been used before throughout history.
You wouldnt have to eat it,just trust it more than you trust present day money.

[Huang Chung]

As far as I can see,the whole monetary system is based on Trust. Why else would you go out and work for 40 hrs a week for some bits of paper,or some ink on the bank statement?
If gold begins to acqire our trust and money starts to lose it,then why not see it as money?
If you deduct trust you have a piece of paper verses a lump of precious metal.
Its something to base our trust on..something that is finite.
Im sure other things could be used but the difference with gold is that it has been used before throughout history.
You wouldnt have to eat it,just trust it more than you trust present day money.

Spot on Skid.

A couple of interesting articles on what has passed as money over time in different cultures.

http://www.britishmuseum.org/explore/themes/money/what_is_money.aspx

http://www.geldmuseum.de/download/sonder_another_form_of_money.pdf

Paper money wins hands down for convenience, but, as we are seeing so clearly right now, a currency's value on the international stage is very much linked to the economic health and policies of the issuing country. Nobody seemed to care too much until it was the all-mighty Greenback that faltered. So is it really surprising that the demand for gold is rising in view of such uncertainty and weakness around the US Currency?

[STRAT]

As far as I can see,the whole monetary system is based on Trust. Why else would you go out and work for 40 hrs a week for some bits of paper,or some ink on the bank statement?
If gold begins to acqire our trust and money starts to lose it,then why not see it as money?
If you deduct trust you have a piece of paper verses a lump of precious metal.
Its something to base our trust on..something that is finite.
Im sure other things could be used but the difference with gold is that it has been used before throughout history.
You wouldnt have to eat it,just trust it more than you trust present day money.Yup. Wells aid Skid. Thats it in a nutshell and makes one realize how shaky it all is eh?

It is also a means of division.
Its a bit hard to trade a barrow of cabbages for 1/5 of a milk producing cow without rendering the cow unable to produce milk.


Heres a few pics to gently remind all you gold bugs why I think of you as FOREX traders :p

POG in USD in blue
POG Aussie D in green

[inghamp]

Hi There,

Agreed it sounds counter-intuitive that gold will rise when interest rates start rising... But Look a bit deeper. Why would interest rates start rising?

Inflationary pressure/an over heating economy. Investors, seeing inflation on the rise and not knowing when it will stop will check out and dump wealth into safer stores of wealth. So despite a better return from higher interest rates they will not want to risk it..

Hot money? Can the Fed really sterilize this much? Sure its worked in the past (just).. but this time the amount of money involved and the current US debt levels means this is highly unlikely. If the US raises interest rates to stop the economy overheating how will it make its debt payments?

Keynesian monetary tool set looks exhausted .. Unless someone can conceive of a game changer.

Lets not forget how long it takes for these macro economic measures to take effect. There is always a very significant lag.

[inghamp]

UU, I think gold is perceived as real because in every country in the world, artisan miners have laboured to produce it from alluvial workings. They intrinsically know its worth, because the easiest gold is now mined already in most cases, and even then only a few made a serious income.

This article from the Herald about China is interesting: and I've heard direct from Chinese manufacturers: their margins are extremely tight. I never cease to be amazed at the quality products they can provide, at low cost. How long will this continue?
[B]

I can validate this from my visits... If China were to revalue there would be chaos in the Eastern seaboard cities I have visited. They are swamped with migrant workers ( millions filling every nook and cranny.. no joke.. they are everywhere) and they depend on these factories to survive. Turn those off and China will explode. The CCCP are governing on a knife edge (as always is the case with authoritarian dictatorships) and are allowed to continue governing because they provide economic growth and ARE uplifting millions out of poverty. Compare with democratic India.. no where near as much improvement in this period of time.


If you were China what would you do? Everyone always points the finger at China.. My recommendation if you feel strongly enough to voice an opinion on this. GO to China. You will see the masses of REAL poor. Then you will understand how fragile their system is (and if you know Chinese history you will also know we Westerners are partly responsible for this - google Opium Wars of 1844 and the Hundred Years of Shame.)..

[inghamp]

http://www.marketwatch.com/story/bernanke-not-trying-to-increase-inflation-2010-11-06


“We are not in the business of trying to create inflation,” Bernanke

LOL..

[upside_umop]

As far as I can see,the whole monetary system is based on Trust. Why else would you go out and work for 40 hrs a week for some bits of paper,or some ink on the bank statement?
If gold begins to acqire our trust and money starts to lose it,then why not see it as money?
If you deduct trust you have a piece of paper verses a lump of precious metal.
Its something to base our trust on..something that is finite.
Im sure other things could be used but the difference with gold is that it has been used before throughout history.
You wouldnt have to eat it,just trust it more than you trust present day money.

Correct. The monetary system is based on confidence, trust and commitment. That's no secret....

This happens in every day life, mortgage payments, credit terms etc.

Why not see gold as money? Because, according to all the people who say it has value, it serves exactly the same purpose as paper money does today. Except...you have to pay upto $1,000 an ounce to dig it up, you have to store it, bury it, pay someone to look after it, insurance costs etc. I.e It isn't at all productive. Would spending that time and energy (equivalent to $1,000) not be more usefully spent in such a way that actually benefits people?

EZ says gold has value, because miners know how hard it is to get out of the ground. I know how hard it is to dig a pile of dirt up, but it doesn't mean it has value. Gold simply seems to have value, because back in the day, when people saw that it was 'pretty' and came in small quantities, it was deemed to have a value. I.e. Gold had value, because it had value. Now, we can protect our paper notes from forgery by having security features which can be printed out for cents - without anyone copying it. This is a lot more efficient medium of exchange.

I bet people will start commenting about look at the mess we're in etc etc. I've posted the stats before. When we were on the gold standard, we were in recession more often than not for a good period of time in the 1700 - 1800's. By moving to a fractional reserve system, we have increased our standard of living not even imaginable under gold.

Re: deducting trust. If you deduct trust, you don't have civilization. Buy a gun and run for the hills.

Don't worry, I've got some gold stocks, although I almost feel guilty holding them - however, it's only going to be some hoarder who is going to get burnt in the long run, so it doesn't bother me so much. If I make money out it, I can efficiently allocate it make a difference somewhere else in terms of it being productively used.

Does anybody in their right mind, think that money would be a more efficient medium of exchange than paper currency? Hehe I'm baiting here...It's good though, hopefully making some people think.

[upside_umop]

I can validate this from my visits... If China were to revalue there would be chaos in the Eastern seaboard cities I have visited. They are swamped with migrant workers ( millions filling every nook and cranny.. no joke.. they are everywhere) and they depend on these factories to survive. Turn those off and China will explode. The CCCP are governing on a knife edge (as always is the case with authoritarian dictatorships) and are allowed to continue governing because they provide economic growth and ARE uplifting millions out of poverty. Compare with democratic India.. no where near as much improvement in this period of time.


If you were China what would you do? Everyone always points the finger at China.. My recommendation if you feel strongly enough to voice an opinion on this. GO to China. You will see the masses of REAL poor. Then you will understand how fragile their system is (and if you know Chinese history you will also know we Westerners are partly responsible for this - google Opium Wars of 1844 and the Hundred Years of Shame.)..

That's basically China's fault for trying be unfair over the western worlds system isn't it. They can't have it both ways - that is, a western life style but trying to undercut us.

China should try bring more equality, because as you say there are millions of poor. There are also millions of super rich. I don't need to go to China to see that, I know it from being at University when Chinese would come over and splash out 30-40-50-60-70-80k on a car. You know there is inequality when you see that sort of stuff happening.

The world isn't fair, I know that.

[elZorro]

http://www.marketwatch.com/story/bernanke-not-trying-to-increase-inflation-2010-11-06


“We are not in the business of trying to create inflation,” Bernanke

LOL..

I agree, it's not the same as saying "This policy is designed to keep a lid on inflation" because the effect will most likely be the opposite.

UU: you're being a bit obtuse about digging a pile of dirt, and comparing it to finding gold, which is a very rare but stable element in the Earth's crust. If you were digging away in a pile of dirt and found a 1oz nugget of gold, would you perceive that nugget as worthless too? No, I didn't think so.

Yes Inghamp, I should visit China, it would be valuable experience I'm sure.

[inghamp]

That's basically China's fault for trying be unfair over the western worlds system isn't it. They can't have it both ways - that is, a western life style but trying to undercut us.

China should try bring more equality, because as you say there are millions of poor. There are also millions of super rich. I don't need to go to China to see that, I know it from being at University when Chinese would come over and splash out 30-40-50-60-70-80k on a car. You know there is inequality when you see that sort of stuff happening.

The world isn't fair, I know that.

Fault? I don't think that is how the Chinese see. Like I said. Research the Hundred Years of Shame. You will find out what the European powers did to the Chinese state.. Also in more recent times. Who has been the major currency manipulator? Is it China's fault for deciding on a fixed exchange rate as the only way to defend itself against the US and other wealthy countries inflating their currencies over the past decades. (we see inflation everywhere.. what is the cause?).

I don't think its "who's fault it is" issue. Playing the blame game gets one nowhere.. The Chinese look at what is.. They are a very pragmatic culture/society. They have seen what the US did to Japan when its trade was imbalanced (a major factor for 2 decades of stagnation in Japan).. They wish to retain control over their countries monetary system... I actually think they are playing this game very well. Considering where they started from (following the 100 Years of Shame). At least they aren't being fleeced by the West like most other third world countries. It's a big hit to our ego lol

And yes like any country there are massive inequalities and China's system is incredibly corrupt. I find it amazing that they are still managing to uplift millions upon millions of people out of abject poverty. However, if they'd followed the Western style of assisting the weak/poor then they would be like the rest of the third world today. This says that although the system is incredibly flawed it is still a more efficient/pragmatic method of uplifting a third world nation. Look at India... And they had no hundred years of Shame... No cultural revolution.. no massive societal wide experiments.. China doesn't do things half pie lol

[Skol]

Hey inghamp,
How about what the Chinese did to themselves, don't give us the Western guilt complex.

Mao Tse tung murdered somewhere around 80 million of his own countrymen.

How about the 'great leap forward'?

Don't give me that PC hand wringing stuff. LOL

[inghamp]

lol... I guess we are digressing from the forum topic here?
80 million? more like 60..

The Great leap forward was a social experiment on an uprecedented scale.. They gave socialism a real try.. But all of that came out of what? What were the foundations that made this happen? Their problem was that they didnt know the consequences of what they were doing >> causing starvation on a massive scale.. e.g. who knew that if you kill all the birds to remove competition for crops that you would create an insect plague.. we know now lol.. The number of things they tried thinking that the collective masses would succeed were many. Naivety resulting in horrible outcomes..

The cultural revolution that followed was a different story. This was an attempt to retain power by Mao's friends when the above failed. The cultural revolution had evil underpinnings. The Great Leap forward did not. Stupid though. Very very stupid.

It starts in 1844 roughly when the British government forced China to allow the sale of opium in China (Britain then flooded the market) etc... Any and every attempt to stop this by Qing govt was subsequently blocked by either threats or war.. this caused the demise of the Qing govt and brought about the systematic abuse of Chinese territory etc by all the major foreign powers. They literally controlled entire areas of China. e.g. Shandong province was controlled in all but law by the Germans (if you visit there you will see lots of German architecture dating from the period)..

In a weakend state a christian cult(taiping) appeared in southern china and resulting in the Taiping rebellion. The foreign powers played into this.. supplying both sides and resulting in at least 10 million deaths from war/starvation.

This is followed by further sytematic abuses by foreign powers (none could conquer China without risking war with other foreign powers..) and ultimately led to a period of warlordism with weapons supplied by said foreign powers.. This then so weakened China that Japan invaded long before the start of WWII..

So China was crippled and in need of leadership. The communists filled this void. The West destroyed their state for the sake of profit and so weakened it that it was easy pickings for Japan and the evil that followed. Hence The Hundred Years of Shame..

Its an unfortunate truth.. But you and I are not responsible for this. This happened long before we were born. No blame is held by anyone today. But ignoring that this happened doesnt help one understand the China of today. This history is still very fresh in the Chinese psyche..

Cooincedentally.. it was the Opium War of 1844 that was the nail in the coffin for silver as money in Britain's bimettalic system.. Silver flowed to China from Britain to buy Chinese massed produced products.. Like what is happening today with the US. The Chinese did not buy anything back. They already made better.. hence trade imbalance. Britain's reply was Opium.

[inghamp]

that is a wall of text.. apologies.. I majored in Chinese and American History

[upside_umop]

I'd like to think we are little more civilised now a days than that.

If the Yuan was revalued more quickly, there would fewer imblances in the global economy, the US potentially wouldn't need QE2, the USD wouldn't drop so much and gold wouldn't be as high as it is today.

But, the Chinese choose not to.

A good article here. (http://noir.bloomberg.com/apps/news?pid=20601087&sid=aAmzfcAlQrRg&pos=6) I like the Indians, Koreans, and the Japanese. They're doing it the right way, which in the long term benefits everyone.

Strat, what is the gold price like in the Trade Weighted Index for the USD? I'd expect to have seen it rising still. There is usually a dominating effect, it's just that the AUD has been the best performing currency for the year, that has erroded most of golds gains. I'm sure people aren't complaining given their PPP has risen immensely under just that. :D

[STRAT]

Hi Oooomop.
How do we determine that the Aussie has been rising when all points of reference are moving targets? Genuine question by the way :D
Could we not say that Gold is in fact the best point of reference? I know yall look at the POG rising and rub your hands with glee but I see gold standing still while the tool you use to measure its value is turning to loo paper.

Never mind the Aussie. At the moment the Kiwi is looking strong and eroding some of my gains on the ASX :mad ;::t_down::ohmy::crying:

I will see if I can produce that chart for you but the gold data I get is very limited.

As a side note. If I were the Chinese Id be doing exactly as they are doing. The US are trying to devalue them selves out of debt. China is not playing the game and why the hell should they?

[elZorro]

that is a wall of text.. apologies.. I majored in Chinese and American History

Not at all, your post is much appreciated. I did science, so plenty of gaps to fill.

[RRR]

Thanks inghamp - good stuff.

[upside_umop]

Hi Oooomop.
How do we determine that the Aussie has been rising when all points of reference are moving targets? Genuine question by the way :D
Could we not say that Gold is in fact the best point of reference? I know yall look at the POG rising and rub your hands with glee but I see gold standing still while the tool you use to measure its value is turning to loo paper.

We can generally know if a currency is increasing in value vs other currencies or "moving targets" by way of a Trade Weighted Index (TWI). This index as far as I'm aware, is usually constructed by the Central Bank of a country, to represent the countries trade basket. The Yuan was recently increased in weight in the AUD TWI to around 22%. You can get the data from here (http://www.rba.gov.au/statistics/hist-exchange-rates/index.html). Alternatively, you can download a chart pack from here (http://www.rba.gov.au/chart-pack/index.html), which shows that the AUD has been increasing against it's trading nations.

Generally, when you see Bloomberg or such state "AUD Best Performing Currency" they are ranking it against any other single currency as this too is representative even if it is a moving target. I.e. If it's the best performing against any single currency, no other currency will have beaten it, right?


Never mind the Aussie. At the moment the Kiwi is looking strong and eroding some of my gains on the ASX :mad ;::t_down::ohmy::crying:
Ah, I'm sure you're still well up. I myself have no intention to bring any money back while we continue to lag Australia in every KPI!


I will see if I can produce that chart for you but the gold data I get is very limited.

I understand that. No worries at all....as long as the related stocks are going up, right?


As a side note. If I were the Chinese Id be doing exactly as they are doing. The US are trying to devalue them selves out of debt. China is not playing the game and why the hell should they?

