Gold

[Skol]

I've been having a debate on another thread with JBMurc on gold.
Personally I think it's going to be a fizzer and we've seen the highs for the next few years.
I reckon the stockmarkets could do well for a while and when the gold bugs, most of whom are new at the game realise what they're missing out on will jump ship and cash in their yellow metal.

Opportunity cost, insurance and safekeeping make it a risky investment and in the event of a real crisis you probably couldn't sell it, divide it into smaller pieces or eat it.

Warren Buffet agrees with me and reckons it's a waste of time. The rationale for gold bugs bullishness is the coming implosion of the $US they say.

The USA virtually paid for World War 2, Berlin Airlift and the Cold War for another 50 years all done with debt, like the stimulus.

The early '80's saw a revival of gold for a short period with investment experts imploring punters to buy gold to avoid the coming meltdown but it ended in tears.

[bermuda]

Skol,
I cannot understand gold. Never have. I avoid it. Apparently there is over 365 days stock on hand. Whereas with oil there is only a few days.
I remember that Ray Smith. Nows lives at sanctuary cove. Apparently back in the good old days he took a little fluesy out to a remote island for a bit of a picnic. The story goes that they got bitten to pieces by the mossies as the Helicopter pilot deliberately dropped them off on the wrong island.

I wouldnt like to pick where gold goes but I would be bearish on the USD.

[Huang Chung]

To twist the words of Mark Twain...

The rumours of the US Dollar's death are greatly exaggerated....

[airedale]

Skol, I admire your tenacity,but wonder at your capacity for a good argument. You are already fighting against oil, gold, and just about everything else except airline shares on the Forex thread, and the POO thread. And sure and bejeez, as Paddy said, here you are opening up here on another front.
Happy New Year to you,:D:D:):)

[Skol]

Skol, I admire your tenacity,but wonder at your capacity for a good argument. You are already fighting against oil, gold, and just about everything else except airline shares on the Forex thread, and the POO thread. And sure and bejeez, as Paddy said, here you are opening up here on another front.
Happy New Year to you,:D:D:):)

Well if you read this morning's Australian there is an article about airline shares having their day in the Sun.

I've watched it all before and history's on my side. The gold bugs, mostly newbies to the investment scene are about to get their fingers burnt. They've read about it in the newspapers and rushed off to by some bullion believing that it will go to $5000 oz or some such nonsense.

Happy new year to you too.

[shasta]

Well if you read this morning's Australian there is an article about airline shares having their day in the Sun.

I've watched it all before and history's on my side. The gold bugs, mostly newbies to the investment scene are about to get their fingers burnt. They've read about it in the newspapers and rushed off to by some bullion believing that it will go to $5000 oz or some such nonsense.

Happy new year to you too.

I think Gold's had a good run, & is due a wee breather, perhaps back under $US1000/oz.

I'm picking Gold will trade between $US900 - 1200/oz, starting the year off strong & then drifting back for a while.

What surprises me the most is that Silver hasn't disconnected from Gold, & reduced the ratio to Gold.

The Chinese have been buying Gold & Silver, while India buys Gold...

Hopefully 2010 will be a good year for Silver & sometime we'll see $US25/oz :confused:

[JBmurc]

Not long ago India brought 400ton of the IMF they traded their USD for GOLD
I believe the USD could well stay strong an in turn push the GOLD price lower which once it's below 1040 watch China,India,Arabs etc in turn come looking to exchange their USD for GOLD bullion
this will be yet another nail in the coffin of a strong USD

like I said to you SKOL gold will be higher come year end from now yet it may fall in the short term ,as long as the US FED prints free money an the US DEPT grows trillions per Qtr Gold the world's other world currency will be sort after....





By Dr. Jeffrey Lewis
Dec 30 2009 2:34PM


Now that 2009 has come to a close, investors are looking forward to the happenings of 2010. One of the most important events is the issuance of nearly $2.2 trillion in Treasury bonds to fund government spending. Although $2.2 trillion seems relatively small compared to a federal debt just over $12 trillion, the size is magnified when you consider its impact on the markets.

2009 Treasury Sales

The 2009 Treasury issuance was relatively tiny due to the amount of quantitative easing enacted by the Federal Reserve. To help ease the credit markets, namely the Treasury markets which allow the government to spend money, the Federal Reserve printed over a trillion dollars and purchased several hundred billion dollars of US Treasuries, as well as nearly $1 trillion of “agency debt” or mortgage-backed securities.

After the Fed’s buying spree, there was only $200 billion in fixed income remaining, creating a net issuance in 2009 of $200 billion. Of course, $200 billion is virtually nothing when it comes to the world economy and the amount of money in existence, and thus, $200 billion was consumed relatively easily, with no real impact on the marketplace.

The Situation in 2010

Fixed income issues are set to increase from $1.75 trillion to $2.25 trillion next year, with the difference mostly comprised of heavier borrowing by the Federal Government via the Treasury markets.

Unfortunately, the Federal Reserve has only $200 billion remaining in its quantitative easing fund to buy agency debt and US Treasuries, and the funds will only last until March under the program enacted early last year. This leaves a total of $2.05 trillion unfunded that must be borrowed to keep government programs in the black – at least with capital and not actual earnings.

