Thanks Strat I will try it out. Nothing to lose and everything to learn. :-))
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Thanks Strat I will try it out. Nothing to lose and everything to learn. :-))
one must remember ASX gold producers have high running costs in fuel so a higher AUD/USD does work in their favour with costs
JB, makes sense, OGC are bleating a bit about their costs over here though. Superb spelling etc by the way..
Here's the reason the gold price jumped up yesterday, and US$ dropped, more QE due soon. Stocks also went up.
EZ,
Wasn't it you that posted mahendraprophecy.com.
Here's his latest prognostication. 30%, that would hurt.
One thing is for sure: gold and silver has very few days left before they correct, and yes they can correct substantially. Sun transit is guiding me that both these metals can fall between 10 to 30% in the next 38 trading days.
JB,
If Mahendra's right I'll be sipping that red in the New Year. LOL
This is good for drawing graphs and comparing prices
http://www.infomine.com/chartsanddat....aspx?g=127681
Thanks for the very good responses...I'm not sure about that Mahendra dude though. Seems a bit grim.
I take it Skol that you are shorting gold stocks or something?
Looks like we may see gold at/over $1300 tonight ; )
A correction in gold and silver will only occur if suddenly people start having faith in the USD again.. Given their debt levels does anyone see this happening? The Feds are attempting a holding pattern.. how long can they keep this going for?
All those metrics we use are based on a world where only the West consumes like we do.. That is changing. All supply/demand equations need to adapt to this. Don't believe me? Go to China. See the millions (I didn't really understand the changes that will be coming until i visited China..) Silver especially looks set to continue its rise. Supply is decreasing, demand increasing. So basic..
Not true.
A correction or even a crash will occur when the herd decide to take some profits, there's a hell bent rush to unload and panic sets in, like 1980.
USD may have absolutely nothing to do with it.
Read, 'Manias, Panics, and Crashes', by Charles Kindleberger.
Here's a quote.
'Devil take the hindmost' and 'dogs bite the laggards' and the like are recipes for a panic. Tha analogy is someone yelling fire in a crowded theatre. The chain letter is another analogy because the chain cannot expand infinitely, only a few investors can sell before prices start declining. It is rational for an individual to participate in the early stages of the chain and to believe that all others will think they are rational too.
Many of the goldbug sites mention the US dollar index, I'd never bothered to look at it, it's dropped nearly 2% in the last few days, lining up with the PoG increase in US$.
http://www.goldseek.com/quotes/chart...rindex5day.php
Note the sharp drop when the FED started mentioning QE again. There was a corresponding spike in PoG. Until gold looks badly overbought against currencies like the Aussie dollar (and there investors are currently losing money on gold), gold investors are fairly safe. Would there be any point having your US$ in a bank earning almost nothing in interest for a whole year, if the value of the capital consistently drops 2% in five days? JB's comments look closer to the truth: the US is using inflation to pay off its debts to the world.
Hi Zorro, this is a handy page in my favourites, it gives me the overnight picture when I switch on in the morning.http://quotes.ino.com/chart/?s=NYBOT_dx
http://quotes.ino.com/chart/?s=NYBOT_dx
The US$ index influences or reflects a number of things globally.
The elephant in the room which is not yet discussed is the Chinese yuan. And if the Chinese loosen their currency, and it rises, and they might yet, the US$ will sink further. Which would actually be good for US exports.
No, I'm an inveterate bubble watcher, there's nothing like it. The most exciting one by far was the Enron implosion. I was in the USA watching the Congressional hearings on TV and seeing these Harvard educated tossers talk down to everyone. One of these guys couldn't do a balance sheet.
Bubbles are addictive I've got books on them, I follow them all the time, there's always a bubble somewhere and you never know what's going to happen. Bankruptcies, suicides, imprisonment, plaintive cries for help from a new generation of impoverished and chastened punters.
I know there's punters out there that have thrown everything at gold including selling or mortgaging the house, so there's going to be some electrifying action sooner or later.
The longer it goes on the more exciting it gets with the goldbugs setting ever higher prices on gold, $5000, $10,000, $50,000. $1,000,000 and taking bigger and bigger risks to ensure they're in on the action. No kidding, I've seen a post that reckons it's going to be a mill an ounce.
They think they're rich but they're not until the money's in the bank and they can't bear to quit, the excitement is too addictive.
I prefer the get rich slowly method. Shares like AAC for example, red gold.
yes been yet another strong move in GOLD overnight up 5.3% last 30days current-$1291.30oz last 30 days Silver up 17.57% current $21.17oz
(why I hold more interests in Silver than Gold)
think we'll see a good size correction after a spike into low 1300 maybe even back to 1250-1270 etc before once again keeping on trend to $1500+ high next year
Gold's in a slow moving but very strong bull trend the end will come when GOLD is moving up down in $100 movements overnight IMHO many years away
Skol i agree about bubbles and to me the whole capitalist system seems to be a big bubble ready to burst...but as long as it doesn't I will have some skin in the game. My exposure is relatively small for me and probably miniscule relative to others here.
How do you get to drink red this summer if you've got nothing to gain from all of this?
Enjoying this thread and its healthy to read contrarian views.
Whirly
I hope you make a few bucks but don't get carried away.
I've got a bet with JBMUrc on the gold price at the end of the year, very likely I will lose if it continues like this but also might win if it goes too far too fast and the rot sets in.
There's one thing I can absolutely guarantee - it'll go down a lot faster than it's gone up.