China, although big, are getting pushed down a narrow hallway with no way of resisting the bigger guy. The US will win the battle. The sad thing is, there doesn't need to be a battle.

[Skol]

There's a very good article in todays FT by John Dizard giving the reasons for a reversal in gold and silver.

A euro-area sovereign default would create a rush back to the dollar and we all know what that would do the PoG.

There's been some churning in the gold and silver ETF's and whipsaw prices, which usually indicate a top.

The low level of lease rates. If you want to borrow gold or silver you can do so at very low rates in large quantities. If there was shortage of metal in the vaults it wouldn't be the case.

He also reckons there's a lot of gearing in precious metals and time's running out.
I'm not that familiar with some of this high finance but apparently there's some margin calls due.

[inghamp]

"A euro-area sovereign default would create a rush back to the dollar and we all know what that would do the PoG."

Will that happen if the USD is experiencing its own crisis? There is a lot of people getting educated (like never before) about this.. They are all watching and thinking.. Nah.. this is all conspiracy theory.. surely not.. surely the govt doesn't do this.. there must be another cause for inflation... Its China's fault, Its the Euro's fault.. etc.. What happens when the effects (that this really is happening) starts to become apparent. Just one major currency.. These are average joe bloggs with no university education and who watch shortland street every day and then go to work.. They hear this stuff but discount it in order to continue living in the now.. But they do hear about it.. What will be the "tipping point"?


Good point.. BUT.. Gearing in what and with what? paper money. Paper gold/silver (via etfs and futures) could suffer the same consequences.. Mind you who wants that scenario to happen? My stocks.. argh no.. But then want and whats possible are two different things.
The famous coming short squeeze in silver.. fairly plausible scenario..

Regarding sovereign debt:
http://blogs.wsj.com/economics/2010/11/06/number-of-the-week-102-trillion-in-global-borrowing/?blog_id=8&post_id=12335&mod=igoogle_wsj_gadgv1

funny thing about this article "major advanced nations haven’t had too much trouble raising the money they need. "... Does printing new money count as raising? mmm

"Tighter regulations could push banks to buy more safe assets such as U.S. Treasurys." mmm.. starting to sound like China and it's capital controls..

[elZorro]

There's been some churning in the gold and silver ETF's and whipsaw prices, which usually indicate a top.


The hazards of TA charting are all around us. Just one well-reported comment about possibly setting up the gold standard again, and off we go.
http://opinion.financialpost.com/2010/11/08/the-gold-standard-and-the-doomed-u-s-dollar/

[gazprom1]

Skol,

One day you will be possibly right about the POG and silver but by that time we will all be wealthy. I have been buying silver bullion from $17 through to about a week ago at $23 will an average price of just over $20. At todays price of $27 plus, I am sitting on 35% gains. Plenty of room to ride out a correction but we will possibly see $30 before any correction.

Gazprom

[skid]

Is anyone really surprised that the US dollar has fallen against gold this week? They may not be on the gold standard anymore but basic market forces still rule.

[skid]

Thats good buying Gasprom

[Skol]

Skol,

One day you will be possibly right about the POG and silver but by that time we will all be wealthy.

You might be right as long as you take your profits early.

I missed out on heaps because I took my profits in November 1986, so the '87 crash was neither here nor there to me. I still had my profits, but most didn't. A lawyer at a firm I used at that time blew his brains out in his backyard (with a shotgun) following the '87 meltdown.
Neither was the tech wreck or the property crash or the GFC a problem because they all had to happen, herd instinct big time.
The GFC was forewarned by the FT 1 year in advance, when they published about the sub-prime.

I won't 'possibly' be right, I'll definitely be right.

I've got cash in the bank ready to sift through the wreckage.

[trackers]

Skol,

One day you will be possibly right about the POG and silver but by that time we will all be wealthy. I have been buying silver bullion from $17 through to about a week ago at $23 will an average price of just over $20. At todays price of $27 plus, I am sitting on 35% gains. Plenty of room to ride out a correction but we will possibly see $30 before any correction.

Gazprom

Hey Gaz, nice one.... Are you buying physical silver? Mind sharing where from?

[inghamp]

Finally some real evidence of inflation starting to rear its ugly head:
for all those into the Technicals..

"Although the Federal Reserve would like us to believe that inflation remains low, the markets say otherwise. As of Friday, our composite indicator that looks at the trends in gold, crude oil and yields on the 10 year Treasury is at an extreme value."

http://thetechnicaltakedotcom.blogspot.com/2010/11/inflationary-pressures-heating-up.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+blogspot%2FvPeU+%28The+Techni cal+Take%29&utm_content=Google+Feedfetcher

[inghamp]

"Meanwhile, as world leaders prepare to meet in Seoul this week, Robert Zoellick, president of the World Bank, said in a Financial Times op-ed piece that leading economies should consider “employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

A return to some sort of currency link to gold would be “practical and feasible, not radical,” Zoellick said. He made the proposal as part of reforms to be considered ahead of the Group of 20 meetings in South Korea. Read more about Zoellick's comments "

http://www.marketwatch.com/story/gold-retreats-silver-keeps-on-rallying-2010-11-08?siteid=rss&rss=1

[COLIN]

Skol,

One day you will be possibly right about the POG and silver but by that time we will all be wealthy. I have been buying silver bullion from $17 through to about a week ago at $23 will an average price of just over $20. At todays price of $27 plus, I am sitting on 35% gains. Plenty of room to ride out a correction but we will possibly see $30 before any correction.

Gazprom

35% eh. Conflicts with a headline I spotted in yesterday's news: "Gazprom's profits up 66%".

[upside_umop]

"Meanwhile, as world leaders prepare to meet in Seoul this week, Robert Zoellick, president of the World Bank, said in a Financial Times op-ed piece that leading economies should consider “employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

A return to some sort of currency link to gold would be “practical and feasible, not radical,” Zoellick said. He made the proposal as part of reforms to be considered ahead of the Group of 20 meetings in South Korea. Read more about Zoellick's comments "

http://www.marketwatch.com/story/gold-retreats-silver-keeps-on-rallying-2010-11-08?siteid=rss&rss=1


Meanwhile, most other economists/people in the know think it's a rubbish idea.

http://www.stuff.co.nz/business/market-data/4323318/Gold-prices-hit-record-high


UNREALISTIC
Zoellick called for a system that "is likely to need to involve the dollar, the euro, the yen, the pound and (yuan) that moves toward internationalisation and then an open capital account."
"I can imagine what he meant was asset inflation as measured by the gold price should be an indicator that should be considered by the central banks when they make their interest-rate decisions," said LBBW analyst Thorsten Proettel.
The consensus among precious metals analysts was that the gold market is also simply too small to absorb such demand.
"Unlike the World Bank, we do not believe that a form of the gold standard will return. Very simply, there is not enough gold supply in the world for the metal to perform in this role," said Edel Tully, precious metals strategist at UBS.
Evidence of a cooling in investor interest in gold put the price under pressure earlier in the session, with holdings of gold in the SPRD Gold Trust falling.
Silver hit a fresh 30-year peak at US$27.63 an ounce and traded up 3.2 percent at US$27.47 an ounce, and palladium surged 3.4 percent to US$710.72, up for a fourth day in a row, while platinum eased 0.1 percent at US$1,764.49 an ounce, marking a second successive day of declines.

The bold part is basically my take on what he actually means. I wouldn't think he wants the worlds currencies to be backed gold - no respected economist in their right mind would.

[inghamp]

Agreed its highly unlikely given governments love for inflating to pay for stuff... But what is interesting is the title of the person making this comment. It's not some far right/far left conspiracy theorist.

[inghamp]

Objective?
http://www.ft.com/cms/s/0/5c5e0018-eb6f-11df-b482-00144feab49a.html?ftcamp=rss#axzz14jzOBMEL



Gold digging at the World Bank

Published: November 8 2010 18:36 | Last updated: November 8 2010 18:36

Long before he helped set up the World Bank, John Maynard Keynes pronounced the gold standard “a barbarous relic”. Relics rarely cease to inspire devotion. Expect a revival in gold worship after Robert Zoellick, World Bank president, gave a nod in its direction.

In a comment piece in Monday’s FT, Mr Zoellick called for a new, co-operative monetary system, which should “consider employing gold as a reference point of market expectations about inflation, deflation and future currency values”. It is beyond doubt that the world’s current monetary arrangement is not serving us as well as it should. What should replace it – and what exactly Mr Zoellick envisages in its place – is less clear. The World Bank has been coy about giving more detail, preferring instead to emphasise that Mr Zoellick’s gold teaser belongs to a package of proposals for the Group of 20 to lift growth rates and thereby make the “currency wars” more tractable.


Still, it is instructive to ask what useful role gold can play in today’s world economy. The answer is probably none at all.

In monetary policy, pegging the monetary base to gold would be a (very impractical) way to target prices. But the gold price is hardly the most useful price to fix. Unlike a broad price index, it is unrepresentative of the economy. Buffeted as its price is by private demand and supply, gold’s stabilising properties are also largely mythical.

Could a gold standard help international currency co-ordination? In theory it could, if states were willing to accept the restrictions on national monetary policy and the current account adjustments that a gold standard entails. But if such political will can be found, there are better anchors than gold; until then, gold will not work.

Mr Zoellick points out that “markets are using gold as an alternative monetary asset”. But there is no sign that confidence in central banks is about to collapse: bond prices show that inflation expectations remain well-anchored. The challenge is to find tools that countries will agree to use to rebalance the world economy. Fascination with gold should not eclipse more practical ideas, such as US Treasury secretary Tim Geithner’s ill-fated proposal to target current account balances directly.

Maybe Mr Zoellick just wants to draw the G20’s attention to policies helpful for the other 167 members of the World Bank. Or perhaps he hopes to open the space for a discussion of radical global monetary reform. Both are excellent goals – so long as his questions are not mistaken for answers

Mr Zoellick points out that “markets are using gold as an alternative monetary asset”. But there is no sign that confidence in central banks is about to collapse: bond prices show that inflation expectations remain well-anchored. "

.>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Where does this guy live? On planet earth? Collapse perhaps not... but a serious decline in confidence.. most definitely going to occur..

"gold’s stabilising properties are also largely mythical." And what is he comparing this to? Paper money? lol

[JBmurc]

You might be right as long as you take your profits early.

I missed out on heaps because I took my profits in November 1986, so the '87 crash was neither here nor there to me. I still had my profits, but most didn't. A lawyer at a firm I used at that time blew his brains out in his backyard (with a shotgun) following the '87 meltdown.
Neither was the tech wreck or the property crash or the GFC a problem because they all had to happen, herd instinct big time.
The GFC was forewarned by the FT 1 year in advance, when they published about the sub-prime.

I won't 'possibly' be right, I'll definitely be right.

I've got cash in the bank ready to sift through the wreckage.

you like Airlines your should have been buying QAN on it's sell-off ,never a fan of waiting till tomorrow to make a profit as the day could be years away an in the mean time miss out on some good profits like the surge in Silver/gold prices

[elZorro]

Are you still living the high life in Fiji JB? Spending a bit of those Silver gains perhaps. Remember last month (or the month before) when I said silver wasn't moving much from $18 yet? Looks like your FA work paid off bigtime. Thanks for suggesting SLV by the way :) (Ed: that should be SVL).

Part of the latest post from the Moneychanger:



The GOLD PRICE (http://goldprice.org/spot-gold.html) and the SILVER PRICE (http://silverprice.org/) are rising not only on dollar terms, but also in yen and euros, therefore it cannot be the US dollar decline alone that is driving metals, but a revulsion against ALL fiat currencies. Finally, the US dollar rose today, about 3/4 of 1%, yet silver and gold climbed madly.

Now here's the question everybody has to answer: Is it a bubble, or a bull market? A hint: Bull markets always climb a wall of worry. Bull markets (primary up trends) run 15 - 20 years. The silver and gold bull market began in 2001; 2010 less 2001 equals nine years, not fifteen years.

Let's be clear: SILVER (http://silverprice.org/) is way, way overbought. The RSI is at 81.04, and anything above 70 is overbought. Yet the MACD indicator, overextended as it is, shows a clear uptrend, a determined uptrend. Just as silver shot through the 2500s in one day, today it cleared half of the 2700s. The Comex close came at 2742.8c, up 68.4c but in the aftermarket silver kept on shooting up to its present 2773c. Brace yourself: I believe it will go even higher tomorrow. Today at 9:00 when I came in silver was 2675c. At 11:00 it reached 2720c, and by 1:00 2760c.

Y'all remember that I said there was no resistance on the chart (looking back at 1980 and 1981) between 2500c and 3400c, and then between there and 3950c. What you saw today is what happens to a market on fire when no resistance stands in its way.

[JBmurc]

[QUOTE=elZorro;325419]Are you still living the high life in Fiji JB? Spending a bit of those Silver gains perhaps. Remember last month (or the month before) when I said silver wasn't moving much from $18 yet? Looks like your FA work paid off bigtime. Thanks for suggesting SLV by the way :)

Last night tonight haven't been spending up to much with the new house taking care of any extra funds gutted to not have more funds in silver bullion myself but also very happy to have got others on board friends that are holding large will be very happy now paying $25-30oz only months ago
$30 likely before the years out $100 well on the cards next year

Don't forget about ARD a real sleeper that will make a few very good gains

[Skol]

you like Airlines your should have been buying QAN on it's sell-off ,never a fan of waiting till tomorrow to make a profit as the day could be years away an in the mean time miss out on some good profits like the surge in Silver/gold prices

Could miss out some gains on gold and silver but I'll take my chances on that one. I'm happy with a selection of stocks.
The idea that gold standard should be re-invented is about as nutty as pegging your currency to a gallon of milk and it says words to that effect in todays FT.
Meanwhile the USD is on the rise and on TV a few minutes back one commentator reckons the big funds are resetting their black boxes to take advantage of a rising USD.
Right now gold is going exponential and I've got more respect for my hard earned moolah than to join the herd.

[upside_umop]

Objective?
Mr Zoellick points out that “markets are using gold as an alternative monetary asset”. But there is no sign that confidence in central banks is about to collapse: bond prices show that inflation expectations remain well-anchored. "

.>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Where does this guy live? On planet earth? Collapse perhaps not... but a serious decline in confidence.. most definitely going to occur..

"gold’s stabilising properties are also largely mythical." And what is he comparing this to? Paper money? lol

They are completely right. Bond markets aren't showing any signs of extreme inflation as yet.

You say a serious decline in confidence is going to occur. How?

Re: Gold stabilising properties? I've said it before, they have returned less than govt bonds over the long term with the risk of the stock market. I'd say that risk/return is able to be compared against most financial assets to see that the properties are 'mythical' lol

Here is a good article from Roubini. I know he is a gold bear...but he portrays the views of most economists, and that largely of myself. Remember how I showed statistics of the gold standard and economic cycles? Roubini is aware of this too. The goldies can keep dreaming, but unless the world falls completely to pieces then there will never be another gold standard.

Roubini: Here's Why a Gold Standard Won't Work (http://www.cnbc.com/id/40088925)

Some quotes:


Historically speaking, Roubini says, during the days of the gold standard economies were constantly imperiled by spasmodic cycles: "When you had a traditional gold standard, boom and bust with severe swings in economic activity were the norm—really big ones. It was only once we moved to fiat money that central banks were able to smooth the business cycle, and make it less volatile, as we did during the financial economic crisis."


Roubini seems to think a gold standard is a pretty awful idea. "There are many fundamental problems with any variant of a gold standard," he said.

A general summary of Roubini's position on the issue would likely begin by saying that, generally speaking, a fixed exchange rate regime or gold standard limits the flexibility and range of actions that central banks can take to improve a nation's economy in fundamental ways. (For example, in a fixed exchange rate regime, central banks have less ability to maximize employment, stimulate growth, and manage price stability.) And, as Roubini specifically pointed out to me, fixed rate regimes inhibit the ability of banks to provide lender of last resort support to an economy when necessary.