Therefore, in the next year, the US Treasury will need to borrow more than $2 trillion without the help of the Federal Reserve. China has already said it is limiting its purchases of US Treasuries, and the government is proving its resolve by redeeming long-dated bonds and rolling them into short term debt. Other purchasers, such as Japan, have their own financial problems. The remaining countries, institutions, and other investors aren't too keen on earning low rates on what is quickly becoming riskier debt.

What is the solution? The Fed will simply need to print more money.

The Fed Will Have to Step in with its Printer

Remember, this recession was triggered due to a shortage of credit. To aid in both creating credit, as well as providing short term loans to businesses and government, the Federal Reserve began to create money to ease the burden. As a result, the Fed bought more debt than anyone else by a factor of 10.

Moving into next year, with the same credit problems and net issuance of $2.25 trillion, the Fed will have to further its quantitative easing (inflation) programs to keep the Treasury markets liquid. Should the Federal Reserve continue to print money to gap a shortfall in Treasury sales, the creation of $2 trillion would create inflation of 25% overnight. Obviously, as in all markets, inflation will not come out of the woodwork for a period of months and possibly up to two years, but it will eventually reach the market. Subsequently, in 2010, investors of all types need to be incredibly prudent with their money and protect their assets with precious metals.



Dr. Jeffrey Lewis

[Dr_Who]

While Skol fights, we are making money and laughing all the way to the bank.

IRN is a good example of 500% return in less than one year.

Who's buying all that US debt?
http://www.businessspectator.com.au/bs.nsf/Article/US-treasuries-pd20091230-Z7QUA?OpenDocument

[Skol]

Nouriel Roubini says any suggestion gold will boom is nonsense.
I hope you read this one too bermuda, there'a message there about oil.

http://wallstreetpit.com/11964-roubini-people-deluding-themselves-with-gold-at-2k-are-talking-nonsense

[Skol]

While Skol fights, we are making money and laughing all the way to the bank.
You're always making millions doctor but never telling us how, there's a few guys at work like that. You should be on the Riviera with your yacht.

I've just had a look at a random selection of the charts of 11 gold mining companies listed on the ASX and it's bad news.

The shares know something you don't, just as oil shares dived last year indicating a bear market in oil, so are gold shares giving you the message.

You must have had hundreds of kilos of Au buried in the garden for a few years to make all this dough because you won't have made it out of gold shares recently.

If you'd bought VBA then you would have really made some money.

[bermuda]

Nouriel Roubini says any suggestion gold will boom is nonsense.
I hope you read this one too bermuda, there'a message there about oil.

http://wallstreetpit.com/11964-roubini-people-deluding-themselves-with-gold-at-2k-are-talking-nonsense

Skol,
I have read so much about oil that I am going to stick with it. Tricha had a very jaggered
up and down graph that summed it up nicely. Tricha, can you post it again please.

This could be quite a good thread but I will just have to watch. I know so little about gold. Wouldn't touch it.

Skol,
I have enjoyed the jousts.( but you will never change my opinion ).

Happy New Year to you and all sharetraders.

[drillfix]

Yes Happy New Year to all you guys over there in NZ.

Its still Yesterday over here on the Gold Coast, QLD and nearly 10pm so still another 2 hours to go.

Right now its pissing down rain off and on. So another night at home and do some study for the next hour until new years. Squeeze a bit more knowledge out of 2009 so I can Kick @SS in 2010.

All the very best to investors and traders and to those who contribute both TA and FA on this ShareTrader site.

Resolutions????

Maybe stop swearing.

Continue seminars and learning.

Get rid of DOG stocks.

Only trade stocks in UP Trend and Sell ones in Down Trends.

Only trade stocks that are liquid.

Balance a 3 tone trading system.

Keep loses SMALL, Keep Profits both small and BIG and at times HUGE ;) :D

Have an operation to rid myself of chronic pain.

[Huang Chung]

All the best for a happy New Year Drilly, and all the rest of the ST fraternity. Just come back from Southbank after the early fireworks (friend's young kids in tow), and it didn't even spit.

Piss that cloud off Drilly :rolleyes:.

[drillfix]

Huang and others,

Did you know tomorrow (or today for you in NZ) is a Digital Binary Day??

Check this out. 010110 :eek: :rolleyes: :p

Happy Binary day and Merry New year...lol

Also,
A typical QLD - Norther NSW trait for the Alco induced party animals. As if one New Year was not good enough, some have to indulge to have it twice...lol

http://www.goldcoast.com.au/article/2009/12/30/174111_gold-coast-lead-story.html

[Dr_Who]

You're always making millions doctor but never telling us how, there's a few guys at work like that. You should be on the Riviera with your yacht.