JB,
What's happened with NAV? Something about a wall failure.
yeah on one corner of their Central pit hopefully not too major a clean-up might drop 2-4,000oz gold for the 10/11 planned 101,000oz good to see management keeping transparent with shareholders unlike some miners who would keep it hushed up till the Qtr report -honest management a major plus here
--will likely be a great buying opportunity for the investors maybe a panic dip to the high teens I'll be waiting to top up
Lucky I didn't take your advice and buy NAV.
Depending on the PoG in the next few days I'll take a look when the trading halt's over.
$1300oz here we come $1500oz see you early next year $2000oz USD longer term
Max on gold recent clip
http://www.youtube.com/watch?v=IDuZmmz3dqg
Well spotted JB: that is one hell of a presentation for goldbugs. I'm picking Skol won't like it..
If this is true, just about any gold/silver producer stock, even holders of gold/silver, should do well in the months ahead. The financial sector is in for one big wake-up. They'll have to stop fleecing their investors at every turn, with paper gold and paper money.
Yeah SKOL won't like this even more LOL still whats the GOLD price SILVER price
Time to wake up for many ---share market crash coming---real Gold silver PGM shares of the like will be the safe haven
one-http://goldsilver.com/newsletters/newsID/9144/ref/1
two-http://goldsilver.com/newsletters/newsID/9157/ref/1
......."too much reality mr maloney".....LOL
......."Think you should stop now before you wake to many people up"........!! ---------said by of the Russia banking group spokesman
yes he does sell real silver an gold bullion SKOL so I guess in your view he's shown the facts to make people buy he bullion Oh no not the nasty rare precious metal
1300 is a tough nut to crack.
From the Motley Fool.
Gold is a speculative bubble.
See the chart below. Historically gold is not at its most expensive (inflation adjusted). There was a massive bubble in the 80's and boy did it fall down hard.
http://www.usagold.com/amk/gold20080315.gif
The reason for the bubble in the 80's was similar to ours. Fear. The soviets invaded afghanistan, the economy was in a rut... people feared that the world might be ending in a nuclear ****e storm anytime soon. Fast forward to 2010 and its the same story... now the US is in afghanistan, mass global recession, people fearing inflation. Fear. If there is one emotion that drives speculative bubbles like greed, its fear.
To anyone investing in gold, I hope you get out in time because after it hits the peak, prices will fall down hard. I'm no fortuneteller, but I feel that anyone that buys gold now will lose their pants. The only way to profit from buying gold now is to get out before it crashes.
I'm shorting gold, because this is a speculative bubble.. I think everyone knows this is a speculative bubble. There's no fundamentals, there's no p/e , it's all the same story. Here's another intersting tidbit: according to the world gold council (which promotes the demand in gold), in 2Q 2010, industrial demand for gold was about 100 tons, jewelry demand was 400 tons, and investment demand was 500 tons.What does that mean? It means that 50% of the demand in gold is driven by speculation. I laugh at it being called "investment demand" because what are they investing in here? They are investing in their hope that gold prices will keep going up..
Let's hear some of the things that people are saying to convince you to buy into this mess
"gold is a inflation hedge"
(Based on what fact?? See gold's historical inflation adjusted price. Gold is like any other security, it's only going to work if you get in when it's undervalued )
"gold has risen 3 times since 2006 and prices are at historical highs"
(really?? So i should sell when its at historical lows?)
"governments are printing/spending more money"
(But overall, government stimulus is not as high as it was since 2008/2009... why are gold prices still rising?)
I haven't heard a single good reason to invest in gold now.. It seems clear that investors have not learned a gon damd thing from the subprime crisis. They will eat whatever bull that they are fed and f me if I'm going to be one of them. The gold ETF's have really coincided with gold's rise ... more people can invest in gold easily. Sounds familiar? Ever heard of oil futures? History really does rhyme.
I'm going to profit from their stupidity. The question is when... a month, 6 month, year, two years.. who knows
I need some advice.
What will do well if gold crashes?
Don't want to use futures or open up another account want to buy some shares that will benefit from a gold implosion.
why don't you short gold or silver though CFD's of the companies like NCM if you think it's going to crash your make a mint.
If say the world just forgot about monetary history an the current amount of Debt attached to the USD an other currencies --Banks etc would be doing better so go buy up bank,financiers.
pretty much buy everything but Gold silver an your be set-SKOL just make sure you've got a few dollars for the bet- no reneging on the deal if you lose 50% of your portfolio value by then
As I've already explained gold could crash at any time, it doesn't need a reason like the debt, or anything else.
All it needs is for someone or something to precipitate the panic and it's all over. Like someone yelling fire in a crowded theatre, the rush for the exit will begin.
Skol: buy a good gold miner that is undervalued now, during the peaks to come all capital debt will be paid off, and when/if gold prices drop they should be in a strong position to still make a profit. Gold will not be dropping back to $300/oz, it's now much harder to find on average. e.g. OGC has been able to find some gold that will cost them minus $300/oz to extract, but only by factoring returns from the copper recovered at the same time. It'll cost them $300 mill to get into a position to extract the first ounce. I hope you watched JB's videos he posted..more upside to gold than downside for a while yet.
I think you're right, a major beneficiary would be the USD and probably most shares because the institutions and mutual funds would be out the door first and have to stow major amounts of cash somewhere else.