[lewinsky]

Hi Skol,

I always appreciate a different view, and whilst I disagree with you regarding gold and gold shares, I do agree that you should diversify and not put all your eggs in one basket. (or moolahs)

Given your aversion to minerals and mining shares, I am interested to know where you are investing your hard earned mullahs.

There will be a correction in the price of gold( not a crash) but as an Economist i listened to last week said, the Chinese Economy will crash, BUT I said this 10 years ago and I am still waiting.

Differences in investment views is what makes the market go round.

LEW.

[STRAT]

"Meanwhile, as world leaders prepare to meet in Seoul this week, Robert Zoellick, president of the World Bank, said in a Financial Times op-ed piece that leading economies should consider “employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

Hi inghamp.
That would be the perfect loop eh?
He may have just invented a perpetual motion machine :scared:

If Id thought of it I would have called it a "bubble engine"

Im sure anything endorsed by the world bank will be good for the world bank :t_down:

[whatsup]

Is this a pause or a turn?

[inghamp]

@ upside_umop


You say a serious decline in confidence is going to occur. How?

How.. Just one of the major economies needs to experience serious inflation. Just one. That will be enough (my subjective bias) to create an overall distrust in fiat currencies.

Not that I am promoting a gold standard here. Don't see how that could be implemented... But we will see many more risk averse people move into other stores of wealth like gold.. The likes of Zimbabwe isn't real enough for the average joe.. We nNeed something closer to home to make them act on the knowledge currently being dispersed about fiat money. Thats my how. Plausible?

[inghamp]

Profit taking.
Fundamentals remain unchanged.

[inghamp]

Hi Skol,

There will be a correction in the price of gold( not a crash) but as an Economist i listened to last week said, the Chinese Economy will crash, BUT I said this 10 years ago and I am still waiting.


LEW.

China does have 2 bubbles. Property and stock.

- The chinese stock markets are super volatile and recognised as speculation by Chinese.. This bubble has had many "sub pops" where many investors are broken (victums of corrupt manipulation).. But I don't see this bursting drastically any anytime soon.. Not while capital controls persist and not while it used as vehicle to fleece the Chinese masses by their elite.

- Property. This is definitely in a bubble.. But it has different characteristics to those we have in the West. First and foremost.. To buy property in China you MUST have at least a 50% deposit. This makes the market (although in a bubble) much more stable and hence the bubble is harder to pop - unlike the sub prime crisis which was based on a house of cards (leverage)..

So, really don't see that situation changing in China for sometime. We keep saying China is going to crash.. But the fundamentals really are different. If it crashes it will be because some corrupt group within the CCP engineered it in order to profit (which if they do that they lose their mandate to govern). I also don't think China is as dependant on exports as it makes out (incorrect/fudged data given to the West).. so it can maintain its low RMB peg for as long as possible..

Besides if either of those two crash (property or stock) what store of wealth will the Chinese flee to? GOLD and SILVER.

[JBmurc]

Could miss out some gains on gold and silver but I'll take my chances on that one. I'm happy with a selection of stocks.
The idea that gold standard should be re-invented is about as nutty as pegging your currency to a gallon of milk and it says words to that effect in todays FT.
Meanwhile the USD is on the rise and on TV a few minutes back one commentator reckons the big funds are resetting their black boxes to take advantage of a rising USD.
Right now gold is going exponential and I've got more respect for my hard earned moolah than to join the herd.

an hows those stocks going I see that silver that lump of metal LOL has gone up 61% in the last year

[Skol]

an hows those stocks going I see that silver that lump of metal LOL has gone up 61% in the last year

Going pretty good actually, been picking some up over the last few months, AWE, TOL, DOW and others, no complaints.
61% in a year, not bad, hang in there.

According to my latest monthly calculation my stocks are up about 40% for the last 12 months, but some of that due to AUD/NZD. Wouldn't want to see my funds head south in a big way if there's a commodity, 'correction', if you get what I mean. BT Natural Resources fund up 20% in the last 12 months (in AUD, more in NZD) but more than that for me because I re-invest the dividend. Well diversified too.

I'v'e just picked up todays WSJ and sky-high commodity prices are front page news.

I'm not greedy, have more than enough to retire, no debt, but got a cruisy job and cruisy life so sticking it out for a while longer.

[JBmurc]

Going pretty good actually, been picking some up over the last few months, AWE, TOL, DOW and others, no complaints.
61% in a year, not bad, hang in there.

According to my latest monthly calculation my stocks are up about 40% for the last 12 months, but some of that due to AUD/NZD. Wouldn't want to see my funds head south in a big way if there's a commodity, 'correction', if you get what I mean. BT Natural Resources fund up 20% in the last 12 months but more than that for me because I re-invest the dividend. Well diversified too.

I'v'e just picked up todays WSJ and sky-high commodity prices are front page news.

I'm not greedy, have more than enough to retire, no debt, but got a cruisy job and cruisy life so sticking it out for a while longer.

Yes very good AWE was great buying recently Oil IMHO will once again be in the spotlight in 2011 as will U308/silver ...Gold will keep ticking away with the odd retracement 1500 min next year can't believe it's 1400 now as for Silver we haven't seen nothing yet

[Skol]

Yes very good AWE was great buying recently Oil IMHO will once again be in the spotlight in 2011 as will U308/silver ...Gold will keep ticking away with the odd retracement 1500 min next year can't believe it's 1400 now as for Silver we haven't seen nothing yet
Maybe you should swap your silver for cows or AAC, Aust Agricultural Company.
Corn prices are through the roof, up 22% in 6 weeks, US farmers are sending animals to the works, too expensive to feed, and US herd numbers are already the lowest since 1969. Only a matter of time before beef gets real expensive.
I'll be doing a homekill before Xmas, pity you don't live handy, it doesn't come any better on the BBQ.

I need a bit of help to eat it too, the animal will weigh about 500kgs, will yield about 250kgs of meat for the fridge.

[stevo1]

Maybe you should swap your silver for cows or AAC, Aust Agricultural Company.
Corn prices are through the roof, up 22% in 6 weeks, US farmers are sending animals to the works, too expensive to feed, and US herd numbers are already the lowest since 1969. Only a matter of time before beef gets real expensive.
I'll be doing a homekill before Xmas, pity you don't live handy, it doesn't come any better on the BBQ.

I need a bit of help to eat it too, the animal will weigh about 500kgs, will yield about 250kgs of meat for the fridge.

HI Skol,
I think its a pretty safe bet to say that nearly everything will increase in $ terms over the next 2yrs(except perhaps the US peso).
The QE 2 is taking us into uncharted waters BUT in the past quantitive easing has lead to MAJOR inflation down the track and if history is any indication this will be no different (other than perhaps being far more servere)with hte eventual rise in interest rates and following recession further out.

[inghamp]

Hey Skol,
have you been watching MEO at all?

[Skol]

Hey Skol,
have you been watching MEO at all?

No, can't say I have but I'll take a look.
Goldbugs think there's going to be inflation, they've been saying it for years but I doubt it, there's no sign of it and I think the $US will recover soon.
Too much debt out there and no indication the housing crisis in the USA is going away. Banks aren't lending unless it's a sure thing, and even if interest rates and inflation do move up it could be the death knell for gold as punters derisk themselves and move their cash into more conventional areas.

[drillfix]

Hi Skol, hows it going mate :)

Still doing battling with the gold bugs I see. Been a while since Ive held a goldie, except a couple of gold future trades a while back.

Hope your trades are doing well.

[Skol]

Hi Skol, hows it going mate :)

Still doing battling with the gold bugs I see. Been a while since Ive held a goldie, except a couple of gold future trades a while back.

Hope your trades are doing well.

Thanks, losing so far.
I've been studying the cash prices of commodities in the WSJ in a restaurant tonight, boring eh.
Most are way up on where they were a year ago. Coffee, cotton, gold, silver, corn, wheat, soybeans, copper. Silver up 72% this year. Can it go on? I doubt it.
Oil, up 9%, natural gas down, but some like beef, chickens, aren't doing nearly as well, so maybe there's some money to made there.

[elZorro]

Gold, a tidy clean retail investment where you are in control (in theory). Contrast that with finance company investments.

[JBmurc]

Thanks, losing so far.
I've been studying the cash prices of commodities in the WSJ in a restaurant tonight, boring eh.
Most are way up on where they were a year ago. Coffee, cotton, gold, silver, corn, wheat, soybeans, copper. Silver up 72% this year. Can it go on? I doubt it.
Oil, up 9%, natural gas down, but some like beef, chickens, aren't doing nearly as well, so maybe there's some money to made there.

Well we know what next year bets going to be SKOL -SILVER will it close higher or lower end of 2011

[JBmurc]

Maybe you should swap your silver for cows or AAC, Aust Agricultural Company.
Corn prices are through the roof, up 22% in 6 weeks, US farmers are sending animals to the works, too expensive to feed, and US herd numbers are already the lowest since 1969. Only a matter of time before beef gets real expensive.
I'll be doing a homekill before Xmas, pity you don't live handy, it doesn't come any better on the BBQ.

I need a bit of help to eat it too, the animal will weigh about 500kgs, will yield about 250kgs of meat for the fridge.

LOL yeah I don't think me 2800sqm section would be big enough plus the neigbours wouldn't like it
I have had to sell down some of my silver to help out on the new house

[RRR]

My missus has a decent collection of jewelery and my father in law pays for the locker(no trust in son in law!). I tried to sweet talk into selling some, but she reckons it is going to go a lot higher-she is not having any bull**** from me(cant fault her given my performance in shares). I dont know when this madness is going to end and I am not a gold fan(no income from gold). Good luck to all the gold fans and you have done exceedingly well. Enjoy as long as it lasts.

[peat]

i am thinking the PM's are close to peaking or already have. Silver did what might be described as a blow off and the candle has an extended upper wick. It hit another 161% fib and last time it did that it corrected a lot.

[Skol]

Commodities have been big news, even commodities like milk, up 14%, eggs, up 18%, (in the USA).
Can't help thinking something bad's going to happen, reminds me of when property prices were going crazy.
Goldbugs say it's going to the former inflation adjusted high of around $2500, Cramer on CNBC says $2000.

I can't imagine why, these are utterly random numbers, the PoG will top out when the last buyer is in. Gold's only worth what someone's going to pay for it, the $US is climbing and those who reckon it's going to be worthless are going to lose out.

Headline in the FT today.
'Irish Contagion Hits Wider Eurozone'.

$US on the way up.

[Silverlight]

Hi Skol, I have only posted my views once back on page 37, did not feel like a debate too much with a devils advocate but over the past 11 months...

NZX50 is up less than 3%, ASX200 up less than 5%, NZD up 6%, Dow up 14% or 8% in NZD, and Gold up over 25%. Having an allocation to Gold has definitely helped a lot of portfolios, including my own.

Would love to know what other asset classes you have been investing in since you begin this thread 11 months ago, and the returns of said assets?

[inghamp]

Any problems with any of major currencies will be favourable for the price of gold in the long run. Sure a flight to the USD will occur short term and that could cause the PoG to move sideways or correct a bit. But in the long run this is all good for the price of gold. Just one more factor towards a decrease of confidence in fiat money.

Commodities up (milk /eggs..) This sounds like inflation? hmmm.. Just not in property? How do they weight the CPI figures these days?

[upside_umop]

Any problems with any of major currencies will be favourable for the price of gold in the long run. Sure a flight to the USD will occur short term and that could cause the PoG to move sideways or correct a bit. But in the long run this is all good for the price of gold. Just one more factor towards a decrease of confidence in fiat money.

Commodities up (milk /eggs..) This sounds like inflation? hmmm.. Just not in property? How do they weight the CPI figures these days?

Property has one of the largest weightings.

[Skol]

Hi Skol, I have only posted my views once back on page 37, did not feel like a debate too much with a devils advocate but over the past 11 months...

NZX50 is up less than 3%, ASX200 up less than 5%, NZD up 6%, Dow up 14% or 8% in NZD, and Gold up over 25%. Having an allocation to Gold has definitely helped a lot of portfolios, including my own.

Would love to know what other asset classes you have been investing in since you begin this thread 11 months ago, and the returns of said assets?

Read some of my previous posts, I do a monthly tot up and it's up about 40% on 1 year ago. I've also taken the opportunity to oollect a few that have potential or a bit neglected. DOW, TOL, RDR, PDN, TLS, some of my profits due to AUD/NZD.
I'm not interested in joining the herd, it can be fatal.
I'm going to retire in a few years and I don't want to see my portfolio savaged by something like 1980. Own a diversified natural resources fund I've been in for about 15 years.

[JBmurc]

KingWorldNews.com - 11/5/2010

They (the Fed) did not say they were going to stop in mid 2011, in fact they didn't say they were going to stop at all... what it does do (QE2) is destroy the value of the dollar and make the debt affordable. The country (USA) is bankrupt. That has been documented by the IMF. The way out of the bankruptcy obviously is to print money and make the dollar worthless so you can pay back the creditors in worthless money... printing money only helps debtors get out from under their debt and the biggest debtor is the United States of America and the Federal Reserve.... we're gonna get to the middle of 2011 and the economy will be in worse shape than it is today and they'll (The Federal Reserve) will just keep going.

- Jim Rickards

[elZorro]

Commodities have been big news, even commodities like milk, up 14%, eggs, up 18%, (in the USA).
Can't help thinking something bad's going to happen, reminds me of when property prices were going crazy.
Goldbugs say it's going to the former inflation adjusted high of around $2500, Cramer on CNBC says $2000.

I can't imagine why, these are utterly random numbers, the PoG will top out when the last buyer is in. Gold's only worth what someone's going to pay for it, the $US is climbing and those who reckon it's going to be worthless are going to lose out.

Headline in the FT today.
'Irish Contagion Hits Wider Eurozone'.

$US on the way up.

I don't want to burst your bubble theory yet Skol, but here is the $US picture on a wider timescale.

[Skol]

I don't want to burst your bubble theory yet Skol, but here is the $US picture on a wider timescale.

Eurozone's out of favour and the first inkling of trouble the herd will rush back to the US dollar.
Gold's gradual ascent will be nothing like it's descent. When gold reaches its zenith, the plunge will be followed by lots of wailing and gnashing of teeth, something like the Blue Chip scandal where lots of unsuspecting suckers get cleaned out.

Most of the commodities exchanges have increased the deposit for margin trades on volatile commodities like gold, silver & corn in case the punters default when their investments don't quite live up to their expectations you might say. WSJ yesterday.

Up from $US5000/contract to $6500.

[Huang Chung]

Eurozone's out of favour and the first inkling of trouble the herd will rush back to the US dollar.
Gold's gradual ascent will be nothing like it's descent. When gold reaches its zenith, the plunge will be followed by lots of wailing and gnashing of teeth, something like the Blue Chip scandal where lots of unsuspecting suckers get cleaned out.


So you keep telling us Skol.....

[JBmurc]

LOL SKOL your aways good for a laugh comparing Hard currency/precious metal Gold with the blue chip scadal..WTF
.. The USD as a great get in now investment you first......I watch from the sidelines with my investments in PG Metals/Energy

I laughed at your USD favour over Gold back at the end of last year an I still do...not saying the USD can't rally but overall long term picture the USD is screwed an nothing the US gumboot an FED are going to fix it


---interview Question with the German Finance minister---

Interviewer: Can't you understand that the American treasury secretary is concerned about [Germany's trade surplus with the US]?

Minister Schäuble: No, because since we introduced the euro in Europe, the determining factor is no longer US trade with Germany, but US trade with the totality of countries in the euro zone. And in that respect the balance of trade tends to be even. So what's the problem? After all, we don't complain about the export successes of individual American states.