Go read my thread and posts on Indophil (IRN). Read my first post and than go read the T/O announcement on IRN in the ASX. And yes I do live near the beach, but no I dont own a yacht cos I am not into sailing.

http://www.sharetrader.co.nz/showthread.php?t=6490&highlight=irn

[Skol]

Not long ago India brought 400ton of the IMF they traded their USD for GOLD
I believe the USD could well stay strong an in turn push the GOLD price lower which once it's below 1040 watch China,India,Arabs etc in turn come looking to exchange their USD for GOLD bullion
this will be yet another nail in the coffin of a strong USD

like I said to you SKOL gold will be higher come year end from now yet it may fall in the short term ,as long as the US FED prints free money an the US DEPT grows trillions per Qtr Gold the world's other world currency will be sort after....

I've given it some thought JB:
Bet you a $100 bottle of wine, (to be provided with receipt) gold will end lower at the end of 2010 than at the end of 2009.
End of 2009 price $1095.

Is it a deal?

[JBmurc]

I've given it some thought JB:
Bet you a $100 bottle of wine, (to be provided with receipt) gold will end lower at the end of 2010 than at the end of 2009.
End of 2009 price $1095.

Is it a deal?

yeah sweet

[Skol]

yeah sweet


OK will note it in my diary. Good luck FT says gold will end 2010 lower.

[Skol]

An interview with Timothy Geithner in today's Herald doesn't indicate any concern about US debt, or the dollar.
$175b in TARP payments to the Govt by the end of the year and when asked about the dollar said:
"When fear was most acute, people wanted to be in Treasuries and hold dollars. Even today, when you have moments of darkness, people want dollars."

[airedale]

Skol, that is a typically American-centred view from Geithner. Although perhaps I should quote other Americans like Jim Rogers who actually runs his own business and makes money while avoiding the US$. Unlike Geithner who is on the taxpayers payroll, and his business is printing US$.

[Skol]

Skol, that is a typically American-centred view from Geithner. Although perhaps I should quote other Americans like Jim Rogers who actually runs his own business and makes money while avoiding the US$. Unlike Geithner who is on the taxpayers payroll, and his business is printing US$.

You're a conspiracy theorist airedale.

Have a read of this and if you read between the lines Jim is certainly hedging his bets. "A couple of thousand dollars an ounce in the next decade." If you're lucky.


Buy RIO or BHP and you've got a much better chance of doubling your money.

www.commodityonline.com/news/Jim-Rogers-on-gold-dollar-commodities-in-2009-24330-3-1.html

[macduffy]

Skol, that is a typically American-centred view from Geithner. Although perhaps I should quote other Americans like Jim Rogers who actually runs his own business and makes money while avoiding the US$. Unlike Geithner who is on the taxpayers payroll, and his business is printing US$.

It's hardly surprising that the Secretary of the US Treasury should take an optimistic view of the USD - it's probably built into his position description!
After all, the banking/economic system relies on confidence in such things.

;)

[Skol]

One website crows that if you'd bought gold in 2000 you'd have gains of 300%.

If you'd bought BHP you'd be sitting on gains of 500% and that excludes dividends.

[bermuda]

Nouriel Roubini says any suggestion gold will boom is nonsense.
I hope you read this one too bermuda, there'a message there about oil.

http://wallstreetpit.com/11964-roubini-people-deluding-themselves-with-gold-at-2k-are-talking-nonsense

I looked up your note Skol,...and there it was..... a Professor of Economics. Roubini. Yes I have heard of him. But spare me the thoughts that just about every economist I have met has been looking at the walls of his room too much. They can't understand that oil is a Precious Finite Resource.They haven't made the stuff for about 75 million years.

Give me a Buffet or more particularly, a Rodgers. Or a learned Chinese.

[Skol]

I looked up your note Skol,...and there it was..... a Professor of Economics. Roubini. Yes I have heard of him. But spare me the thoughts that just about every economist I have met has been looking at the walls of his room too much. They can't understand that oil is a Precious Finite Resource.They haven't made the stuff for about 75 million years.

Give me a Buffet or more particularly, a Rodgers. Or a learned Chinese.

They haven't made gold for a long time either bermuda but no one seems that concerned that we're going to run out of it.
Oil's just another commodity, time to get used to it.

Give us all a clue bermuda, when will the precious finite resource run out?

[winner69]

Interesting

Gold's rush falls short on 30-year investment
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10618282

[JBmurc]

worth a look

http://www.perthnow.com.au/money/investing/performers-of-the-decade/story-e6frg2v3-1225814038342

[airedale]

Interesting

Gold's rush falls short on 30-year investment
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10618282

At my advanced age I am not looking for a 30 year investment. :D:D
But Mary Holm dishes out plenty of advice for those who are.:D:D

[Dr_Who]

At my advanced age I am not looking for a 30 year investment. :D:D
But Mary Holm dishes out plenty of advice for those who are.:D:D

Mary who? lol

Even a 10 yr old can get better returns than her. :D

[drillfix]

PerthNOW,

I think they should have a column of the WHO is WHO of RIP OFF artists over there in Perth.

Lets start it off with Michael K. with many associated business associates.

Add Kate H to the list too, female version of the above and also a total scoundrel.

The list goes on, and I dont have the time to make such trashy posts like this :rolleyes: sorry~!