Gold $3 from $1300 new all time USD high ---Silver steaming ahead 21.35 seems like only yesterday Silver broke $20
I see it just cracked 1300.10 now a little below. If it gets up and over our fav goldies should have a helping hand on Monday ; )
And to think we've only just started the 2nd longer high growth phase which will make the first look slow then a very short but extreme growth in the 3rd phase many years from now
people worldwide are starting to wake-up even the SKOL's of the world which is really the bulk of the western world will maybe once over $2000 as the facts come out how little real Gold Silver backing is in the vaults for all the trillions of paper tenders of so called monetary value....
Somehow I think SKOL will be fight to the bitter end .........2018 Gold falls from 4800oz USD to $3300" I told you it was a bubble!!!"
Nice one JB.
One only sees what one wants ; )
The real question, of coarse, is who's fooling who : ) : )
Not JB's favourite 'goldie' because on Monday it's going to get a thrashing, right JB?
Unfortunately I have to spend a few hours at work that day so won't be on deck to watch the initial action.
Seems to me that punters are nervous, OGC down 15c in NZ and 16c in Aust. In Aust the OGC chart has a gap which could indicate further falls.
Gold shares don't necessarily follow the PoG.
So would Skol end up here JB?
Two things about you JB that I didn't know: OGC is your favourite Goldie? and that you also apply EWT to the gold price.
Have no fears with OGC, Skol, it has readjusted after 10% of all shares being purchased by major funds indexes, and should now track gold until further news releases bump it up.
Found this longer-term look at stocks and commodities, something in here for all sides.
Didn't know you had a crystal ball JB.
Here's a couple of paras. from my books here, I'm sure even you'll be able to spot the similarities.
"All speculative manias are characterized by ever-widening acceptance. In every case we studied, the seeds of a market mania are planted by the wealthy and by professional investors. (In this case, Schiff, Rogers, Faber, Chanos et.al). It was only after the masses jumped in and tried to emulate the market maker that prices seemed to really rocket beyond any semblance of fair value."
and
"It is impossible to forecast the top in a speculative mania, just as it is impossible to predict a top or bottom in normal markets. In a mania investors lose the ability to think rationally. Any attempt to forecast a price peak can be deadly. All manias are characterized by prices that, in retrospect, are irrational. Prices, having risen wildly, can keep doing so, doubling, tripling, or more."
You don't need a crystal ball to see GOLD in a massive bull trend --the Yanks looking at starting the next stage of Q.E soon enough will add fuel to the fire of the large gold/silver bull trend of the honest currency--
Japan
The yuan issue is also further complicated by Japan’s first unilateral yen intervention in six years-- estimated at more than 2 trillion yen ($23.32 billion). Japanese officials already indicated the government will continue the yen intervention if necessary. And judging from its last intervention in 2004--Y35+ trillion in 15 months—Japan’s got a long way to go.
U.S. lawmakers conspicuously didn’t address this new act of Japan during last week’s congressional hearing. In light of recent heightened tensions between China and Japan, giving Japan a free pass to intervene would only infuriate Beijing. That means zero chance for China to even consider curtailing such activity, if just for the sake of “saving face
so even though both have massive Debts to GDP they can afford to buy billion's of their own dollars an bonds it's like using one credit card to pay the other maxed out one down ..
Here's something from todays Yahoo Finance.
Meanwhile, gold continues its decade-long rally, hitting an intraday high of of $1,301.60 per ounce early Friday. As with Treasuries, gold continues to defy its skeptics. If recent bubbles in dot.coms and housing are any indication, gold probably hasn't peaked yet, but any asset that "can't lose" typically does -- in a big way.
Hi Fellas.
Not trying to burst anyones bubble :p here but take a good look at this.
The price of Gold in 4 major currencies
Gold went up on Friday in only one. Guess which one.
Bit like climbing a ladder in an elevator thats going down I reckon.
By the way I have no interest in the POG or trading it. Just an observation
The bottom line in Green is the Aussie Dollar and probably the most relevant to us here down under.
Stepping back a bit from all the noise.
In Aussie Dollars again ( this time in blue US dollar in Green ) It actually peaked in Feb 09
Theres no doubting that its been a winner over the last decade though.
Seems to me that Goldies are really FOREX traders :huh::lol: No matter which currency you value your gold in you are always using a moving target as your reference which in almost all scientific or engineering fields would be considered useless or unreliable data at best.
Nice charts there Strat, a different look at it.
If you believe the goldbugs, gold is a currency all on its own, so how do you measure it, what's it worth?
If the ultimate meltdown arrives as JB and goldbugs reckon, it could be something like "I'll give you an ounce of gold and you give me your 3 year old steer."
http://en.wikipedia.org/wiki/Barter
Barter will happen if it all hits the fan. Not gold and silver...
Hi Skol.
If I was a gold bug I would be more interested in how everything else is doin than whether there is a bubble or not.
This chart is interesting to me too. Notice how Gold and the ASX parted company when the GFC hit.
Safe port in a storm?
If we dont get a double dip with the GFC I can see the POG moving inversely to everything else till some level of equilibrium is found even if the bubble doesnt pop.
I see kitco headlines show "target" now adjusted to 2K / oz gold. Wow, big bucks will be made for producers in the next year or three if this gets hit. ASX looks set to outperform, driven by its undervalued gold companies doing a catch up quick time.
Quite right there Strat,
I was watching CNBC today briefly and there was a discussion on the NASDAQ and S&P 500, how well they've done just recently. The DOW is up 8.4% in Sept. & S& P 500 up 9.5%, still the best Sept. since 1939.