The German export successes are not the result of some sort of currency manipulation, but of the increased competitiveness of companies. The American growth model, on the other hand, is in a deep crisis. The United States lived on borrowed money for too long, inflating its financial sector unnecessarily and neglecting its small and mid-sized industrial companies.

It's inconsistent for the Americans to accuse the Chinese of manipulating exchange rates and then to artificially depress the dollar exchange rate by printing money

[elZorro]

Skol : Eurozone's out of favour and the first inkling of trouble the herd will rush back to the US dollar.
Gold's gradual ascent will be nothing like it's descent. When gold reaches its zenith, the plunge will be followed by lots of wailing and gnashing of teeth, something like the Blue Chip scandal where lots of unsuspecting suckers get cleaned out.



Agree JB -Skol-, the gold market is nowhere as nasty as Blue Chip. I received some of those Bluechip brochures in the mail, and I might have been in there if I had any money spare at the time. Very plausible advertising, don't think I'd have bet the house though. I've been taken in by a person like Bryers for a short while. Nothing fazes them, it's all a big game. But I know what they look like now.

http://www.sharechat.co.nz/article/39501e22/northern-crest-packs-bags-after-settling-outstanding-bills-to-bob-jones.html

Good on yer Bob, those Blue Chip con artists made sure they settled with you before getting out. They knew very well Bob would hound them to the end of the Earth.

Skol, what will your bet be for the New Year? Will 2011 be the year when the $US again beats the hell out of all other currencies? Or will PGM investments show the way over there?

[Skol]

LOL SKOL your aways good for a laugh comparing Hard currency/precious metal Gold with the blue chip scadal..WTF

Wait until it goes wrong JB, all the suckers who've been told PM's are a great deal and they can make their fortunes will be in the papers pleading for government assistance, saying they weren't aware of the risks they were taking, just like Blue Chip or any other craze. Then there's going to be the scams that come to light as there always is in any mania.

Blue Chip, gold in 1980, oil, '87 crash, tech wreck, riots, property boom, all the same, herd instinct, it's everywhere. They all end the same way, great to watch, too bad the punters often end up broke but that's life.
Read this about the rush into PM's and the more esoteric 'investments' out there.

www.stuff.co.nz/business/money/4338638/Investors-develop-taste-for-exotic-funds

I've seen it all before, lot of times actually. History repeating itself, all aboard.

There are so many chumps out there it's no wonder con men find it so easy to empty them out, maybe in my next life. Now you know why Charles Ponzi and Bernie Madoff found it so easy.

How about a leveraged palladium fund JB, that sound like you? 20% a month - absolutely guaranteed.

[Skol]

Skol, what will your bet be for the New Year? Will 2011 be the year when the $US again beats the hell out of all other currencies? Or will PGM investments show the way over there?

I can tell you for sure where I won't be putting my money in 2011 - gold.
Have a couple of mutual funds that are in $US so I will probably put a bit their way $US is so low.

I didn't think I ever would after being a landlord for a decade or 2 but might take a look at the housing market. Still think there's loads of debt there and worse to come.

Been busy for the last couple days and it's just come to my notice there's been a bit of carnage in the gold market, tomorrow will be worth a watch.

[JBmurc]

Wait until it goes wrong JB, all the suckers who've been told PM's are a great deal and they can make their fortunes will be in the papers pleading for government assistance, saying they weren't aware of the risks they were taking, just like Blue Chip or any other craze. Then there's going to be the scams that come to light as there always is in any mania
---
-You just don't get it SKOL --Gold/Silver bullion holders will be the last type of investor your see pleading for government help--
back in the last great 30's depression the US government made all so called free US citizens exchange there gold bullion for a set paper price they made it illegal to hold gold bullion made the investors take easy printed money for there real bulllion they wanted/needed
-funny now the US gumboot are using the FED an free money once again which is then feed on to the JP morgans etc who then use these cheap funds to short the price of GOLD/SILVER

what do blue chip etc investors have now ? ,what do Gold/Silver bullion holders have now ?? one has nothing.. another a real asset that never ever been worth nothing to


It's news that JP Morgan is being sued for manipulating the silver market by maintaining a large concentrated naked short position in futures contracts on the CME's COMEX metals exchange

[Skol]

Wait until it goes wrong JB, all the suckers who've been told PM's are a great deal and they can make their fortunes will be in the papers pleading for government assistance, saying they weren't aware of the risks they were taking, just like Blue Chip or any other craze. Then there's going to be the scams that come to light as there always is in any mania
---
-You just don't get it SKOL --Gold/Silver bullion holders will be the last type of investor your see pleading for government help--
back in the last great 30's depression the US government made all so called free US citizens exchange there gold bullion for a set paper price they made it illegal to hold gold bullion made the investors take easy printed money for there real bulllion

what do blue chip etc investors have now ,what do Gold/Silver bullion holders have now ?? one has nothing another a real asset that never ever been worth nothing since well before JC was a boy


It's news that JP Morgan is being sued for manipulating the silver market by maintaining a large concentrated naked short position in futures contracts on the CME's COMEX metals exchange

The gold and silver 'investors' are sitting pretty at the moment because they haven't sold, it's only profits once it's in the bank. Some Blue Chip 'investors' have assets too but they're not worth much.
Aaaahhh, the old 'manipulators' and 'suppressors' are at it again, right?

I know who's fault it's going to be when it goes wrong, the manipulators, JP Morgan, The Fed, Bernanke, Glenn Stevens et.al. That's when it'll all be someone elses fault, not the goldbugs.
I know about the history of gold, you need to learn about crowd behaviour.

[JBmurc]

So whats the 2011 bet going be USD GOLD SILVER ?? I'll let the facts do the talking in the mean time 1385oz AUD looks great to me an NAV

[Skol]

JB,

The thread's getting boring, how about some entertainment and a real laugh.

Tell us the story about the hit and run in London.

That's a goldbug pearler.

[peat]

So whats the 2011 bet going be USD GOLD SILVER ?? I'll let the facts do the talking in the mean time 1385oz AUD looks great to me an NAV


I say silver goes quickly back to 20 and during 2011 hits 16 at least with a chance of 13. (All USD) It will be a good buy back at those levels.

[elZorro]

Skol, are you saying all shares look a bit risky and that a move back to oversold property will be a better bet? You're giving up way too early..

Try one of these gold funds for an easy return: (http://www.trustnet.com/News/Printable.aspx?id=121627)

Actually I'm interested in seeing the performance of Baker Steel against others. They backed out of OGC mid-year or earlier, and they obviously chose the right targets to go to after that. I think one is IGR. Too late for us all in the meantime, but several ST people have done very well out of EKM.

I really like the comment from an employee/owner of one of these funds ;)



"Anyone not owning some gold shares or units in a well managed gold fund is taking an enormous risk with their wealth," Winnifrith said.

[Skol]

Skol, are you saying all shares look a bit risky and that a move back to oversold property will be a better bet? You're giving up way too early..

Try one of these gold funds for an easy return: (http://www.trustnet.com/News/Printable.aspx?id=121627)

Actually I'm interested in seeing the performance of Baker Steel against others. They backed out of OGC mid-year or earlier, and they obviously chose the right targets to go to after that. I think one is IGR. Too late for us all in the meantime, but several ST people have done very well out of EKM.

I really like the comment from an employee/owner of one of these funds ;)
Will be selling a few shares but they will be the non-performers, will accumulate a few others, but not gold. I won't be selling shares to buy property have some cash on hand.
The thought of being a residential landlord again doesn't do much for me but have a good tenant in mind.

[elZorro]

Will be selling a few shares but they will be the non-performers, will accumulate a few others, but not gold. I won't be selling shares to buy property have some cash on hand.
The thought of being a residential landlord again doesn't do much for me but have a good tenant in mind.

That's yourself and JB spending spare capital on property..it's a crying shame. You know the gummint takes a dim view of that, you should really be investing in high-tech industry. Labour had the same idea, they even backed it up with R&D tax credits (for one year, National took them away again):(

But back to a rental property idea: surely any small annual gains could be clobbered by one disgruntled tenant in just five minutes? Gold would be safer, if you remove the concept of capital gain on property for the next few years.

[Skol]

But back to a rental property idea: surely any small annual gains could be clobbered by one disgruntled tenant in just five minutes? Gold would be safer, if you remove the concept of capital gain on property for the next few years.

Gold would be safer, you gotta be kidding me, buy in at the highest nominal price it's ever been, no thanks. I'm not a property fan, used to be, but I'll take a look around, my wife wants a project, got a relative wants to rent from me if I buy. Property any day over gold, something you can more or less control yourself.
I won't be joining the herd, you'll have to stampede without me I'm afraid EZ.
As far as Mr. Winnifrith goes he's got a lot at stake, like his fund won't do too well if the gold price collapses and neither will his salary. It's a sales gimmick.

[elZorro]

Gold would be safer, you gotta be kidding me, buy in at the highest nominal price it's ever been, no thanks. I'm not a property fan, used to be, but I'll take a look around, my wife wants a project, got a relative wants to rent from me if I buy. Property any day over gold, something you can more or less control yourself.
I won't be joining the herd, you'll have to stampede without me I'm afraid EZ.
As far as Mr. Winnifrith goes he's got a lot at stake, like his fund won't do too well if the gold price collapses and neither will his salary. It's a sales gimmick.

Ok, maybe I was pulling your leg Skol, enjoy looking for a bargain out there. There's been a bit of buying activity at the right price, well, lower than it was.

[JBmurc]

I say silver goes quickly back to 20 and during 2011 hits 16 at least with a chance of 13. (All USD) It will be a good buy back at those levels.

Your joking right? current world production 500-600moz demand 800moz+

The commentaries by Butler concerning the available above ground silver reserves, which are nearing extinction (as confirmed by authoritative sources such as CPM Group and the Silver Institute), compared to the soaring demand by industry, hardly need to be added to except by way of additional confirmation and examination of other aspects. More billions of ounces have been depleted from important mining sources at the same time! We know that as the silver price has been forced still lower by naked shorting, mine after mine has ceased production; others have scaled back; silver as byproduct of gold mining has declined sharply because gold also has been afflicted by the same Ebola viruses of manipulative chicanery as silver; and byproduct silver from copper, lead and zinc mining has also declined. Silver as byproduct of other metal mining will be less of a factor in the months and years ahead, since basic epithermal geology (except in Idaho) has silver becoming scarcer among other metals as depth increases. There are well over 200 significant gold mines in the world whose silver byproduct ounces are close to insignificant. Some of these gold mines reach down deep into the earth, such as Western Ultra Deep Levels mine and the Buffeslfontein in South Africa, reaching over 13,000 feet depth; whereas the Cannington silver-lead-zinc mine in Australia reaches less than one sixth that depth. Most silver deposits reach lesser depth than that, and most of the great silver deposits of this earth were found, exploited, and tapped out decades ago, most notably the tremendous Comstock Lode in Nevada and the immense Potosi in Bolivia. History shows that for roughly every 50 years of world silver production, that amount has been consumed by industry in 1 year, and this consumption ratio increased sharply since the mid 1980s. Silver production staged a big upsurge in this timeline since about 1850, yet nearly all this production has been consumed in applications where recycling cannot be done. Many of the remaining silver mines have been high graded, that is, the richest silver bearing areas have been exploited already due to foolish management decisions to continue production during depressed prices. We are at a time in history when technology (electronics) is heavily reliant on silver for its fantastic properties, yet most of the silver originally in the crust of the earth is gone; burgeoning world population is adding to the demand simultaneously with above ground supplies nearing pygmy (not Maximinus) levels, and short sellers fire more salvos of naked shorting to hold the price down lest an unchecked price explosion forces them into insolvency as the short sales are impossible to cover. As Chapman observed, the only hope for the shorts is a Presidential executive order to get them out of their perilous predicament.

[peat]

JB you know I dont disagree with you about the fundamentals. But that doesnt mean both points of view cant be right.
Silver went from 21 to 8.5 in six months in 2008 so theres no reason it cant go from 29 to 16 again without destroying a long term bullish picture.

[Skol]

Your joking right? current world production 500-600moz demand 800moz+

Because chumps are buying it and storing it under the house. When that stops silver will revert to the mean which will be a fraction of what it is now.

[JBmurc]

JB you know I dont disagree with you about the fundamentals. But that doesnt mean both points of view cant be right.
Silver went from 21 to 8.5 in six months in 2008 so theres no reason it cant go from 29 to 16 again without destroying a long term bullish picture.

Well yes nothing impossible just very unlikely IMHO F/A wise silver even at 30 is cheap just ask any Silver miners accountant it's not getting easier or cheaper to discover or to produce

the FACT's& F/A speak volumes
-the CFTC hearing on silver on March, 25th, 2010, admitted that silver was traded and leveraged "over 100 to 1" in the London market.
-JP Morgan also holds the largest derivatives positions of any banks, at $69 Trillion, according to the US OCC. Thus, it is likely that JP Morgan also holds the largest short position in silver derivatives most est. round 100bill worth of short
-JP Morgan is also the custodian of the biggest ETF of silver :SLV (10,000ton+ holding)yet in the fine print of holding a SLV share you cannot at any stage recieve any real bullion from the your ETF yet

[inghamp]

Because chumps are buying it and storing it under the house. When that stops silver will revert to the mean which will be a fraction of what it is now.

Granted.. It could stop. So let's consider the scenarios in which this could occur and how likely those scenarios are given the current certainties.

all valid questions..

[elZorro]

Gold would be safer, you gotta be kidding me, buy in at the highest nominal price it's ever been, no thanks. I'm not a property fan, used to be, but I'll take a look around, my wife wants a project, got a relative wants to rent from me if I buy. Property any day over gold, something you can more or less control yourself.
I won't be joining the herd, you'll have to stampede without me I'm afraid EZ.
As far as Mr. Winnifrith goes he's got a lot at stake, like his fund won't do too well if the gold price collapses and neither will his salary. It's a sales gimmick.

You must have a sixth sense Skol, all of my particular goldies are getting hammered in the last 2 days. Maybe I should buy a cheap rental too. The only thing I am pleased about: I was made aware of a share that was on stop-trading and about to make an announcement. I researched it and didn't buy - price dropped from an unrealistic 24c after opening to 14c within a day. I'm not as big a sharetrading mug as I was a year or two ago.

[Skol]

Now comes the decision all goldbugs must make.

Is this 'it', or is it a minor correction that justifies purchasing more?

[elZorro]

Now comes the decision all goldbugs must make.

Is this 'it', or is it a minor correction that justifies purchasing more?

Sir, is the correct answer "do not buy any more gold equities until they stop dropping?" - gospel according to Phaedrus.. despite how cheap they might look.

I guess you were right to point out the US$ rising, when no really great news was on the horizon. It signified the start of a safe haven flight in currencies, which we have seen before. There were also worrying signs in the gold market itself (http://broadcast.ino.com/education/gold1112/?blog)for the short term.

[Huang Chung]

The one thing 'it' doesn't appear to be is this plunge off a cliff you keep warning of.

[Skol]

The one thing 'it' doesn't appear to be is this plunge off a cliff you keep warning of.

It might not be the drop off the cliff, it might be, who knows. The oil implosion took 6 months from top to bottom, gold in 1980 took about 3 months.

I think it will largely depend on psychology, if a panic sets in it's all over, if goldbugs keep their nerve it could recover, but the 'worthless' USD we keep hearing about is on its way back maybe. Up 5% against the Euro in the last few days.

In my experience the shares decline before the underlying asset, probably because they're liquid, and more sophisticated investors are likely to own shares rather than the underlying asset.

NYMEX said it would increase the margin for gold, silver and palladium which would slow further buying.