[JBmurc]

Gold- $1111 onwards an upwards should well be a really good year for the goldies
even though I 50/50 on a sharemarket crash led from the US-UK markets etc which will drag everything lower

[Skol]

Here's something from CNN on gold.

www.money.cnn.com/2010/01/06/pf/buying_gold.moneymag/index.htm?postversion=2010010706

[Skol]

It was only a matter of time until headlines like this made the news with all and sundry believing gold bullion is a good investment.

www.stuff.co.nz/national/crime/3238842/Man-charged-over-gold-cash-theft

[JBmurc]

It was only a matter of time until headlines like this made the news with all and sundry believing gold bullion is a good investment.

www.stuff.co.nz/national/crime/3238842/Man-charged-over-gold-cash-theft

Think you need to watch these clips -hope you have some real asset investments aswell or you might not even be able to buy than bottle of moet ..

http://www.youtube.com/watch?v=_RglsoCJMa4&feature=related

[Skol]

I watched it JB, but it's like peak oil, lots of people think it's happening but it's not.

Those dudes are going to have egg all over their faces (and so are you) if by the end of 2012 I can still go and buy a big mac for $4 and not $400.

Hope you've got that gold stashed away safe and sound. Where is it, in the safe, in the garden or stored away where you have to pay for it?
Maybe you've got it somewhere where it'll end up like Goldcorp.

Don't have to worry about the Moet, if anything it's liable to be cheaper. The CPI due out on the 20th is expected to show a decline in prices.

[JBmurc]

I watched it JB, but it's like peak oil, lots of people think it's happening but it's not.

Those dudes are going to have egg all over their faces (and so are you) if by the end of 2012 I can still go and buy a big mac for $4 and not $400.

Hope you've got that gold stashed away safe and sound. Where is it, in the safe, in the garden or stored away where you have to pay for it?
Maybe you've got it somewhere where it'll end up like Goldcorp.

my gold holdings are in stocks-tgf-try-cfe

i do hold some silver bullion in my own safe

the only people that have egg on their faces atm is the obama's, bernanke,an all the analyst that said their wasn't going be a recession back in 2006 the same guys that are saying the US economy is now fine an looking bullish going forward how could you trust guys that say things like the US car makers are fine to then only a year later find them going bankrupt ....I'd rather trust the guys who get it right with their predictions that's if you want to make money an not go broke following the herd of idiot Analyst

[Skol]

According to an article in the Globe and Mail today 10 year Treasuries could 'spike' to 10% over the next decade.

Doesn't look like hyperinflation to me.
The US economy is in much better shape than many other countries, especially Europe.

Which will make gold a fizzer.

[JBmurc]

According to an article in the Globe and Mail today 10 year Treasuries could 'spike' to 10% over the next decade.

Doesn't look like hyperinflation to me.
The US economy is in much better shape than many other countries, especially Europe.

Which will make gold a fizzer.

what really cracks me up is the usually bearish news that the IMF will sell yet more gold some 190ton what does the gold price do but hold it's range an end the week at $1117

Now with world production history of gold falling an the fact more of the gold produced is coming from ever lower grade large miners I can't see the gold price in USD falling at all unless the US interest rates head alot higher which they won't as their economy has be on life support for far to long now..........

Below are the end-of-year, closing-prices for gold since the start of the decade. It has risen every year, and last year spectacularly so.

2000 $273
2001 $279
2002 $348
2003 $416
2004 $438
2005 $518
2006 $638
2007 $838
2008 $889
2009 $1084

2010---$1200-$1300 my pick

looking forward to that bottle of Moet skol

wish i had a glass right now lying by me pool in the yet another ripper 25deg central otago blue sky day...

[airedale]

Hi JB, what is surprising is that POG is holding up even as the US$ index strengthens. If [or when] the US$ index turns down, then expect gold to outperform even more strongly.

[Skol]

Good luck with the gold JB.

In real terms the price of gold is the same as was in 1265. In that year if a guy had bequeathed the gold to his children and so on ad. infinitum, his familiy's wealth in gold would have decreased by 90% over the next 500 years.
Inflation is expected to stay flat.

One of my neighbours told me a while back he had a few bars stashed away, in the ground some where if I remeber correctly. He said gold would go to US$5000, but I didn't have the heart to pour cold water on it. Dreams are free, like winning lotto.

I see George Soros bought some gold a while back hoping to cash in because he says gold is a bubble.

[airedale]

Skol, where do you get your numbers from? What was the price of gold in English money 745 years ago? As Columbus had not been born, it wasn't being quoted in $US.
If this ancient guy had left his family a paper note or metal coin, the loss of purchasing power for said money would be astronomical.

[Skol]

Skol, where do you get your numbers from? What was the price of gold in English money 745 years ago? As Columbus had not been born, it wasn't being quoted in $US.
If this ancient guy had left his family a paper note or metal coin, the loss of purchasing power for said money would be astronomical.

Required reading for all commodity investors:

http://gulfnews.com/business/features/commodity-super-myth-1.585152

[Skol]

A gold bug in Auckland has had a 1kg ingot stolen.
Expensive lesson, won't be the last either.

[airedale]

A gold bug in Auckland has had a 1kg ingot stolen.
Expensive lesson, won't be the last either.