I wonder how many hedge and mutual fund managers are sweating, missing out on the action and contemplating unloading the yellow stuff?
Bears are on the endangered list.
A 2007 article, but still valid. When gold was $600 an ounce. Since then there has been feverish activity from miners, lots of capital equipment purchased and exploration carried out, but not a lot more gold produced yet. At a recent conference, the largest miners discussed their problem of replacing mined gold with new reserves. No argument can replace the fact that as the human population grows steadily wealthier (well, we can all hope), there will be a demand for more annual ounces of gold. This conflicts with the fact that gold is getting harder to find.
We could all stay out of the gold market, and maybe that would be safe. Or would we be kicking ourselves for the rest of our lives, that we didn't give it a go? Is this an opportunity that will replace property as an investment for the next few years?
Like a Ponzi scheme, the promise of higher and higher returns, a sure sign of a bubble.
In 1920, Carlo Ponzi promised to pay 50% interest for the use of 45 days deposits (162,450% annually), very tempting indeed. Unfortunately for the depositors, it ended in tears, probably similar to Kitco who now say you better get on board because the 'target' is 2K.
Good luck.
You obviously didn't read my previous post which said "any attempt to forecast a price can be deadly".
Skol.
A bubble can be a beautiful thing, especially if you hitch a ride when it's still relatively small.
It's like driving a car....fine and safe if you drive it within the speed limit, still probably safe enough if you exceed the speed limit somewhat, but generally deadly if you drive it at break neck speed.
The printing presses are humming, and the USD falling, so I don't think gold right now is anything like that car travelling a break neck speed. If anything, the last week or so makes me think they've just raised the speed limit it's safe to drive at....
HC,
Since you mention speed I have a special para. from one of my books just for you.
'It is impossible to invest successfully in a speculative mania. A mania is like a speeding freight train. It accelerates, rockets along, slows at some points, only to speed up again. Getting on and off at just the right time is near to impossible. More likely, you'll end up standing in front of it, unable to move as it bears down on you.'
As an avid follower of bubbles, the last one, if you will forgive me for diverging for a moment, was South Canterbury Finance, a $2 billion implosion the NZ taxpayer has to suffer for for some strange reason, now the US Government is passing a law to protect suckers who invest in gold. Let them eat cake I say.
www.cnbc.com/id/39343339
Than I guess you've got to properly define speculative mania, and whether it currently applies to gold.
Something I read on HC which seems worth considering...
The only gold commercials you see on TV are those where the advertiser wants to BUY your gold, not sell gold to you.....
That's typical Hot Copper, some very naive dudes there who don't know what's going on.
Travel to the USA and check out the TV there, it's full of it, Goldline, Glenn Beck pushing gold, dollar worth nothing, the usual meltdown nonsense and the suckers are buying it too, gold eagles selling like hot cakes, more in the first few months of this year than the whole of last year.
It's a real them and us scenario on HC, the goldbugs vs. the 'manipulators' and the shorters and not forgetting of course the 'illuminati'. The paranoia and conspiracy theories would keep a psychiatrist busy for months.
One goldbug refers to the opposition as the 'filth', and if you dare question their ideology you're liable to get banned because one of the moderators is a rabid goldbug and looks for anything in your post to kick you out.
After I posted there on one occasion I was accused of being an agent for the 'manipulators' or J P Morgan to demoralise them , that's how obsessed they are.
When the the whole deal finally does come crashing down the goldbugs will be blaming everyone else but themselves.
Since there's only a decent rally in gold once in a generation they've gotta make the most of this one.
There is one very amusing aspect to the goldbugs that is going to have some fairly serious consequences eventually that will be worth watching and that's that some of these guys have posted they are pushing gold on their relatives, families and mates. It's gonna be a friendless existence when the final cataclysm arrives LOL.
http://www.noquarterusa.net/blog/201...s-selling-gold
"The Fed will announce at its next meeting that it intends to buy at least $1 trillion of Treasuries, Goldman Sachs economists led by Jan Hatzius in New York wrote after the central bank's statement was released."
"the announcement by Americans for Tax Reform that "the average American worked 231 days just to support government, which consumes 63.41 percent of national income." Yow! The government consumes two-thirds of income!
federal pay and benefits per employee now average more than twice that of private workers: $123,049 compared to $61,051
I actually think there could be a bit more in the gold rally JB, doesn't quite look as if it's got to meltdown stage yet.
Ironically I'm hoping there is, because I know there are punters out there who are trying to make up for losses in the GFC by buying gold.
The bigger the boom, the bigger the bust and it's very likely that many will have more allocated to gold than would normally be regarded as prudent, so there could be some tasty morsels turn up when it's all over.
One of my neighbours told me it will be $5000/oz and he has kgs of the stuff buried.
I don't have any debt, and have sufficient resources to pick up some of the pieces. My wife is keen to acquire a rental property down by the local school, they trade at a significant premium because it's a decile 9 job.
JB,
Berkshire Hathaway avoided the 2000 NASDAQ techwreck by refusing to believe in the 'new era' tech shares.
Here's what Charlie Munger said 2 days ago about gold.
"I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation.
If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you can become rational hoarding gold.
Even if it works, you're a jerk".
I guess he just doesn't understand, right, JB?
http://theinfounderground.com/forum/...=12270&start=0
Robert Prechter- Elliott Wave International
If anything, we should be buying USD right now.
If anything, we shouldn't listen to Robert Prechter!