[elZorro]

Some indication today that some goldies might be good value, but keep watching. Meanwhile, here's a really useful post from Stockhouse about junior gold explorers (http://www.stockhouse.com/Columnists/2010/Nov/16/Gold-miners-and-explorers-face-serious-supply-prob).

[inghamp]

I will wait it out. Distrust media hype lol. QE2 still coming.

Skol you have been saying you aren't seeing signs of inflation at all..

I disagree.

Inflationary problems spreading globally. Now only a matter of time. The effect of China's stimulus is now starting to show up in basic price increases... Of course other factors at play.. but the stimulus is the major cause. Expect the same in the US.

Riots over increases in student fees in UK. Riots in France over raising retirement age. All these are government attempts to lower govt costs so they dont have to borrow more because they know they wont be able to meet their debt obligations. It's anyone's guess what governments will likely get voted out and replaced with voter friendly politicians?

And this is just the beginning. The US economy has yet to really start warming up. The stimulus is out there idling.

So the fundamentals remain unchanged. Personally see this as a healthy correction. Makes sure we don't go into mania too soon.

What I am not so certain on is how much more it will correct before we gold bugs buy into it..

What does the technical analysis say?

[inghamp]

Some indication today that some goldies might be good value, but keep watching. Meanwhile, here's a really useful post from Stockhouse about junior gold explorers (http://www.stockhouse.com/Columnists/2010/Nov/16/Gold-miners-and-explorers-face-serious-supply-prob).

Thanks elZorro.. A good article

[elZorro]

Yes, I must read that article in depth, I might learn something Inghamp.

Message for Skol re the US$..(last seen dropping again)

Ground warning! wup wup wup Pull up..pull up........:mellow:

[Skol]

Yes, I must read that article in depth, I might learn something Inghamp.

Message for Skol re the US$..(last seen dropping again)

Ground warning! wup wup wup Pull up..pull up........:mellow:

That's because US inflation is at it's lowest rate since 1957, so you can ask the goldbugs where's the hyperinflation/currency meltdown? In their minds. LOL

The only inflation I see on the horizon is food inflation, some US farmland up 10% in the last year and farm profits up 24%.

You definitely won't have missed the interest in NZ farms from the east. I looked at buying a dairy farm in Matamata about 10 years ago but the Mrs. wasn't keen, bad mistake.

[elZorro]

That's because US inflation is at it's lowest rate since 1957, so you can ask the goldbugs where's the hyperinflation/currency meltdown? In their minds. LOL

The only inflation I see on the horizon is food inflation, some US farmland up 10% in the last year and farm profits up 24%.

You definitely won't have missed the interest in NZ farms from the east. I looked at buying a dairy farm in Matamata about 10 years ago but the Mrs. wasn't keen, bad mistake.

You mean when they were around just $300k for a small unit? They did look cheap back then. Of course, in the 70's every farmer was using inflation to pay off the farm. It's a bit harder now - a lot of capital tied up for a mediocre return most years. I have a lot of respect for the hard work that goes into farming.

[elZorro]

I found this short video (http://www.youtube.com/watch?v=VASDlVC59g0)on Stockhouse: buy physical gold every week when you can afford it, is the answer to our investment/savings nightmare. Of course, if enough doubters like Skol did that, it really would see PoG go higher, quicker. It's going to be interesting to see who is right, within the next few months perhaps.

[Skol]

Here's a pearl of wisdom from a book review in yesterdays WSJ. The book's called 'Boom and Bust', I'll have to get it to add to my collection of books about manias.

'It isn't only the fools that get caught up in speculative frenzies that lead to busts. Many of the smartest people succumb. Even the brightest, who fancy themselves wiser than the madness of mere crowds, want a piece of the action.
"There is nothing so disturbing to one's well-being and judgement as to see a friend get rich", Mr. Pollock observes. In boom times, "previously conservative investors get to feeling that they are suckers to miss out."
As more and more people make lots of money, the soundness of their investments seems to be confirmed. Creditors feel reassured and so make more money available to finance further folly. Of course, the more astute investors realize that the party will end sooner or later, but they assume (often incorrectly) that they will get out in time.'

There's a suggestion that silver's in a bubble too in the latest WSJ.

[elZorro]

Here's a pearl of wisdom from a book review in yesterdays WSJ. The book's called 'Boom and Bust', I'll have to get it to add to my collection of books about manias.

'It isn't only the fools that get caught up in speculative frenzies that lead to busts. Many of the smartest people succumb. Even the brightest, who fancy themselves wiser than the madness of mere crowds, want a piece of the action.
"There is nothing so disturbing to one's well-being and judgement as to see a friend get rich", Mr. Pollock observes. In boom times, "previously conservative investors get to feeling that they are suckers to miss out."
As more and more people make lots of money, the soundness of their investments seems to be confirmed. Creditors feel reassured and so make more money available to finance further folly. Of course, the more astute investors realize that the party will end sooner or later, but they assume (often incorrectly) that they will get out in time.'

There's a suggestion that silver's in a bubble too in the latest WSJ.

Hi Skol, very polite post there.. I thought you'd at least have had a go at James Turk, not your favourite seer?

However, I'm not as worried as you are, about being caught in any boom/bust. As long as most of the investment has been made earlier on, surely all gold equities or even gold could be disposed of in the profit-making area at or near the next peak, if that happens. It's important not to get too greedy I think, and I'm still learning about that. Already I've had a chance to make a reasonable capital return, and given it back to the market, and then some. But I hope to keep learning, and I'm not putting all my efforts, or much of my capital, into shares.

[upside_umop]

A couple of good videos on bloomberg too. One from Ben Bernanke with his words on the Feds Asset purchases. There is another video about gold where there is this hysterical guy and another who seems relatively logical.

Not sure how to post those links, but you can see them at Bloomberg (http://noir.bloomberg.com/?b=0)

[peat]

silver ounce prices on TradeMe seem a bit insane - theres one auction (admittedly its for a charity) where one ounce is bid at 57.00, so I guess thats the charity side of it but all the other ounces are bid well over 40. I sold some at 43, just couldnt resist.

[Skol]

Any share an you can even include any divies starting today to the end of NOV
Gold had some heavy shorting&selling pressure from the Nymex/London markets(both very anti gold governments with access to free money)

I think we'll see GOLD hold above $1100 with a pick up in interest in Oct with a late year Gold price surge towards $1300 likely..

I see the Anti-PGM bullion US government is now putting new high cost regulations & tax on any $600+ purchase of the metals by the public basically trying push investors to buy the fake bullion holding ETFs

Remember this JB? No, you probably don't conveniently. Any share against NAVO. From july 28th.
So far I'm the winner, only a few days to go. I picked RCR and I've politely excluded the dividend to avoid you further humiliation. Lucky you didn't bet a bottle of wine on this one. NAVO up 26%, RCR up 54%.
LOL

http://video.ft.com/v/677520168001/Steer-clear-of-gold

Sound advice.

[inghamp]

both returns aint too bad over such a time period..
"NAVO up 26%, RCR up 54%."

[elZorro]

Junior explorers are most likely the stocks that will outperform (if chosen well), and an example might be Mawson Resources on the TSX (MAW), it went up 18% last Friday alone, after high grades of gold and uranium were found in samples. Their permit was near existing hotspots. No, I don't have any..

I can't see a manufacturer of boilers matching that performance short-term. Probably a good safe bet though, Skol.

Addition to post: Here's a great video, (http://timiacono.com/index.php/2010/11/18/why-people-dont-buy-gold/) Skol would like the bloke..

[JBmurc]

There's a suggestion that silver's in a bubble too in the latest WSJ.

well we will see am happy to take on anyone on the US Silver price closing higher end of 2011 than now or the start of 2011 for a $100max bottle of the winners choosing
Real Silver is without doubt the best safest short or long term investment IMHO too much demand to little production too much paper silver to little real bullion more new application each week less recycling etc etc

looking forward to drinking SKOL bottle in the new year

[elZorro]

There's a suggestion that silver's in a bubble too in the latest WSJ.

well we will see am happy to take on anyone on the US Silver price closing higher end of 2011 than now or the start of 2011 for a $100max bottle of the winners choosing
Real Silver is without doubt the best safest short or long term investment IMHO too much demand to little production too much paper silver to little real bullion more new application each week less recycling etc etc

looking forward to drinking SKOL bottle in the new year

I won't take you on over the silver price JB (or anything for that matter), because you tend be right eventually :).

Skol: MAW:TSX is up another 25% overnight, but some evidence of selling too. Can't win 'em all.

John Clarke (Fred Dagg) video on Euro economies.. (http://www.youtube.com/watch?v=I5QwKEwo4Bc)

An amusing or disturbing video on QEII (http://club.ino.com/trading/2010/11/laugh-or-cry-watch-this-qe2-video-and-tell-us-which/)


U.S. Stocks Fall Amid Irish Bank Bailout; Goldman Sachs Slumps

By Rita Nazareth and Elizabeth Stanton - Nov 23, 2010 6:53 AM GMT+1300

U.S. stocks fell, ending three days of gains for the Standard & Poor’s 500 Index (http://www.bloomberg.com/apps/quote?ticker=SPX:IND), amid speculation a bailout for Ireland’s banks will fail to stop the sovereign-debt crisis from spreading to other European economies.
Bank of America Corp. (http://www.bloomberg.com/apps/quote?ticker=BAC:US) and JPMorgan Chase & Co. led a drop in the Dow Jones Industrial Average, dropping more than 2.7 percent, following a slump of European banks and after two Connecticut hedge funds were raided by the FBI. Goldman Sachs Group Inc. (http://www.bloomberg.com/apps/quote?ticker=GS:US) slumped 3.8 percent after the Wall Street Journal reported the securities firm is the subject of a federal insider-trading investigation. Schlumberger Ltd. (http://www.bloomberg.com/apps/quote?ticker=SLB:US) and Alcoa Inc. dropped at least 1.6 percent as commodities prices retreated.

[Skol]

From todays Herald.


Tuesday November 23, 2010

Chris Worthington: Beware promises of financial alchemy.

By Chris Worthington 5:30 AM Tuesday Nov 23, 2010

History proves protecting wealth by buying gold is folly, writes Chris Worthington, senior economist at Gareth Morgan Investments.

History abounds with the occasional fortune and frequent ruin of explorers, prospectors and alchemists who have sought wealth through gold.

Unfortunately, "conservative investors" may join that list in future tales. Such is the folly in the misconception that safety can be found by concentrating investments in an asset that should be labelled "high-risk".

There's no disputing that we are emerging from a scary period from the perspective of safeguarding wealth. Sharemarkets crashed; finance companies vanished; and even conservative banks teetered.

What's an investor to do? Even money under the mattress is no panacea in an age of quantitative easing, if one believes that runaway inflation will make today's paper money tomorrow's toilet paper.

Hence the allure of gold, history's reigning champion as a store of value. And it's not just the perception of safety. Gold has had quite a run in the past eight years, up 18 per cent a year in real terms.

The past year has brought frequent headlines announcing new record highs in the nominal price of gold.

So what has been driving this meteoric rise, especially over the past few years? A number of reasons are given, most of which can be applied broadly to all commodities.

Low interest rates mean that the opportunity cost of holding gold (which pays no interest) is small. Expectations of rising inflation or even fears of hyperinflation make hard commodities like gold appealing as a store of real value.

The "currency wars" - whereby major countries are trying to weaken their currency simultaneously - are cited as another source of support for gold as an alternative currency that can't be debased.

In essence, this is the inflation argument again - if countries all try to devalue simultaneously, the outcome can only be higher inflation. However, sovereign wealth funds may be driving up the price of gold as they try to diversify out of traditional holdings of government bonds in "devaluing" currencies.

Of course, as the gold price is denominated in US dollars, it follows that the price of gold expressed in US dollars must increase if the US dollar weakens to maintain global equilibrium. New Zealand gold investors might be surprised to learn that gold, in NZD terms, is actually down some 12 per cent from the peak in March last year.

The second main argument is that gold is somehow special - a safe haven against financial crises, sovereign debt crises and coming apocalypses. From that viewpoint, events of recent years demand a much higher gold price.

But empirically, the above arguments are flimsy. Let's begin with the pernicious claim that gold is a "safe" asset. Nothing could be further from the truth under any conventional measure of safety. During the free-floating gold era (1970 onwards) gold has been about 20 per cent more volatile than equity markets, and far, far more volatile than investments in bonds or cash.

Furthermore, the gold price distribution has even larger "fat tails" than equity markets. The stock market crashes that investors dread are actually more likely to occur in the gold market. The historic data bears this out - the single-worst month for gold saw a 23 per cent fall (in March 1980), versus a 21 per cent fall in the S&P500 (in October 1987).

Despite popular perception, gold has no special properties in times of crisis. In general, there is no relationship between equity markets and gold. Whether markets are crashing or rallying has little implication for the yellow metal, in contrast to things like government bonds that tend to rally in market crashes.

Forecasters who believe that financial Armageddon is around the corner would be better off avoiding gold in favour of bonds, or simply shorting equity markets.

The long-term performance record of gold should instantly give pause to investors seeking to safeguard their retirement purchasing power. The losses borne by investors who bought at the last gold price peak (and still the true record-high in real terms) are mind-boggling.

From the peak in 1980 to the low in 2001 (which most would consider as a long-term investment horizon), gold prices fell 87 per cent in real terms.

And to be generous, I haven't deducted transaction and storage costs over this period. Even eight years into the rally, investors are still 45 per cent below the high-water mark.

The inflation argument for gold is likewise ill-supported. The correlation between inflation movements and gold price movements is low, especially in the modern inflation-targeting era.

Even advance knowledge of inflation would give you very little predictive power over the gold price.

The last eight years bears this out - US inflation, whether measured by the actual CPI, derivative contract expectations or forecaster surveys, is lower now and expected to remain lower than when gold started its rally.

Despite the inflationary scare-stories of goldbugs, the real risk at the moment is deflation because of the huge spare capacity and high unemployment in the developed world.

No, the most likely explanation for gold's rise is simply that it's a commodity like any other, in a period in which China's rapid growth has sucked up a fast-growing proportion of the world's resources.

Copper and oil, useful industrially though not as pretty to wear, have soared in price in a similar fashion to gold over the same period. Soft (that is, perishable) commodity prices have also climbed, showing that protection from inflation cannot be the sole reason for commodity price increases.

So what place does gold have in a growth investment portfolio? I would argue a small one at best, as part of a broader commodity exposure. Commodities, as an asset class, have provided decent, if unspectacular, historical returns (once costs are properly accounted for) and a good source of diversification for equity and bond holdings.

However, that correlation to equities has been increasing and while the Chinese growth story has a while to run yet, it may well be possible that the lion's share of commodity price gains are now behind us.

But the high inherent risk in gold makes it anathema to the conservative investor. Ironically, those with concentrated holdings are unwittingly taking on the huge risk of the wealth destruction they seek to avoid.

By Chris Worthington

[JBmurc]

Is this guy your brother etc SKOL LOL

[Skol]

Remember to cash out before the day of reckoning, it's not profits until its in the bank.
Anyone with any brains at all would look at that chart and know it's not going on forever.
It will all revert to the mean.

[elZorro]

Skol: Chris Worthington from Gareth Morgan Investments. Would he be pushing a barrow of any kind? You have warned our side of the argument about accepting comments from vendors at face value. Here's a more learned comment from the Herald article:



Aussie (New Zealand)
11:41AM Tuesday, 23 Nov 2010

Written from a true Keynsian perspective. This article is superficial and recycles many of the tired old cliches about gold that make it appear to be a risky investment. Nothing could be further from the truth. I suspect that Mr. Worthington has been making the same arguments over the past 5-7 years when gold was $300, $600, $1,200 an ounce and will continue to ignore the facts as the price continues to rise further.