In 745 years time who will care?:o

[Skol]

Jim Rogers seem to talk with forked tongue. He says buy gold and it'll be $2000 within 10 years, but then says he's buying $US. I thought gold was supposed to compensate for the coming implosion of the dollar but Rogers says the euro's going to implode, not the dollar. He says gold will go up by 6/7% per annum over the next 10 years. Aaaah, doesn't sound like a decent risk/return to me.

He says the world is running out of oil, but most know it's not.

How old is Rogers? Maybe time to check out the old folks homes.

www.cnbc.com/id/35906680

[tobo]

In 1265 POG was 5.2 British Pounds per fine ounce.
In 1265 you could feed an Esquire for 6 Pounds per annum, or a horse groom for 1.5.
In 1265 you could buy a horse for 1 to 10 Pounds (depending on quality)

So you could feed a wealthy person for a year or buy good horse for about 1 oz of gold.
If would cost a lot more than USD 1,100 to do that today.
This suggests that the price of gold is now lower than then.

And looking at POG over the period from 1265 to now, climbed only gradually until steeper climb from 1973 (ie well into the age of money markets) .

[I am not a historian. I just googled this, and was intrigued to find a complete history of the price of gold all the way from 1257]
[And this is not particulary helpful for investment decision-making either. Just a curiousity.]

[arco]

Jim Rogers seem to talk with forked tongue. He says buy gold and it'll be $2000 within 10 years, but then says he's buying $US. I thought gold was supposed to compensate for the coming implosion of the dollar but Rogers says the euro's going to implode, not the dollar. He says gold will go up by 6/7% per annum over the next 10 years. Aaaah, doesn't sound like a decent risk/return to me.

He says the world is running out of oil, but most know it's not.

How old is Rogers? Maybe time to check out the old folks homes.

www.cnbc.com/id/35906680

According to Wikipedia
James Beeland Rogers, Jr. (born October 19, 1942) is an expatriate American investor and financial commentator based in Singapore

[JBmurc]

Central banks around the world added 425.4 metric tons of gold to their reserves last year, the biggest increase since 1964, according to the World Gold Council. That represents a 1.4 percent gain to put their holdings at 30,116.9 tons in total. The increase was the first since 1988. Central banks in India, Russia and China were among those boosting their gold reserves last year, as the precious metal jumped 24 percent, hitting a record of $1,226 an ounce in December. Central banks now possess 18 percent of all gold ever mined.

"There's clearly been a renaissance of gold in central bankers' minds," Nick Moore, an analyst at Royal Bank of Scotland, told Bloomberg. "It's not just been central banks taking on gold, but a general shift for physical gold in the investment sector." Many are now singing gold's praises, with the precious metal up about 3 percent so far this year.

"Gold is quietly, at the edge, becoming the world's second reservable currency, supplanting the euro and rivaling the dollar," money manager Dennis Gartman wrote in his Gartman Letter, obtained by Bloomberg. "The trend shall continue months, if not years, into the future."


-Goldmans analyst confirms lmba gold market is ponzi Scheme

http://www.zerohedge.com/article/former-goldman-commodities-research-analyst-confirms-lmba-otc-gold-market-paper-gold-ponzi

[clearasmud]

In 1265 POG was 5.2 British Pounds per fine ounce.
In 1265 you could feed an Esquire for 6 Pounds per annum, or a horse groom for 1.5.
In 1265 you could buy a horse for 1 to 10 Pounds (depending on quality)

So you could feed a wealthy person for a year or buy good horse for about 1 oz of gold.
If would cost a lot more than USD 1,100 to do that today.
This suggests that the price of gold is now lower than then.

And looking at POG over the period from 1265 to now, climbed only gradually until steeper climb from 1973 (ie well into the age of money markets) .

[I am not a historian. I just googled this, and was intrigued to find a complete history of the price of gold all the way from 1257]
[And this is not particulary helpful for investment decision-making either. Just a curiousity.]

I just want to question your calcs.

A quick google showed in 1257 a pure gold penny weighed 45.5 grains=2.73 grams
The gold penny was first valued at 20 pence later changed to 24 pence or 1/10th of a pound.
Therefore a pound was 27.3 grams or about 1.1 ounce of gold in 1265.
So an esqire would have cost 6 pounds or 6.6 ounce at nz$1577/ounce or $10408 a year to feed=$200 a week.
Slightly more than today??
Cheers,

[Skol]

Skol, I admire your tenacity,but wonder at your capacity for a good argument. You are already fighting against oil, gold, and just about everything else except airline shares on the Forex thread, and the POO thread. And sure and bejeez, as Paddy said, here you are opening up here on another front.
Happy New Year to you,:D:D:):)

Haven't been too far wrong though airedale. Gold and oil pretty much the same as they were at the beginning of the year, XAL, airline index up nearly 12%.

I do own other shares though but sold some VBA recently. The only oil share I own is AWE, awaiting the result of Hoki 1 (fingers crossed).

VBA up 22% since Dec 31st.

No gold.

[Skol]

Hey JB, I made a extremely rare error. I have just had a look at a gold chart and it's been in a downtrend since late November, lower highs and lower lows, very bearish. A bit like NAV right?