If you had done the exact opposite of what he advocates, with a couple of grand you would be a millionaire (of course, a lot of his losses could be to do with trading costs/slippage etc). But the point is, his losses are substantial and his comments should be taken with a grain of salt, eh?
Here's someone else who's bullish on gold.
Personally, I don't worry too much about trying to predict the PoG. Just hold my goldies so long as the trend continues!
http://www.businessspectator.com.au/...cument&src=tnb
All well and good but how do you know when there is a correction or if it's 'it'?
No one does otherwise the goldbugs would all be rich and the GFC would have been a minor affliction.
I know a guy who threw everything at shares prior to the '87 crash and when the 'correction' started he threw even more at it on the advice of his sharebroker.
That man is still working and he's 78.
Might as well just all top ourselves then.
No rewards without risk.
There is risk and then there is calculated risk. If you don't understand the risks (calculated somewhat)...then you shouldn't be in it.
If you can't understand that gold is speculative, and based a lot on expectation and human emotions...you shouldn't be buying it.
No gold bug has still told me what happens when the net hoard turns to zero?
By the way...I have some NAV and NAVO. They look undervalued...but I'm watching that gold price as they're a highly leveraged producer. I.e. Greater risk.
Rare Earths looks to be a bit of a bubble too, although its actually based off some fundamentals. Its hard not to be nervous when some of the REO have increased 4500% in a short space of time...it all depends how the demand will react to prices like that over the medium/long term. A general thought of my own is it shouldnt have too much effect, as they're non-subsitutable (most). NAV have some REO but like gold...I'm watching that too closely.
If you want to get into gold I think the best way would have to be via shares, PM too dangerous to store and illiquid.
A gold share that caught my eye some time back was RDR, should have bought some, not to worry though.
There are some signs that gold hoarding is getting out of hand.
www.sovereignman.com/finance/gold-mania-in-china
You dont need to believe in the gold story to make money off gold speccies. Im sure most here dont hold gold ETF's. I dont care if it goes to 2000 an ounce or stays where it is, as long as i get my pound of return on my resource punts in the meantime.
This is true, I have the same philosphy. I think gold valuation is crazy, which is why I'm not attempting to price it. Instead, buy a gold producer which derives its income off the gold price....that doesn't mean to say you should not understand the risks surrounding the gold price. I.e. I won't try justify in my head why its going up or down....because simply I don't understand how people can value it - in other words, the price of gold is speculation and investing in gold stock use a fundamental analysis.
But yeah, you should at least understand the short comings of how people price it LM. I like that quote by Charles Munger that skol put up earlier....I assume he's reffering to the physical stuff.
I'll have a look at RDR...looks like it has taken a bit of a hit but has the trend changed now?
I just dont think it's in the final bubble phase yet. Think oil in 2008 with its 5-10% daily moves and absolute spike of a graph. We will get there though, as everything moves in cycles....and that's the time you'd want to be going balls-short.
LM,
If you know when it's at the top can you let the rest of us know too, then we can all be rich.
One commentator reckons if it breaks through the 34 week EMA it's 'look out below'.
Wrap your heads around this one ...http://fofoa.blogspot.com/2010/09/shoeshine-boy.html
Hi JB, Skol and others...
I watched these 2x Mike Maloney videos this morning and am quite confused.
http://www.richerdaddy.com/10-oil-mi...n-part-1-of-2/
http://www.richerdaddy.com/10-oil-mi...n-part-2-of-2/
He says that soybean, corn, wheat, oil etc are going to have DEFLATION
While gold/silver are going to have INFLATION
I thought they would both inflate or deflate in the same patterns? Why is oil and grains different to gold/silver?
Appreciate everyones thoughts on this. The videos are extremely valuable and I recommend you watch them.
Hi ENP, I think we covered those videos further up the page. He's a powerful speaker. But in most of these conferences time is strictly limited, and he's been pushing this news for awhile.
Try this link, China's new policy is one reason why Gold is a different animal.
Thanks a lot Timo. That is a really useful read. A lot to digest
Another contrarian signal, gold vending machines to be installed in the USA. A flash in the pan for sure.
Probably got a bit to go yet though.
http://blogs.wsj.com/marketbeat/2010...a-sell-signal/
Poverty stricken places like the Chinese countryside are notorious for pyramid and get-rich-quick schemes and gold will shortly become the latest get-rich-quick-scheme.
The average Chinese peasant hasn't studied the works of Ludwig Von Mises, he's buying gold because it's trendy thing to do and it will probably end badly.
Read this about the Albanian pyramid that engulfed two-thirds of the population.
http://www.imf.org/external/pubs/ft/.../03/jarvis.htm
It's complex. Gold tends to try to hold its value against a basket of currencies, at the least. So if the US$ is under pressure (lowers its value) then the US$ value of gold has to go up. Check the Aussie value of gold, it has been less exciting.
On top of that, will there be buying pressure from more of the masses? Most likely, and this could very easily increase the shortage of available physical gold. Most of the gold already mined is held as jewelry (about 60%) and 25% is stored as bullion. Every human on the planet would have about 23g of gold (well under an ounce) if it were to be distributed equally. Of course that isn't the case, but for many, a decision to hold some gold where they didn't have much before, would have huge ramifications. Already wealthy Chinese and Saudi Arabian clients are apparently asking for their promised physical gold that they've invested in, to be supplied to them for storage, they're not happy with the paperwork only. That has caused some back-room juggling around the world, if the rumours are to be believed.