There is a reason why major Wall St. Investors like John Paulson, Greenlight Capital and even George Soros are heavily weighted in gold - it's because they understand that under current and future conditions it will continue to rise in value, they know that the world is broke yet continues to create trillions and trillions in new credit that can never be repaid.

So what does that say about the quality of today's paper assets? Especially supposedly safe government bonds. Governments can always guarantee you will get your money back - but they cannot guarantee the purchasing power of that money.

Mr. Worthington also fails to disclose one of the biggest reason that banks and fund managers like him dislike gold - they cannot make any ongoing fees or charges against it.


Gold now costs a lot more than US$300/oz to get out of the ground. The PoG is never going back there, to what you call the mean. It should stay in those trendlines JB posted, and that's looking very safe at the moment.

Gold is not like a share, no-one can dilute it by issuing more. What you see is what you get.

[shasta]

Skol: Chris Worthington from Gareth Morgan Investments. Would he be pushing a barrow of any kind? You have warned our side of the argument about accepting comments from vendors at face value. Here's a more learned comment from the Herald article:



Gold now costs a lot more than US$300/oz to get out of the ground. The PoG is never going back there, to what you call the mean. It should stay in those trendlines JB posted, and that's looking very safe at the moment.

Gold is not like a share, no-one can dilute it by issuing more. What you see is what you get.

When the supply exceeds* demand the price will fall, but while the US is doing there best bit to follow Zimbabwe by printing more money, its only going one way.

* There are plenty of gold explorers who will most likely miss out on the boom & not make production (when costs rise & the PoG falls below acceptable IRR's)

The $US600b injection into the US economy (into US bonds?) is going in at $75b a month over 8 months, so the $USD you would think won't strengthen overnight!

What worries me is the constant "buy gold" ads on the radio, the desks in the mails all wanting to "buy" your gold.

Who is selling the gold, & i know the rates the mall rats offer arent much $NZ700/oz i think ive seen

[JBmurc]

they want to buy your gold so they can sell it to a mint/bullion house who has buyers keen to pay 1800oz+NZD

I'll be far more concerned if the world economies sorted their debt problems to credits with strong high interest cash rates to back up investors holding these fiat tenders till then I hold/buy silver bullion +property+shares

[Skol]

Skol: Chris Worthington from Gareth Morgan Investments. Would he be pushing a barrow of any kind? You have warned our side of the argument about accepting comments from vendors at face value. Here's a more learned comment from the Herald article:



Gold now costs a lot more than US$300/oz to get out of the ground. The PoG is never going back there, to what you call the mean. It should stay in those trendlines JB posted, and that's looking very safe at the moment.

Gold is not like a share, no-one can dilute it by issuing more. What you see is what you get.

Gold is a piece of metal, it doesn't do or make anything.
I remember very clearly about 1999, Berkshire Hathaway shareholders were very irked because most other fund managers were making zillions investing in tech shares and they wanted a piece of the action. Warren Buffett was adamant that he only invested in things that were useful, what the techies called 'smokestack industries'.

The tech wreck that followed ruined millions of punters and is still the worst meltdown in history, including the great depression.

Buffett was right, all the rest were wrong.

There's always a new lineup of punters ready to throw their cash at the lastest craze, and that's all gold is, a craze.

I've seen a letter today from a guy awaiting the proceeds of a house sale and it's going into gold. There's one born every minute. LOL

[shasta]

Gold is a piece of metal, it doesn't do or make anything.
I remember very clearly about 1999, Berkshire Hathaway shareholders were very irked because most other fund managers were making zillions investing in tech shares and they wanted a piece of the action. Warren Buffett was adamant that he only invested in things that were useful, what the techies called 'smokestack industries'.

The tech wreck that followed ruined millions of punters and is still the worst meltdown in history, including the depression.

Buffett was right, all the rest were wrong

In the end he was proven right, after all the insiders made there money when teck stocks were promising the earth & on insane P/E multiples (some even had market caps in the billions with NO revenue or profits!)

Those in from the start made alot of money, it was the "late to catch the train" retail investors who got burned

I get your point though, WB didnt understand them, how they made there money or how to value them, nor could he see where they would be in 10+ years

In some respects he was a little ignorant, but who am i to question the "great one"

[elZorro]

Gold is a piece of metal, it doesn't do or make anything.
I remember very clearly about 1999, Berkshire Hathaway shareholders were very irked because most other fund managers were making zillions investing in tech shares and they wanted a piece of the action. Warren Buffett was adamant that he only invested in things that were useful, what the techies called 'smokestack industries'.

The tech wreck that followed ruined millions of punters and is still the worst meltdown in history, including the great depression.

Buffett was right, all the rest were wrong.

There's always a new lineup of punters ready to throw their cash at the lastest craze, and that's all gold is, a craze.

I've seen a letter today from a guy awaiting the proceeds of a house sale and it's going into gold. There's one born every minute.

Skol: maybe it's true that we're not in USA, so we can't easily make as much from a simple physical gold investment. They are the ones devaluing quicker than the rest of us at the moment.

But you know gold has other uses, and is plated inside heaps of electronic gear. Not because it's a good selling feature, because the punters don't see it. It's the best metal for that job. So your first argument is completely invalid.

Warren Buffett isn't perfect, he bought heaps of GE shares as they dipped in the GFC, and then they kept dropping. I think he eventually did OK, but could have done better. I guess I like the fact he's an FA type of investor.

I'm not the smartest, but I've been trying very hard to make a dollar out of shares for four years. So far, (while I was up a little at one stage but failed to jump out) it's been zip return for many hours work. I'd have been far better off to buy some gold and sit back. How did that happen, if shares are better than gold?

[JBmurc]

Yes Buffett made some great decisions like buy a heap of Silver bullion cheap(he did sell to early though)

[Skol]

well we will see am happy to take on anyone on the US Silver price closing higher end of 2011 than now or the start of 2011 for a $100max bottle of the winners choosing

You're on. As from today, last cash price $27.90.
When gold goes it'll take silver with it.

[Skol]

Skol: maybe it's true that we're not in USA, so we can't easily make as much from a simple physical gold investment. They are the ones devaluing quicker than the rest of us at the moment.

But you know gold has other uses, and is plated inside heaps of electronic gear. Not because it's a good selling feature, because the punters don't see it. It's the best metal for that job. So your first argument is completely invalid.

Only 9% of gold is used industrially.

[JBmurc]

You're on. As from today, last cash price $27.90.
When gold goes it'll take silver with it.

What price you looking at SKOL last close price $27.51oz USD so should we make it one year from today so 23rd NOV 2011 -lower than 27.51 SKOL winner 27.52 or higher JBmurc wins again might have to start another thread -Silver higher or lower by Nov 2011

[Skol]

What price you looking at SKOL last close price $27.51oz USD so should we make it one year from today so 23rd NOV 2011 -lower than 27.51 SKOL winner 27.52 or higher JBmurc wins again might have to start another thread -Silver higher or lower by Nov 2011

You said end of 2011. we're only talking a month.

[JBmurc]

You said end of 2011. we're only talking a month.

yeah doesn't worry me 31st DEC 2011 last day then

[elZorro]

Only 9% of gold is used industrially.

That's about the closest I've seen you get to saying 'Maybe I was wrong there', Skol ;)

I've googled up this Geology of Gold 101 (http://geology.com/minerals/gold/uses-of-gold.shtml)article for our further education, should anyone decide to read it. As the traffic officer will say, ignorance of the law (facts) is no excuse.

The biggest use of gold is jewelry. It has historic importance, a means of passing good fortune to future generations, of saving some cashflow for emergencies, etc. And it is invariably a good investment, although timing needs to be checked, as in all investments.

[Skol]

The biggest use of gold is jewelry.

The biggest use of gold is hoarding.

[JBmurc]

3057
The biggest use of gold is hoarding.

so are we on for the Silver higher or lower than 27.52 by 31st DEC 2011 for a bottle of veuve etc

[Skol]

3057

so are we on for the Silver higher or lower than 27.52 by 31st DEC 2011 for a bottle of veuve etc

Lower than $27.90, the cash price yesterday.

[JBmurc]

Lower than $27.90, the cash price yesterday.

so you basically want the highest price since the start of trading on the 21st nov an not a close price of the days trading --sounds fair NOT

[elZorro]

The biggest use of gold is hoarding.

Also not technically correct Skol. From a fairtrade blog, which I'm sure will be fairly accurate:


In 2008 jewelry demanded 69M ounces of gold and the mining output produced 78M ounces. So the jewelry world demand is quite similar to the mining offer.

To be fair, you have to compare apples with apples. The biggest user of the gold mined each year (by far) is the jewelry market, not hoarding per se. As the jewelry does tend to stick around as personal property, is that hoarding? It's not usually in a vault. And it can be consumed by reselling to dealers if times get tough, so that's not really hoarding either. (See Kitco charts).

Of the gold above ground, I guess a lot of it will be in the form of jewelry and ornaments, do you call that hoarding? Or are you really referring to gold held as bars, ingots, in a vault. Because that's what I thought you were meaning, in which case the accumulated gold would still not approach jewelry by weight I'm sure.

Link to data from Kitco, also proves the point. (http://www.kitco.com/charts/CPM_charts.html)

It has been estimated that all the gold mined by the end of 2009 totaled 165,000 tonnes.

[elZorro]

I don't have access to buying shares on the TSX at this stage, Direct Broking stopped doing that (unless I'm wrong?) The other day I pointed out a goldies share that looked v. interesting, TSX: MAW.

I just had another look. I knew what I'd find, because I didn't buy any..

This all looks too easy, but I daren't buy any now, for fear of jinxing the great run other people are having...:confused:

[shasta]

You're on. As from today, last cash price $27.90.
When gold goes it'll take silver with it.

Silver has far more industrial use than Gold, & there aint many silver mines going around, largely its a by product

Yes, Silver will follow Gold in some respects - but i see a disconnect as silver has lagged Gold for some time.

There's probably 1000 gold bugs for every silver bug out there, as it doesnt get the hype & headlines

[JBmurc]

Silver has far more industrial use than Gold, & there aint many silver mines going around, largely its a by product

Yes, Silver will follow Gold in some respects - but i see a disconnect as silver has lagged Gold for some time.

There's probably 1000 gold bugs for every silver bug out there, as it doesnt get the hype & headlines

Too right Shasta some other facts JPMorgan has at least 14 law suits pending against it for illegally manipulating the silver price. This bank is still carrying a very large large ‘short silver’ position on its books(likely the biggest estimated to be 3.3 billion ounces !! ) ---JPMorgan is a custodian of SLV:ETF the so called largest holder of silver bullion in the world 10,000tons+

Sounds like this friday is the next date that Silver Opts will roll over --the big shorters like JPM will have to yet again have to front up with more funds to keep their short position(thanks to SLV funds?) Or close down the shorts (silver would double+ overnight)

[elZorro]

Wednesday, November 24, 2010

The Gold Price Remains in a Bull Market That Will Keep Prices Rising Another 4 to 10 Years


If only we could tell for sure..but the MoneyChanger is adamant.

He's suggesting we swap silver for gold for 15 weeks, then swap back, JB. I did note silver stopped moving with gold the other day, for a while.

I have had a good year so far (not on the sharemarket). I'm thinking very seriously about buying some gold for an investment. Skol has not dissuaded me with any of his arguments, and I like the concept of having some capital completely away from normal distractions like buying shares on a whim, from share dilution, or from buying new retail trinkets.

I might even be able to make some money on my investment.

[Skol]

so you basically want the highest price since the start of trading on the 21st nov an not a close price of the days trading --sounds fair NOT
I'll get back to you on this one because I'm busy but if you're quibbling over a few cents 13 months out, looks like you might lose.

[elZorro]

This looks to be huge breaking news (http://seekingalpha.com/article/238670-china-and-russia-dump-dollar-in-mutual-trade-no-big-deal-in-the-short-run), regarding the effect on gold, especially in US$.

A video just out on hyperinflation (http://www.youtube.com/watch?v=2N8gJSMoOJc)etc..coincidental with the breaking news. Might be a bit OTT.

[Skol]

If only we could tell for sure..but the MoneyChanger is adamant.

He's suggesting we swap silver for gold for 15 weeks, then swap back, JB. I did note silver stopped moving with gold the other day, for a while.

I have had a good year so far (not on the sharemarket). I'm thinking very seriously about buying some gold for an investment. Skol has not dissuaded me with any of his arguments, and I like the concept of having some capital completely away from normal distractions like buying shares on a whim, from share dilution, or from buying new retail trinkets.

I might even be able to make some money on my investment.

Good luck, not many people make money buying things when they're at historic highs.

[Skol]

so you basically want the highest price since the start of trading on the 21st nov an not a close price of the days trading --sounds fair NOT
What price do you want to make it then?

[JBmurc]

What price do you want to make it then?

well just a closing price you can chose as it will be you shouting me again LOL

last few days-- I see Freshchoice have Veuve at $79 (103rrp)

[Skol]

Closing price today then. Where do you get your prices from I used Bloomberg.

[Skol]

The Russian gummint is buying Canadian dollars and may buy Aussie dollars as well.
Why don't they buy gold if it's such a great hedge against the meltdown of the dreaded 'fiat' currencies?

Because even though they were stupid enough to embrace communism for 85 years they're not that stupid.

[JBmurc]

[QUOTE=Skol
Kitco

[Skol]

[QUOTE=Skol
Kitco

$26.70 will do, OK JB?

What's this?
The phoenix rises from the ashes, the 'dead' US dollar now EUR/USD 1.32, up from 1.42.

[JBmurc]

[QUOTE=JBmurc;327640]

$26.70 will do, OK JB?

What's this?
The phoenix rises from the ashes, the 'dead' US dollar now EUR/USD 1.32, up from 1.42.

yep fine looking forward to drinking your Veuve soon an in 2012

[shasta]

[QUOTE=Skol;327732]

yep fine looking forward to drinking your Veuve soon an in 2012

As much as i like Veuve Clicquot, they did renege on a recent NBR (National Business Review) promotion, perhaps change it to another french one.

Cameron Slater (the blogger) was very aloud about the competition where people could write in why they deserved to win there "weight" in Veuve.

Nothing to do with Gold, sorry folks, but i think we should join the ban against Veuve!

PS, Will watch the Silver comp price between you & Skol closely - i too, think Silver will outperform both Gold, & the general share market.

[JBmurc]

my fav are Moet or Veuve think skol original deal was $100 bottle of wine etc must include receipt personal I don't even mind if it's just a $100 new world voucher as long as it's paid plus sending a voucher would save on post I'll leave it up to SKOL even a high Quality bottle of RED would be fine

[Skol]

Well it's not the end of the year yet and there was a very big article on gold in yesterdays WSJ. Sometime soon there could be a very savage reversal according to them because of the ETF's and the size of the funds if they need to liquidate in a hurry.
Also says when gold tanks so will silver.
One of the biggest ETF's, GLD, has 1300 tonnes of gold in a vault in London - and it's uninsured. There's also been some questions asked as to whether the stated amount of gold is actually there.

Slippery slope at the moment, dollar index up, gold down.

[JBmurc]

One of the biggest ETF's, GLD, has 1300 tonnes of gold in a vault in London - and it's uninsured. There's also been some questions asked as to whether the stated amount of gold is actually there

Yes both SLV & GLD would be very short of actual real Silver&gold bullion IMHO which in turn will be very bullish for the prices of the real precious metals just like the fact if their was alot more real phyiscal Gold an silver discovered/found in the vaults it would be bearish
Yes the holders of the SLV & GLD are really holding paper Gold/Silver an not any right to actually own the phyiscal which is stated when you buy the ETF's
that you cannot claim or redeem real Silver/Gold bullion from your ETF (or the other many paper forms of owning PGM's)

If you think you own physical gold or silver, one of two statements will be true:

1.You really do own physical gold and/or silver bullion, meaning that you are the legal owner of specific coins and/or bars and you hold legal title to that gold or silver.
2.You think you “own” gold or silver bullion, but in reality the truth is that somebody else owes you gold or silver bullion. There is a possibility that the other party will not make good on its obligation to you, and that risk would increase in a major systemic crisis.