[JBmurc]

Hey JB, I made a extremely rare error. I have just had a look at a gold chart and it's been in a downtrend since late November, lower highs and lower lows, very bearish. A bit like NAV right?

Well I brought NAV at 12c now their 16.5c only weeks later one nice bear run LOL

[airedale]

Hey JB, I made a extremely rare error. I have just had a look at a gold chart and it's been in a downtrend since late November, lower highs and lower lows, very bearish. A bit like NAV right?

Hi Skol, late November is a little over four months ago. Go right back to the four year or eight year charts for gold and then tell us about trends.:ohmy:





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GCGold01/04/10 00:00


LAST:

1,126CHANGE:
http://findata.co.nz/images/up.gif 11.60OPEN:
1,115HIGH:
1,129ASK:
0VOLUME:
108,481CHANGE(%):
1.04PREV:
1,115LOW:
1,112BID:
0OPEN INT:
283,090



1 Month 3 Months 6 Months 1 Year 5 Years 10 Years 15 Years Moving Averages: MACD: Stochastic:
http://chart.findata.co.nz/?e=COMEX&s=GC&w=476&h=360&n=3700&ma1=5&ma2=20

FundamentalsTechnicalPrice RangesOther
Sector:Metals52 Wk Range:843.84 - 1227.5PE:0EPS:0Div Yield:0Market Cap:0NTA:0.0000Div Date:

MA5:1,132STO9:44:MA20:1,120MTM14:18:MA50:1,136RSI1 4:51:

Week High:1,147Month High:1,163Year High:1,228Week Low:1,108Month Low:1,075Year Low:844Week Change:26Month Change:1Year Change:169

ISIN: CUSIP:




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NZ sharemarket up in early trading (http://findata.co.nz/News/7064609/NZ_sharemarket_up_in_early_trading.htm)

23 Mar 2010 10:48NZPA
http://images.findata.co.nz/nzpa_7064609_90x68.jpg (http://findata.co.nz/News/7064609/NZ_sharemarket_up_in_early_trading.htm)
Shares in NZ Refining Co gained a further 6c in early trading to reach a two-month high of 396, as they climbed away from 325 in early March, their lowest level since mid-2005. more... (http://findata.co.nz/News/7064609/NZ_sharemarket_up_in_early_trading.htm)
NZ dollar lower as euro, Australian dollar weakens (http://findata.co.nz/News/6757240/NZ_dollar_lower_as_euro_Australian_dollar_weakens. htm)

18 Feb 2010 17:24NZPA

















http://secure-nz.imrworldwide.com/cgi-bin/m?rnd=1270246598108&ci=findata&cg=0&cc=1&sr=1440x900&cd=32&lg=en-nz&je=y&ck=y&tz=13&ct=lan&hp=n&fl=10&si=http%3A//findata.co.nz/Markets/StockQuote/COMEX/GC.htm&rp=http%3A//findata.co.nz/Markets/StockQuote/COMEX/GC.htm

[STRAT]

Hey JB, I made a extremely rare error. I have just had a look at a gold chart and it's been in a downtrend since late November, lower highs and lower lows, very bearish. A bit like NAV right?
and short term it might be worth another look too

[JBmurc]

Hong Kong pulls all gold reserves from depositories in London


In a challenge to London, Asian states invited to store bullion closer to home





HONG KONG (MarketWatch) -- Hong Kong is pulling all its physical gold holdings from depositories in London, transferring them to a high-security depository newly built at the city's airport, in a move that won praise from local traders Thursday.





The facility, industry professionals said, would support Hong Kong's emergence as a Swiss-style trading hub for bullion and would lessen London's status as a key settlement-and-storage center.


"Having a central government-sponsored vault would create a situation where you could conceivably look at Hong Kong as being a hub, where metal could be traded for the region," said Sunil Kashyap, managing director at Scotia Capital in Hong Kong, adding that the facility was the first with official government backing in the region.


The Hong Kong Monetary Authority, which functions as the territory's unofficial central bank, will transfer its gold reserves stored in other vaults to the depository later this year, the Hong Kong government said in an earlier statement.


The monetary authority reported $63 million in physical gold reserves as of July 31, according to its International Reserves and Foreign Currency Liquidity statement. The authority wouldn't disclose where the reserves are held, but local media reports cited gold traders as saying that London's the most likely location.


Traders said the new depository facility could also foster new financial products, such as exchange-traded funds based on precious metals.


The 3,660-square-foot depository, located at the city's main Chek Lap Kok Airport, will serve as a "storage facility for local and overseas government institutions," according to the government statement.


Martin Hennecke, a financial advisor with the Hong Kong-based Tyche Group Ltd., said that could be appealing to regional central banks unnerved after watching the global financial system teeter on verge of implosion last year.


"Central banks are increasingly aware of the importance of having gold reserves at time of financial crisis and having it easily available at their own disposal," he said.


Meanwhile, local newspaper reports said the Hong Kong Mercantile Exchange had signed an agreement to use the depository for its physical settlement and storage needs.