I've just been reading about a guy who wants to know what some gold coins he bought 10 years ago are worth.
They were minted in 1933 and have lady liberty on the front and a flying turkey on the back.
Bad news, no gold coins were minted in the USA in 1933 except for some rare double eagles so they're fakes.
Flying turkey, get it? LOl
Yep, there's one born every minute alright.
So Skol, ( by extension of your train of thought) anyone who is investing in gold or gold stocks must be (i) a turkey (ii) a jerk, (iii) prepared for a bursting bubble any second. I think we've all got the message.
Anyone who has helped post data on this thread knows there might be a small risk of that, but the risk is small. It's much more likely gold will keep appreciating against the US$ for a while yet. And since those who buy gold stocks are heavily influenced by the US$ gold price, gold stocks are leveraged to that situation. A case in point: gold is trading at over US$1300.
At what point will gold be overvalued Skol? Do you have a US$ figure in mind?
It's probably overvalued now when people say gold will keep appreciating, meaning it's a one way bet, a sure thing, right EZ?
Mark my words, gold will be the next get-rich-quick-scheme if it's not already.
I'll be visiting Asia in the next few days so it'll be interesting to find out how far advanced the bubble is there.
I didn't say you were a jerk, Charlie Munger did.
Have you got some 'flying turkeys'?
Saw this interview with Philip Manduca on CNBC this morning. He has an interesting take on gold.
http://www.moly.com/Moly+News/Busine...ke+America.htm
Make sure you watch the embedded video.
ENP: I was wrong about gold holding its own amongst a basket of currencies. It's done much better than that. Maybe they have all been depreciating, and the US$ is just one of the worst.
http://www.incrediblecharts.com/trad...gold_forex.php
Of more interest would be how much oil you can buy with an ounce of gold, or how many ounces to buy a new car. That can give more reliable even trends, maybe the price of land would be another good indicator.
Skol: I was hoping you had a serious comment to make. Never mind.
From another blog site frequented by economists, this looked powerful.
While some of the comments on this blog look like ours, there are also some compelling and well founded arguments on both sides. As someone points out - there might well be a bubble forming. That will not stop well-informed investors from profiting from it, if they are careful.Quote:
The confusion on gold arises from its role in discounting all FUTURE inflation (gold is the longest duration asset available -- it is permanent and has no yield).
So when deflation risk exists, additional data signaling economic weakness should make the gold price rise. The likely response to a double-dip would be further significant deflation-fighting commitments by the Fed. This might include additional QE or price-level targeting.
If the Fed formally adopts an inflation target that they will meet "at all costs", the tail risk of high or hyper inflation rises. Therefore gold should rise as the best hedge against this risk.
The enemy of gold is self-sustaining, organic (not produced by stimulus) real growth. We had that from 1983 to 2000, during which time the gold price collapsed (actually it levelled off). Since 2001, we have made repeated, global attempts at stimulating the economy. Gold and equities both worked as earnings rose, but the stimulus commitment implied higher future inflation risk. What we face now is a possible commitment to reduce leverage by reducing the real value of debt. If that occurs, then gold could go materially higher.
Gold is nothing but the longest-duration financial asset that is also not a financial liability. All of its characteristics and behavior, over the long term, stem from this fact.
Posted by: David Pearson at June 13, 2010 11:57 AM
HC, I just watched the video, see what you mean. Inflation in China, India, etc likely to be large. So they will buy gold, just like westerners did in the 70s.
[QUOTE=Skol;320844]JB,
Berkshire Hathaway avoided the 2000 NASDAQ techwreck by refusing to believe in the 'new era' tech shares.
Here's what Charlie Munger said 2 days ago about gold.
"I don't have the slightest interest in gold. I like understanding what works and what doesn't in human systems. To me that's not optional; that's a moral obligation.
If you're capable of understanding the world, you have a moral obligation to become rational. And I don't see how you can become rational hoarding gold.
Even if it works, you're a jerk".
I've never said one should hoard Gold not when Silver is so cheap ----I see after what nearly a year your finally coming round to see gold's bubble is a some time away 3-9yrs ,of course we will see correction's along the way --personal I never thought Gold would run as hard as it has lately but it now we are in phase 2 which will see a much stronger pull north 1500..2000 till the real madness of phase 3 gets underway (I'll be selling during this phase the short Boom boom time ,before the crash back to fair levels under a stronger Financial world )
[QUOTE=JBmurc;321420]I heard on the news last night that China were looking to bow out of the "investment" in US debt, & focus on gold, as we all know, the US owes China hundrds of billions of dollars, so even a small amount of this into gold is going to push the price up further.
Still a silver bull & think it's got a lot more to go than gold has
[QUOTE=shasta;321425]Yeah the FED will be the one taking up the shortfall the USD debt no one else in the world could get away with the massive excess of free money their going to have to use to stop the huge devalue of the USD ----------
-Heard on the radio business news that some 20% of US GDP will go to paying their huge debt interest bill even at the very low rates they'll have attached to the debt...
JB, here's the link to a gold and inflation blog/commentary with David Pearson in it: fellow bloggers are well up the tree, and are talking about (at least indirectly) trying to influence FED policy with their findings.
http://www.econbrowser.com/archives/..._inflat_1.html
They suggest that the FED has some blame in the GFC situation, where the FED's policy is that everyone else is to blame.
For three days now, gold has rested at almost exactly $1310 an ounce. What are the chances that the market has decided that?