[upside_umop]

Had a talk to a lady at the gold stand in one of the malls the other day. Price is still around $750NZD for 999 pure...it's a great money spinner for them isn't it considering spot more than double that. Almost fraud.

She also told me to buy silver because its going to go up. I asked her why. She just said because it is. I said...so it will be higher tomorrow than it is today? She said..."I'm 99% sure it will be." Amazing. I told her to go and mortgage her house because those odds are just too good!

She gave me a spiel on how she 'knows' of people that have never had to work again from making the 'right' choices. I.e. Massive speculation. What people fail to realise is, if you put enough monkeys on a type writer, one will write a Shakespeare play. What happens to the rest of the monkeys? They're still monkeys.

[JBmurc]

yeah it better than mining for it if you could buy it for $750 many miners costs are above that add in exploration costs etc
very optimistic scum IMHO -bet before she got on the ban-wagon see sold timeshare hoildays or read peoples auras/minds/futures etc sounds like a muppet if she doesn't even know why a metal would increase in value

[Skol]

JB, if there was any suggestion that the gold in the vaults wasn't there it would instigate a panic, the price of gold would crash as worried punters bailed out.

[Skol]

Hey EZ, we're running out of gold all right, very rare. LOL


Third-Quarter Gold Output in Australia Gains 22%, Surbiton Associates Says.

Third-quarter gold production in Australia gained 22 percent compared with the same period a year ago, as prices remained high, a research group said.

Production climbed to 67 metric tons in the three months ended Sept. 30, 12 tons more than a year ago, Sandra Close, a director of Melbourne-based Surbiton Associates Pty, said in an e-mailed statement.

Gold is headed for a 10th annual gain and prices may average $1,375 an ounce during the first quarter of 2011, National Australia Bank Ltd. said Nov. 23. Regis Resources Ltd. and Integra Mining Ltd. began output last quarter, Surbiton said.

“We are now seeing the results of a sustained period of higher gold prices,” Close said. “We are now seeing the effects of re-evaluation of known deposits and the bringing of old mines back into production, as well as some new finds, so output is increasing.”

AngloGold Ashanti Ltd. this month approved development of the A$600 million ($583 million) Tropicana gold project in Western Australia.
.

[JBmurc]

JB, if there was any suggestion that the gold in the vaults wasn't there it would instigate a panic, the price of gold would crash as worried punters bailed out.


It would instigate panic in the holders of SLV,GLD paper etc as for dropping the price of the real metal well if they haven't got it how can they sell it an depress the price of the real metal
JP morgan who runs SLV also has 3billoz Silver short sold if punters stop funding JPM through the SLV an in turn start selling then surely JPM short orders must also have to be trimed as they payout the funds back to SLV sellers

[Skol]

One of the more interesting observations in the WSJ article a couple of days ago I forgot to mention was that a large percentage of 'investors' in gold, if you can call them that, are novices who probably haven't invested in anything before and are unused to the vagaries of the metal.

Many will be enthusiastic amateurs who heard from a relative or a neighbour that you just can't lose.

No one knows how these greenhorns are going to react if these's a serious downturn in the price.

[Skol]

I don't want to burst your bubble theory yet Skol, but here is the $US picture on a wider timescale.

Hey EZ, why don't you post another chart of the US dollar index like this one, post #1613

[elZorro]

Hey EZ, why don't you post another chart of the US dollar index like this one, post #1613

Hi Skol, fair enough, looks like the start of a recovery. Would you bet the house on it though? Re your earlier post about more gold being found recently, that is probably only marginal gold at low grades of 0.5g/tonne, normally mothballed mines that can make a bit of cash at the moment.

[JBmurc]

Cook: The basis of the lawsuit is that these big banks are short an inordinate amount of silver. How much to be exact?
Butler: It varies over time, but at the time referenced in the lawsuit, JPMorgan, either alone or with another U.S. bank, held short on the COMEX the equivalent of 25% of world annual mine production
Cook: How many ounces is that?
Butler: In most recent CFTC data, it is 150 million ounces, but within the past year it has been over 200 million ounces
Cook: You’re claiming that’s manipulative?
Butler: Absolutely. It would be impossible for such a concentrated short position not to be manipulative. It was this observation that led to the current CFTC silver investigation which, in turn, led to this lawsuit.
Cook: How many ounces are there held short in total?
Butler: The total net short position in COMEX futures is around 550 million ounces, but if you include everything, especially unbacked bank certificates and pool accounts, it grows to 2 or 3 billion ounces.
Cook: Who are these short sellers outside of the big one or two?
Butler: On the COMEX, there are about 8 commercial entities short over 300 million ounces, including the biggest.
Cook: They got squeezed pretty good when silver hit $29, didn’t they?
Butler: You bet.
Cook: How big have the losses been for the shorts?
Butler: In silver, the big 8 were out over $3 billion at the top, and more than $5 billion if you include all the shorts.
Cook: You pointed out that there had to be a lot of margin calls, when gold is included, what’s the total?
Butler: All in all, almost $15 billion.
Cook: They actually had to cough up $15 billion?
Butler: Absolutely. That’s a key component of the clearinghouse system.
Cook: Did anybody fail to make their margin calls?
Butler: It’s hard to tell.

[Skol]

Any share an you can even include any divies starting today to the end of NOV

Remember this JB, It's here, the end of November any share you like to bet against NAVO, very lucky you didn't bet a bottle on this one.
I bet RCR.

NAVO up 42%.
RCR up 52%.
I declare myself the winner.

[JBmurc]

yes lost that one do you hold RCR---still holding NAV sp not moving much still making good EBIT with gold at $1420ozAUD costs should be in the 800's for this Qtr all going to plan to top 100koz for the 10/11 -- Cummins Range REE listing allocations soon

[Skol]

JB,
What's with the obsession over manipulation? 2 lawsuits have been filed and you can bet HSBC and JP Morgan will front up with armies of lawyers.

Manipulation will be difficult to prove and only once in its history has the CFTC successfully sued. Commodities like silver and gold are speculative, only the big boys should play.

As soon as gold and silver prices take a hit it's back to beating the manipulation drum, goldbugs who think it should be $5000/oz.

[inghamp]

I'd say given how rigged the legal game is in the States that Skol is correct on the manipulation front. Any lawsuit will probably be unsuccessful.

but..

When they (JP Morgan and HSBC), decide the future fundamentals will mean losses for their current trade, they will simply jump on the other side of the trade..

[JBmurc]

I'd say given how rigged the legal game is in the States that Skol is correct on the manipulation front. Any lawsuit will probably be unsuccessful.

but..

When they (JP Morgan and HSBC), decide the future fundamentals will mean losses for their current trade, they will simply jump on the other side of the trade..

If the big shorters like JP morgan etc do jump on the other side they'll cause a massive spike esp. in the Silver price having 200moz+ short just to close out the position the small silver market would rocket
-I did believev JPM have good sized shareholding in many silver focused miners so maybe they see the writing on the wall for the silver price to stay low for much longer

[inghamp]

yeah i know a spike is likely.. didnt want to climb into prediction territory :-)

[elZorro]

How about those gold and silver prices just now? The MoneyChanger had this to say:



Something's not right in the world. Silver and gold are simply ignoring the US dollar and climbing right along, thank you very much, right in the face of dollar strength against every other currency alternative. Remember that silver and gold are also alternative monies, offering the only hard alternative to every unbacked fiat money in the world. You are watching the de-coupling now, the world-wide revulsion against central-bank-created money out of thin air. Trouble is brewing, world-wide.

[Skol]

Headlines in the FT. Another sign of a bubble.


HK gold market hit by sophisticated scam
By Robert Cookson in Hong Kong

Published: December 2 2010 03:59 | Last updated: December 2 2010 03:59

Hong Kong goldsmiths have been sold hundreds of ounces of fake gold this year in one of the most sophisticated scams to hit the Chinese territory’s gold market in decades.

Industry executives say the scam – while not massive and hitting only the retail sector – uncloaks the increasingly elaborate gold swindles perpetrated by criminals in Asia as bullion prices soar to record highs of $1,400 a troy ounce.
.The counterfeits have shocked Hong Kong’s gold community not because of the amount involved, but because of their sophistication.

“It’s a very good fake,” said Haywood Cheung, president of the Chinese Gold & Silver Exchange Society, Hong Kong’s century-old gold exchange, highlighting how criminals are developing new techniques to commit an age-old fraud.

Mr Cheung said he was aware of at least 200 ounces – worth $280,000 – of the fake gold that had been discovered by jewellers and pawn shops. But he estimated that ten times that amount might have infiltrated the retail market. In comparison, the large gold bars held by central banks weigh 400 ounces and are worth nearly $560,000 each.

In one case, executives discovered a pure gold coating that masked a complex alloy with similar properties to gold. The fake gold included a significant amount of bullion – about 51 per cent of the total – alloyed with seven other metals: osmium, iridium, ruthenium, copper, nickel, iron, and rhodium.

The complex nature of the fakes suggest they were produced by a metalsmith with sophisticated equipment and extensive knowledge of metallurgical engineering.

Even Luk Fook Group, one of Hong Kong’s biggest jewellers, was tricked into buying $11,500 worth of fake gold this summer before putting its stores on alert. “This was the biggest hit ever,” said Paul Law, executive director of the firm.

In the past, counterfeit gold in Hong Kong and the rest of Asia was either rough and easy to detect, even to the naked eye, or involved gold-plated tungsten, a metal with a similar density to gold, but which traders and jewellers can easily identify.

The complexity of the latest batch of fake gold would have reduced the profitability of the scam, since it used a significant amount of bullion, and because iridium and osmium are expensive.

The fakes are extremely hard to detect by sight and touch alone. In most cases, they passed basic scrutiny, only to be revealed later by more sophisticated tests involving high temperatures and chemicals.

Industry executives stressed that the scam targeted the street-level sale of scrap gold to jewellers. Mr Cheung said none of the fake gold had infiltrated the much more bigger market for gold bars, which as is protected by more rigorous controls

[elZorro]

Skol, I'm not too worried about this scam, won't affect me if I buy certified bullion. The street buyers might get pinged however, and that is part of the reason for their lower offer I suppose. I'm real keen on getting some bullion soon, before it goes over US$1400/oz for the last time..(he said, looking for a reaction).

But you didn't comment on my post from the Moneychanger: how did gold and the US$ go up together? Who's kidding who?

[Skol]

Gold an alternative money? Not for me it's not, it's a piece of metal, like lead or copper, but they're actually useful.

I'll stick with shares in a basket of currencies and considerable exposure to natural resources.

There's been rumours about fake gold for a while but this is the first concrete evidence I've seen of such a sophisticated rip-off.
I wonder how big this is?

[elZorro]

Useful or not, a lot of it has been sold to collectors: (http://news.coinupdate.com/us-mint-bullion-sales-silver-eagles-achieve-new-record-0557/)

[Huang Chung]

Gold an alternative money? Not for me it's not, it's a piece of metal, like lead or copper, but they're actually useful.

I'll stick with shares in a basket of currencies and considerable exposure to natural resources.

There's been rumours about fake gold for a while but this is the first concrete evidence I've seen of such a sophisticated rip-off.
I wonder how big this is?


Piece of metal....piece of paper
Fake gold.....fake banknotes

[elZorro]

Hi HC, an interesting finishing price for gold of $1413.5, the US$ starting to drop again.

A major buyer of gold is emerging, maybe this seldom released news kicked the gold market along. (http://www.bloomberg.com/news/2010-12-02/china-gold-imports-jump-almost-fivefold-as-inflation-outlook-spurs-demand.html)

[skid]

Nice way to get rid of some of that worrysome stockpile of $US sitting in China

[Huang Chung]

[QUOTE=elZorro;328666]Hi HC, an interesting finishing price for gold of $1413.5, the US$ starting to drop again.

Hi elZorro

A rising $A in reduced the profits of Aussue miners BUT gives Assie goldies with overseas projects more bang for their exploration buck.

I just hope gold can hold at these levels for the next 5 or 6 months. That timeframe should be enough for West African goldie PIR (almost my entire portfolio!!) to complete a second, more comprehensive, drilling program to back up their first successful campaign, and get a revised resource statement to the market.

[elZorro]

[QUOTE=elZorro;328666]Hi HC, an interesting finishing price for gold of $1413.5, the US$ starting to drop again.

Hi elZorro

A rising $A in reduced the profits of Aussue miners BUT gives Assie goldies with overseas projects more bang for their exploration buck.

I just hope gold can hold at these levels for the next 5 or 6 months. That timeframe should be enough for West African goldie PIR (almost my entire portfolio!!) to complete a second, more comprehensive, drilling program to back up their first successful campaign, and get a revised resource statement to the market.

Hi HC, I did hold PIR for a while, got a bit bored and sold, but will keep an eye on it.

I wonder where the PoG will go this week..

[inghamp]

I heard mention of a possible QE3..

lol

Anyone have a link to this?

[Skol]

There might be more but where's the inflation I've been hearing about for years?

[shasta]

There might be more but where's the inflation I've been hearing about for years?

Give it time, when the OCR starts rising, we'll see the effects of inflation down the track, we are still recovering from the recession!

[elZorro]

Give it time, when the OCR starts rising, we'll see the effects of inflation down the track, we are still recovering from the recession!

There have been plenty of examples of recent inflation posted on this thread anyway Shasta, annual results are just heavily camouflaged by reduced housing costs I think.

Is tonight the night for a new record gold price? Looks that way.

[COLIN]

In one case, executives discovered a pure gold coating that masked a complex alloy with similar properties to gold. The fake gold included a significant amount of bullion – about 51 per cent of the total – alloyed with seven other metals: osmium, iridium, ruthenium, copper, nickel, iron, and rhodium.



Well, that should push up the value of those companies chasing Rare Earths!

[shasta]

There have been plenty of examples of recent inflation posted on this thread anyway Shasta, annual results are just heavily camouflaged by reduced housing costs I think.

Is tonight the night for a new record gold price? Looks that way.

The GST increase & the effects of the ETS costs being past down & increased petrol levies will only fast track the next inflationary period

Wages & static interest rates are the only thing slowing it down at present

[Huang Chung]

Sounds like a bit of a mess....

http://www.cnbc.com/id/40521684

[Skol]

The GST increase & the effects of the ETS costs being past down & increased petrol levies will only fast track the next inflationary period

Wages & static interest rates are the only thing slowing it down at present

The goldbug dudes on HC have been threatening hyperinflation, fiat money meltdown, Weimar Republic for years, and when you ask them when it's coming they say 'soon'. So's Xmas, LOL

The real story they reckon is the inflation is being secretly manipulated by the suppressors in the US Govt. Nothing like another good conspiracy theory.

Too bad if the US Govt. decides to unload some of its 9600 tonnes of gold at these prices. That'll guarantee heaps of overexposed punters end up in the poor house.

[inghamp]

couldn't agree more regarding wages and static interest. Exactly what's going on here in my company... We are all expecting increases soon

[inghamp]

There might be more but where's the inflation I've been hearing about for years?

lol Price rises everywhere? It's building. It's all coming... The Keynsian toolset always lags. The effect is delayed depending on the economy. So many factors at play globally. But the theme will be replicated on global scale because pretty much all economies are doing the same thing.