Marketing efforts will be launched to convince Asian central banks to transfer their gold reserves to the Hong Kong facility, according to reports citing Raymond Lai, finance director with the Hong Kong Airport Authority.


Efforts will also be made to reach out to commodity exchanges, banks, precious-metals refiners and ETF providers, the reports said.


Management firm Value Partners planned to launch an ETF gold fund that will use Hong Kong instead of London as a repository for the gold backing the fund, local reports said Thursday.


((Reporting By Chris Oliver - Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.))

[Huang Chung]

From the Papillion Resources website (well, technically, the CLN website, as the PIR one is still under construction).

Note: PIR has been on the move, so not quite the bargain as when the report was written, but still cheap IMO.

http://www.colonialresources.com.au/images/stories/100401_Papillon_PIR_-_Undiscovered_West_African_gold.pdf

Some other West African goldies mentioned as well.

[Skol]

Hi Skol, late November is a little over four months ago. Go right back to the four year or eight year charts for gold and then tell us about trends.

OK, on a long term basis it looks a little like NASDAQ 2000 or Oil 2008.

I've seen the physical metal manias a couple of times in my lifetime and we've got a new generation of retail investors out there buying the stuff thinking they're going to make their fortune. When Harrods is selling physical gold in their basement you know there's a mania going on. A couple of years back Harrods was selling apartments in Dubai with a massive and very impressive mock-up. Dubai property is now down up to 70%.

Could go for a while though, bull and bear markets always go longer than you think. The notion that the fiat currencies will implode and gold will skyrocket is pie in the sky, sophisticated investors go for the US$ in times of fear. You just need to be out before the peak, because as you will all know markets generally fall a lot faster than they go up.

Anyway, because I'm going to retire in the next few years I might be a tad more cautious than some of the real punters. When I was younger I used to crank up the mortgage something fearsome and bet on shares but I've since lowered my risk profile.

Even some of the most sophisticated investors get caught up in manias.

[JBmurc]

Hey JB, I made a extremely rare error. I have just had a look at a gold chart and it's been in a downtrend since late November, lower highs and lower lows, very bearish. A bit like NAV right?

LOL yeah things are looking real bearish Skol---

NAV 21c GOLD $1161

--$2000 gold this year-----
http://www.kitco.com/ind/kitcoradio/index.html

[Skol]

As the mania reaches its peak I'm trying to think of ways to bet against gold without shorting it.

Anyone got any ideas? Buy $US I suppose, but have exposure there.

Gordon Brown lost 2 billion pounds on gold while he was the UK Treasurer. Sold 400 tons at the bottom of the market. LOL

[JBmurc]

As the mania reaches its peak I'm trying to think of ways to bet against gold without shorting it.

Anyone got any ideas? Buy $US I suppose, but have exposure there.

-Yeah I think cash ,term deposit etc you could CFD short a couple gold miners personal I wouldn't
If you do make sure you have some cash spare under the bed to buy my bottle of-- Moet-----



The biggest fraud in history

We have received several emails over the past few days asking us why we aren't covering the metals market fraud that has been exposed.

To be honest, the story requires a book, rather than a Daily Reckoning article. And it is a story that makes our stomach churn, rather than filling us with glee.

It is probably one of the most important things to inform yourself about, especially if you are interested in gold or silver.

The short version is that banks don't hold the gold they say they do. They have been issuing gold and silver certificates and charging people for storage costs on the metal, without actually holding it. The London Bullion Market Association (LBMA) holds only 1% of the gold it has outstanding in certificates, according to testimony given at a Commodities Futures Trading Commission (CFTC) hearing.

Best of all, the precious metals market has been subject to extreme and predictable manipulation.

Can you imagine what will happen if people try to take delivery on the gold they hold in certificates

[Skol]

You've been on too many of those conspiracy theory websites JB.

Looking forward to my bottle of red because the implosion will take place before the end of the year.

This what George Soros reckons:

The Hungarian-born hedge fund pioneer founded his Quantum Fund in 1970, and his longevity at the top end of the industry is almost as extraordinary as the raw number for his taking last year.

It is more than 17 years since his bet against the pound earned him $1bn (£650m) and the nickname "the man who broke the Bank of England", and when Institutional Investor's rich list was first calculated in 2001, it was Mr Soros who topped it with earnings of $700m that year.

He has kept atop the rankings, through good years and bad, through boom times and financial crises, thanks to the sheer size and diversity of his holdings. The Quantum Fund was up 29 per cent last year, earning Mr Soros $3.3bn in investment gains and fees.

But Mr Soros enjoyed 2009 for reasons other than the billions. Thanks to the financial crisis, he has won an eager audience for his philosophy of finance, which warns that markets are inherently unstable and prone to what he calls "reflexivity". They don't reflect economic reality, he says, they change it.

Armed with this insight, he has been vociferously arguing for a ban on speculative credit default swaps – which he describes as "selling insurance on someone's life to someone else and giving them a gun" – and betting there will be a bubble in gold

[JBmurc]

George Soros doubled his investment in the world's largest gold fund – just weeks before claiming investing in the precious metal is now the "ultimate bubble".
do as I say not as I do.........LOL

[Skol]

Here's a quote I used to bring up occasionally before the POO collapsed re. herd instinct.