Many of these links and comments we've been happy to paste in, are from people with vested interests one way or another. Scathing comments about other's points of view are bound to be noticed, and all advertising is good advertising, right? Except we're just individuals wanting to learn about the dynamics of gold. So what is behind Mr Munger's comments? any perspective? Try this link out Skol.
At a guess, gold is completely unproductive in its hoarding form. Why would you go and spend upto $900 cash costs an ounce to get it out of the ground and then put it in a vault, pay someone to look after it, and believe its right?
That $900 would be much better spent on helping out society, bringing people out of poverty, enhancing education etc. I could write a book on this...can you eat gold? No (some people do but usually end up with health defects). Can gold make every day living easier (ie increased standard of living through direct use of hoarding)? No. Can gold be used it in electronics? Yes, but that is not where marginal demand is coming from...it's coming from hoarding.
I for one would be very dissapointed in central banks if they were to start 'hoarding' gold as that would be speculating and its completely inefficient.
Yes UU you are right you can't eat it ,it only has value because we the human race give it value like many items..-
- just like we give value to pieces of paper that the world financial powers create trillions off for free value an trade real assets for.
-yet anyone that has prospected for Gold knows it is very valuable because it so costly to get out of the ground
----we really have gone over all of the reasons 10 times over on this part of the topic ---
think we have moved on to what certain current paper value us humans believe it's worth to the ultimate tender of exhange -GOLD- respected as honest money for thousands of years--An hoarded in time of distrust of tenders of exhange-
Like what? Paintings would come to mind...but then paintings are bought to hang on the wall to show off, and admire the extreme skill some artists have. Gold is put away in a vault and never looked at again 'its just there.'
The paper you talk about is a promissory note of exchange. It is perfectly logical, as it is an efficient means of trade. Much more efficient than say, bartering (i.e. it would be difficult to form a market place where you could do some accounting work for your car to be fixed....but by selling your service and receiving a form of exchange, 'paper notes', you can go and get that car serviced instantly and more efficiently). To use gold instead of paper is EXACTLY the same concept....the only difference is:Quote:
- just like we give value to pieces of paper that the world financial powers create trillions off for free value an trade real assets for.
-It is costly to produce
-Harder to bend to put in your wallet.
Gold also has the flaw that its supply would be determined by the geological challenges the earth provides us. If you look back a few pages, I posted some facts, one being that we were more in recession than out of it for over 100 years when under the gold standard.
Thats a strange concept, JB. If I were to build a mountain of dirt for the rest of my lifetime, with a digger....would you consider it to have some worth just because it was costly?Quote:
-yet anyone that has prospected for Gold knows it is very valuable because it so costly to get out of the ground
Yes, but the fundamentals behind it don't seem to be known by many. A few of us here are just trying to point them out given the same old articles get put up.Quote:
----we really have gone over all of the reasons 10 times over on this part of the topic ---
I had a look on trademe to see what the types of people were like buying gold and silver. One buyer appeared to have bought all the silver he could get his hands on...I didn't look to far down his previous trades, but the first 10 or so were all silver spoons. Another bought a gun...he was preparing to head for the hills by the looks (waterproof torch was there too).Quote:
think we have moved on to what certain current paper value us humans believe it's worth to the ultimate tender of exhange -GOLD- respected as honest money for thousands of years--An hoarded in time of distrust of tenders of exhange-
Heres a wee tip for you: The central bank doesn't necessarily have to have the 'printing presses' on to create money. They can simply debit the cash to the balance sheet...so they don't literally always turn the printing presses on :t_up: Can't get cheaper than that mate.
UU, that must be a record in lame posts..
Hypothetically, someone might be keen on saving some of their hard-earned money for a few years. They might not be in a position to use that money inside a business or in other productive sectors, so gold is worthy of consideration.
Do you suggest that the money could be: put in a savings account, hidden in note form around the house, invested with a finance company, invested in standard stocks as part of a fund (excluding mining sector of course), put in a super fund, used to purchase a car or a rental house, etc etc. All of these options would see the saver losing money in the current environment, by comparison with simply holding gold. If/when things come right, maybe your point of view would be easier to validate.
well the facts speak volumes UU you should head round to the NZ mint or local jewelry an rant to them how over valued an worthless GOLD is LOL tell us how you got on..
when people are talking about Gold via currency it's more so as a backing to the paper tenders of exchange so yes it will be held in the banks vaults but the ultimate is holding the PGM in your own vault -personal I'm all for free choice in holding assets IMHO holding Silver bullion will return a sizable return in years to come so far for me it's gone from $25-$35oz thats if I was trying to buy 1oz rounds in bulk
How?
No it's not! With a risk equivalent to that of the stockmarket and returns less than govt bonds...gold is not a worth consideration.Quote:
Hypothetically, someone might be keen on saving some of their hard-earned money for a few years. They might not be in a position to use that money inside a business or in other productive sectors, so gold is worthy of consideration.
Savings account: YesQuote:
Do you suggest that the money could be: put in a savings account, hidden in note form around the house, invested with a finance company, invested in standard stocks as part of a fund (excluding mining sector of course), put in a super fund, used to purchase a car or a rental house, etc etc. All of these options would see the saver losing money in the current environment, by comparison with simply holding gold. If/when things come right, maybe your point of view would be easier to validate.
Hidden in note form around the house: No...I've never advocated that. Although I do have a $100 note as a book mark for my investing books. Currently, its in 'The intelligent investor' by Benjamin Graham.