I know you understand how the government tampers with the economy via the Keynsian toolset.. And we have seen how this toolset effects the economy in the past (repeatedly). Can't you put two and two together? Why so resistant to the obvious lol.

I'm not saying doomsday bla bla.. just obvious effects of Keynsian monetary policy. When they go to tighten it will be too late (as usual) due to said delayed effect.

[Skol]

lol Price rises everywhere? It's building. It's all coming... The Keynsian toolset always lags. The effect is delayed depending on the economy. So many factors at play globally. But the theme will be replicated on global scale because pretty much all economies are doing the same thing.

I know you understand how the government tampers with the economy via the Keynsian toolset.. And we have seen how this toolset effects the economy in the past (repeatedly). Can't you put two and two together? Why so resistant to the obvious lol.

I'm not saying doomsday bla bla.. just obvious effects of Keynsian monetary policy. When they go to tighten it will be too late (as usual) due to said delayed effect.

It's quite obvious you goldbugs are way smarter than the Federal Reserve and Ben Bernanke, you ought to apply for a job, with your 'toolset' they'll give you the top dogs job right away.

[upside_umop]

FYI

http://en.wikipedia.org/wiki/Inflation_targeting

Of course it could be more broad based and targeted and maybe this will happen in the future. For now, inflation targeting via the OCR and a like has empirical evidence. When you hear Phil Goff come out and say they are going to reorganise the reserve bank it actually scares me. He has no idea.

The ETS and GST are one off increases and the reserve bank will be watching for second wind effects - there shouldn't be any given the economic state and spending power. I have more thoughts on CPI but this is not the place for the indepth discussion.

Back to gold. When it was $300 an ounce in 2000, did people buy it as a store of wealth against inflation? If so, why has global inflation been less than 50% (approx) and gold has risen some nearly 500%? Speculation. Do we expect 500% inflation in the coming times from 2000? Do we expect the banking systems to fall over?

[hal]

FYI

http://en.wikipedia.org/wiki/Inflation_targeting

Of course it could be more broad based and targeted and maybe this will happen in the future. For now, inflation targeting via the OCR and a like has empirical evidence. When you hear Phil Goff come out and say they are going to reorganise the reserve bank it actually scares me. He has no idea.

The ETS and GST are one off increases and the reserve bank will be watching for second wind effects - there shouldn't be any given the economic state and spending power. I have more thoughts on CPI but this is not the place for the indepth discussion.

Back to gold. When it was $300 an ounce in 2000, did people buy it as a store of wealth against inflation? If so, why has global inflation been less than 50% (approx) and gold has risen some nearly 500%? Speculation. Do we expect 500% inflation in the coming times from 2000? Do we expect the banking systems to fall over?

perhaps they bought it as protection against falling currency as well as rising inflation. seems to have done very nicely thanks.

[inghamp]

It's quite obvious you goldbugs are way smarter than the Federal Reserve and Ben Bernanke, you ought to apply for a job, with your 'toolset' they'll give you the top dogs job right away.

Far greater minds than mine have already done the criticising here..

I don't have an emotional attachment either way. It's just factual evidence (statistics about inflation and the causes). I am not passing judgment. Time will tell if what they are doing is right or wrong. I have no idea. But even so... the statistically evident consequences will be?

You know about Keynsian toolset yes? It's not "mine" lol. It's the current popular economic toolset deployed by goverments worldwide. No big deal. But these policies cause things.

e.g. As a child... I used to be able to buy an ice block for 20 cents, now it costs over $2 at least. Ice blocks haven't really become more valuable (increased demand).. so, the cause? Keynsian monetary policy lol.

It's taught to every Economics/business student at University.

[elZorro]

Gold hits a record high in Nepal

http://www.nepalnews.com/main/index.php/business-a-economy/11314-gold-price-hits-new-record-high-of-rs-40250-per-tola.html

2 hours ago: Gold hits a new high in US$, silver proportionally better.

http://www.theglobeandmail.com/globe-investor/gold-hits-record-as-silver-climbs-to-30-year-high/article1827281/

Skol, I have a bottle of Veuve Clicquot on my desk: payment for a flash appliance repair I hope to complete soon. I could sell it to you, so you could send it to JB. Because I think you'll lose that wager :)

[Skol]

Well, EZ, unless there's a sudden implosion I will owe JB a bottle, however when the gold price reaches its zenith it's very likely to descend rapidly, maybe even take down the ETF's depending on how orderly it's managed. It could be a very scary scenario with ETF's unloading tonnes of gold at whatever anyone will pay.

[STRAT]

Well, EZ, unless there's a sudden implosion I will owe JB a bottle, however when the gold price reaches its zenith it's very likely to descend rapidly, maybe even take down the ETF's depending on how orderly it's managed. It could be a very scary scenario with ETF's unloading tonnes of gold at whatever anyone will pay.Dont worry Skol. It wont happen. The vaults are all empty:p;)

[shasta]

Dont worry Skol. It wont happen. The vaults are all empty:p;)

The smart ones probably sold off some gold into the spike > $US1400/oz & bought Silver ;)

[Skol]

Dont worry Skol. It wont happen. The vaults are all empty:p;)

Not so, I read this morning that you can tour the Feds vault in Wall Street where they store about 7000 tonnes. The tours are booked out months in advance, would be good to see, if I get to NY it's on my list.

[STRAT]

Not so, I read this morning that you can tour the Feds vault in Wall Street where they store about 7000 tonnes. The tours are booked out months in advance, would be good to see, if I get to NY it's on my list.This is the Fed we are talkin about. right? :scared:

They are probably painted lead bars. Bet you wont get close enough to prove otherwise:lol::lol::lol:

[Skol]

If I owned gold, I'd sell and buy U308, check it out. Own PDN.

[STRAT]

If I owned gold, I'd sell and buy U308, check it out. Own PDN.Cant see any gold bugs buying sticks of that to put under the bed. :D

[JBmurc]

Not so, I read this morning that you can tour the Feds vault in Wall Street where they store about 7000 tonnes. The tours are booked out months in advance, would be good to see, if I get to NY it's on my list.

Which holds much of germanys gold and many other countries I understand that the Yanks hold most of theirs at fort knox which cannot an hasn't be viewed for a very long time

[Skol]

Cant see any gold bugs buying sticks of that to put under the bed. :D

Haha, goldbugs think they've got a monopoly on a good investment but uranium's up 50% since June.

[lewinsky]

Hi Skol,

My views have been different to yours regarding gold, however I am in agreement with you regarding Uranium stocks.
Diversification is the key and I have tucked a few U shares away.
I gather you may have your own lifestyle block and food will become more of an issue moving forward.

Can I take out a futures contract on some of your eggs?

Cheers

LEW

[Huang Chung]

Haha, goldbugs think they've got a monopoly on a good investment but uranium's up 50% since June.

OMG...it must be a bubble!!!!

[Skol]

OMG...it must be a bubble!!!!

Uranium's actually useful, you don't hoard it and hope for the best.

[peat]

30883087

silver and gold display large bearish engulfing candles now.

[elZorro]

Hi Peat, thanks for the advance warning on gold/silver stocks today, don't expect anything exciting. Just found this from OGC: they stopped hedging gold early this year, based entirely on a bet about the gold price no doubt.


In gold Oceana trusts

Ross Louthean — 26 November 2010

The gold market and the Reefton goldfield and not the flagship Macraes operations were the themes of two OceanaGold Corporation papers yesterday at the AusIMM NZ Minerals Conference.
Who better to talk about the gold market for Oceana than its vice president for corporate and investor relations Darren Klinck who said while there had been speculation that the current high gold price may be a bubble, the gold sages he listens to say otherwise.
Oceana has benefitted greatly from the rising gold price, particularly in $NZ terms.
Klinck said that the gold price has gone up 18% in the past year and, in the past three years it has lifted by 60%.

[Skol]

I've got some questions for the gold and silver speculators that indulge their fantasies of riches by purchasing physical metal. A few months back a uni student in Auckland was given a 1KG bar for getting his degree. It was stolen, the bar was uninsured.

Do you store it at home or in a safe deposit box?

If stored at home is it in an accredited vault for insurance purposes? Or buried in the garden like one of my neighbours?

Is it insured at all?

If it is, is there a loading on your premium?

If it's in a safe deposit box is it insured by the bank?

Is it stored by the company you purchased it from, all the while bearing in mind what happened to Ray Smith's Goldcorp 'investors'?

If stored by a company that sells gold is it insured?

When you transport it, is it insured?

I wonder how many gold bars disappeared in the Christchurch earthquake when the ground turned to mush? We will never know.

Probably won't get many responses, but it's food for thought.

[JBmurc]

I've got some questions for the gold and silver speculators that indulge their fantasies of riches by purchasing physical metal. A few months back a uni student in Auckland was given a 1KG bar for getting his degree. It was stolen, the bar was uninsured.

And if the Uni student was given $1000NZD cash and it was stolen it wouldn't be insured?
I had $800 pick pocketed from me on holiday(was some winnings from a Casino) had travel insurance no payout

[Skol]

I've got some questions for the gold and silver speculators that indulge their fantasies of riches by purchasing physical metal. A few months back a uni student in Auckland was given a 1KG bar for getting his degree. It was stolen, the bar was uninsured.

And if the Uni student was given $1000NZD cash and it was stolen it wouldn't be insured?
I had $800 pick pocketed from me on holiday(was some winnings from a Casino) had travel insurance no payout

A pretty feeble answer JB, cash is not insurable, neither is gold unless you've made arrangements with the insurance company.
There's a difference between $1000 cash and a 1KG gold bar, like about $67,000.

[lakedaemonian]

If I owned gold, I'd sell and buy U308, check it out. Own PDN.

Uranium Participation Corp has been my sole Uranium investment vehicle

[Skol]

I wouldn't mind betting that 99.9% recurring of the physical gold and silver out there is uninsured.
Some of the ETF's don't have thousands of tonnes of their gold insured.

Whatcha reckon EZ, you've got PM, right?

[elZorro]

I wouldn't mind betting that 99.9% recurring of the physical gold and silver out there is uninsured.
Some of the ETF's don't have thousands of tonnes of their gold insured.

Whatcha reckon EZ, you've got PM, right?

To be truthful, no. I just enjoy reading your responses.. I haven't given up on shares altogether, certainly gold miners look to be a reasonable bet. Just not the ones I'm with..still searching for a quick dollar.

A guy I know lined his new house, included a secret compartment of reasonable size to hold valuables. I think it worked fine. No insurance needed? I'd probably buy a cheap safe and hide it in the compartment, bolted to the wall and/or floor. Alarms are cheap, can be standalone.

[Skol]

A fire would more than likely damage any gold or silver, melting point of gold slightly higher than a house fire temperature, but maybe the firemen would get to it before you did, if you could find it in the wreckage.

Anyway, it's only a matter of risk, if you're willing to take it, fine.

[JBmurc]

A pretty feeble answer JB, cash is not insurable, neither is gold unless you've made arrangements with the insurance company.
There's a difference between $1000 cash and a 1KG gold bar, like about $67,000.

-a feeble answer to a feeble old rant of yours
-you didn't state if the bar was Silver or Gold
-In a house fire I'd much rather have Silver&Gold bullion in my safe than paper

just sold another 1kg bar of silver paid $750 for it earlier last year sold it on Sella for $1355 no commissions no storage costs (as I keep it in my own safe)

I see NAV looking at growing legs again with strong production levels and a soon spin-off of their Rare earths project

[Skol]

Silver is more likely to melt in a house fire and would probably be unrecoverable JB, becuase it would melt all over the USD, and unallocated gold certificates you keep with it. LOL

[JBmurc]

Silver is more likely to melt in a house fire and would probably be unrecoverable JB, becuase it would melt all over the USD, and unallocated gold certificates you keep with it. LOL

ya want? If for one the house fire was so hot to melt the silver that most likely in a metal safe it wouldn't be hard to get it made back into bullion I for one couple years back took some old sterling silver scrap and got it melted into a pure .999% silver bar took like a hour or so at Silver recovery in auckland no big deal

[brettdale]

So when is Gold suppose to drop, surly this thing wont go past 1500 bucks despite glenn beck pushing it.

[Skol]

So when is Gold suppose to drop, surly this thing wont go past 1500 bucks despite glenn beck pushing it.

Glenn Beck's a turkey, he's on a mission from God. Beck claims that god has given him a plan to share with mankind, but you can bet that there's loads of suckers have bought gold after watching Beck on TV.

I don't even know why it's going up, the only explanation is that it's a mania. No hyperinflation, Korean War, Greek meltdown, Euro impolsion, USD crash, all the reasons advanced by the goldbugs are old hat.

Now that's become apparent it's the 'suppressors' and JP Morgan, Glenn Stevens and the major banks inveigling the goldbugs out of what's rightfully theirs.

There's been a few gold scams as the POG's increased, but the big scams, like Bernie Madoff, Blue Chip or Goldcorp generally only become apparent when an asset's on the way down, so that'll be something that'll make interesting reading in the future I'm sure.

I used to post on the Peak Oil thread a couple of years back. I reckoned the POO was unsustainable and was gonna crash. I was told by a number of posters that the Chinese were buying all the oil they could lay their hands on and that "asians are not stupid', so the POO would just keep climbing.
Shortly after the POO crashed all right. The Chinese are buying lots of gold apparently, so it might be deja vu.

I know a bit about the asian psyche and I can tell you for sure that they are more prone to herd behaviour that europeans.

[JBmurc]

So when is Gold suppose to drop, surly this thing wont go past 1500 bucks despite glenn beck pushing it.

yeah Glen beck is a turkey he jumps on anything for a rating

better of listening to Max Keiser,Mike maloney,Jim sinclair,Jim rogers etc

[corran]

I don't even know why it's going up, the only explanation is that it's a mania. No hyperinflation, Korean War, Greek meltdown, Euro impolsion, USD crash, all the reasons advanced by the goldbugs are old hat.

The smart money will seek ways to protect their assets ahead of the events that you describe above. Just because the euro hasn't imploded yet it doesn't mean that the risk of that happening is gone. It is most definitely not gone! Same applies for risk of hyperinflation, greek meltdown, etc.

Rich europeans are positioning themselves so that if an event such as the euro collapsing does occur, they don't have all their assets tied up in a currency that no-one wants. Gold is not the only beneficiary of this. I read this morning that the majority of multi-million pound properties sold in London over the past few months have gone to wealthy europeans who don't live in London.

A mania is when the shoe shine boy tells you to get in. The vast majority of people don't own any gold or silver, don't talk about it and don't think about it. When that changes then we'll see a mania in gold.

[Skol]

Well watch this space because one of JB's heroes is a dude called Jim Sinclair who seem to be psychic. He's predicted gold will reach $1650 by the 2nd week of January 2011.

Goldbugs take themselves very seriously and on another forum I've been abused, and on 3 occasions been accused of being an agent of the 'banksters' or JP Morgan. It's hard not to take the p*** out of people like that so why disappoint them?

So the other day after one of these allegations I said OK, you guys have outed me, I admit it, I work for JP Morgan and Jamie Dimon's sent me to the antipodes to demoralise the goldbugs and buy up all the cheap gold I can find before hyperinflation sets in and you buy a loaf of bread with a wheelbarrow of useless fiat money.. Once the hyperinflation sets in I told them us guys are gonna do a 'pump 'n' dump', that'll be just before Obama gives the signal to sell 5000 tonnes of gold from Fort Knox. Naturally we'd like to make a few bill on the way down too, so we'll be selling heaps of gold futures once it gets to the top. etc etc.

Unfortunately my post was moderated. By a goldbug.

Reading between the lines I reckon some of the GB's are extremely nervous, gold hasn't performed lately and some have big bets on it, like the house.