Finance company: Depends. Some offer risk free rates well in advance of the risk free rate. You do the maths and work it out with old Sharpe's ratio.
Investing in standard stocks excluding the mining industry: Depends your time frame. Stocks are inherently risky. Mining stocks more so. In saying that, the two best performing capitals markets over the last 110 years or so have been the Australian and South African markets.
Superfund: Depends how old you are. If your 62 and wanting it out when your 65, then why not. (Excludes possibility entitlement age rises).
Purchase a car: Some vintage cars go up in value. I don't know alot about investing in cars sorry. Ask Serpie/Gazprom.
Rental house: I would'nt right now. I've been advocating this for quite a while...rental houses as a whole are relatively unproductive, but I guess we still need them.
All these options lost money against gold? Wow! What foresight you have with such hindsight! lol Seriously EZ? Did you not see Strats charts in AUD over the last 6 months or so?
If you want to protect yourself against inflation (and not speculate), buy some TIPS. Then take out some forward cover over a basket of currencies. Then you have a risk-free, inflation hedge. Gold is not risk free (annual volatility around 20% with returns less than govt bonds over the long term).
I'll be waiting for the EZ-O'meter to pick when the bubble has ended...We will all be trillionaires :D :D :D
Also, given you guys are so hell bent on inflation (which was actually deflation in the last quarter), have you thought of the consequences of the decrease in Money Supply to due foreclosures? I.e. People failing to pay money on their promises? Then, work out the multiplier effect on these. Is it actually that bad then?
I've never said jewelry didn't have value...as it obviously does. People buy it and get joy from it. Intangible benefits if you like. But hoarding? LOL as you say.
What difference does that make? So your saying it's still ok to print money with gold as backing? I don't see what the difference is apart from having spent billions, and billions to dig the stuff up? (And of course some sense of perceived confidence...like if we were to go back to the stone ages, the central banks could trade gold with each other LOL).Quote:
when people are talking about Gold via currency it's more so as a backing to the paper tenders of exchange so yes it will be held in the banks vaults but the ultimate is holding the PGM in your own vault -personal I'm all for free choice in holding assets IMHO holding Silver bullion will return a sizable return in years to come so far for me it's gone from $25-$35oz thats if I was trying to buy 1oz rounds in bulk
Silver at least seems to be productive.
i guess its obvious and stated already by others but the continued devaluations of all the major currencies through quantitative easing v2 is clearly a major factor in demand for PM's. BoE, Fed, BoJ, ECB have all acted in various ways to debase their currencies and the fact is they are happy to compete in the race to the bottom in an attempt to stimulate demand both internally (low interest rates) and externally (low exchange rates). Even BoJ is now resorting to selling yen to hold up USD/JPY rate and of course (and I dont know why NZ doesnt do this a bit more to be honest) if a nation state is selling their own currency to prevent its appreciation against others there is of course potentially an unlimited supply!
The alternative to fiat is hard assets and gold is the winner at the moment though I still believe silver is a better choice as it has that 'actual use' side of the demand/supply equation covered whereas gold merely glistens. I do still think theres a reasonable chance that serious deflation will knock commodity prices and that may affect gold and silver as well. I've reduced my virtual silver holdings now by selling into the rallies, possibly too soon but c'est la vie. Will only sell the physical when prices are fully parabolic or I need to so as to eat.
It seems to me that while its happening quite slowly and one would think lessons from history had been learned , the major governments are in fact repeating the same mistakes as in the 30's. USA is bitching about the yuan passing passing trade barrier legislation, China is retaliating and holding back the real earths from Japan , wide social unrest in Europe - the signs are all there for further escalations in tension at all levels. The bottom line is when everyone is feeler poorer they become more insular and self centred especially politicians who are not focussed on the long term good but only the retention of power.
Stock markets and currencies seem to be doing a lot more of 'the megaphone pattern', a broadening wedge shape with both higher highs and lower lows indicating a fundamental uncertainty with volatile swings in sentiment brought about from fleeting factors - a kind of speculative schizophrenia.
Have a good weekend ;+)
UU, your post is lame because you haven't bothered to spend any time reading previous posts, where most of your arguments have been slaughtered several times over.
In the last few months the Aussie dollar has climbed against the US$, and so the gold performance over the ditch has been relatively flat. But go back a year or three and look at the plot then, as I posted just the other day. And don't try the old contrarian trick of showing graphs for the last 100 years. My post was a comment on what to do for the next few years, based on what has happened in the last few years.
In the last few years many people were hoodwinked in NZ with finance companies, giant ponzi schemes most of them, fed by brokers. Bluechip etc, property investments. Tower Super has/had the most outrageous penalty fees for funds withdrawal before due date. And they got away with it.
How many investors are proactive like you guys, who are able to use TA etc to sell shares on the market when they dip too much. I've seen the effect when all of you are twiddling your thumbs, all on the sidelines. How is that an investment? It's gambling, just like the goldbugs must be doing, according to you.
We have to stop looking at gold through Western eyes. In India and China, possibly Africa later, are hundreds of millions of small investors who will buy some gold for very good reasons, and there is your demand, and your insurance, up to a certain point.
That's the thing with the anti-golders they've been proven wrong for a very long time an will continue to be they just don't get it or care to get it which is fine I personal wouldn't hoard Gold bullion when silver is a much better investment for that purpose -I respect Gold as a valuable asset just as I see a well built house as being a asset