According to Gustave Le Bon, whose excellent book (The Crowd) appeared at the end of the 19th Century,

"a chain of logical argumentation is totally incomprehensible to crowds, and for this reason it is permissible to say that they do not reason or that they reason falsely and are not to be influenced by reasoning."

Gold like all bubbles will collapse as it has before, but 'this time it's different' right?

When the Dubai property market crashed a whole lot of losers got caught in the crossfire there and it was with great pleasure that many of them were what are referred to as 'celebs', like the Beckhams and Brad Pitt.

Whole heaps of other 'celebs' got emptied out by Madoff.

I'm betting the 'celebs' are queueing up to buy gold right now.

[Skol]

Yep I was right! "as gold fever breaks across the globe".



Celebrities
Look out for what the top stylists, like Jessica Paster have to tell you about why gold is the way to make celebs shine.

Jessica Paster has been dressing Hollywood’s elite since 1997. Her all-star roster include: Cate Blanchett, Penelope Cruz, Deborah Messing, Sandra Bullock, Hillary S****, Diane Lane and many more. But, whatever your particular take, look out for dynamic attention-grabbing designs which reflect your own personality, aspirations and dreams. Remember to strike the right balance in choosing your hand-picked jewelry, whether you are looking for day or evening wear, why not take further inspiration from the award winning online magazine, Gold Inspirations, and luxuriate in the warmth, sensuality and spiritual richness of gold.

Gold in Fashion
Jessica Paster Top Stylists Feature

Trends
Shopping for the new season? Be sure to buy gold. This autumn the designers focus on gold’s texture, and fabric-like finishes, silky, ribbed, plaited, pierced and woven.

Designers
.Whatever the occasion calls for real gold jewelry glows on catwalks as gold fever breaks across the globe

[Huang Chung]

Skol, with all the celebs in the world, you just had to go to the top of the 'A' list with Jessica Paster, didn't you? :D

[Skol]

Hey HC, Jessica's just the stylist to the 'celebs'.
Here's something from Nightly Business Report with some old hack celebs selling gold. Contrarian Warning.

Taking a Shine to Gold
Tuesday, April 06, 2010 SUSIE GHARIB: With gold prices trading above $1,100 an ounce, there's lots of hype about investing in the shiny yellow metal. But tonight's commentator worries that some late night infomercials could take the shine off your portfolio. Here's Todd Buchholz, author of "Lasting Lessons from the Corner Office."

TODD BUCHHOLZM AUTHOR, "LASTING LESSONS FROM THE CORNER OFFICE": I don't blame celebrities for pocketing money endorsing products. Peyton Manning looks great playing ping pong with Justine Timberlake in an ad for Sony which brings me to the New York Mets and investing. When I was a little kid, a guy named Ed Kranepool played first base. Recently, I was in New York flipping channels on the television and there he was. I hadn't seen his name in 20 years. What was he doing on the air? Was it an old-timers day? No, Ed Kranepool was hawking investments in gold. He always seemed like a decent guy. I hope they pay him well. But why, oh, why would any investor listen to Ed Kranepool on the price of gold? He was a lifetime .261 hitter. Now, if Tom Seaver did the ad, I might be interested. In truth, our airwaves are inundated with ads for gold investments, urging you to buy gold as a hedge against inflation and any number of disaster scenarios. Watergate burglar G. Gordon Liddy does them, too. Please be careful. Unlike copper, which gets used in all sorts of industries from electric wiring to water pipes, gold has a huge speculative shine to it. A few weeks ago the Chinese government said it had already bought enough gold to last it awhile. If you're going to spend money based on late night TV ads and infomercials, you might get off cheaper buying something like a Ginzu knife or Ronco's pocket fisherman. That way, if times got tough, you could always catch and filet your own dinner. That's better than getting your portfolio filleted. I'm Todd Buchholz

[Huang Chung]

I'm betting the 'celebs' are queueing up to buy gold right now.

I can just see Leonardo DiCaprio, Rob Reiner, Larry David, Camerion Diaz busily loading up the boots of their Prius' with gold bars.....

[Huang Chung]

Hey Skol...if you haven't seen this already, you'll probably get a kick out of it, especially the big 'connection' at the end.

http://www.youtube.com/watch?v=DNSakO8Z11o

[Skol]

Here's something on Todd Buchholz.

April 2008 commodities prediction
In April 2008 on the PBS Nightly Business Report, Buchholz forecast that commodity prices, including oil, would climb higher in the short-term but then tumble during the summer of 2008. On July 13, 2008, addressing the Southern Legislative Conference, when oil prices were $137 per barrel and leading Wall Street analysts were forecasting a move to $200, Buchholz predicted that prices would fall in half over the next six months. He comments were met with criticism from other leading economic analysts, but within the next eight weeks, prices of commodities such as oil, grain, and industrial metals all started to crumble, and the price of oil fell significantly.

[Skol]

Hey Skol...if you haven't seen this already, you'll probably get a kick out of it, especially the big 'connection' at the end.

http://www.youtube.com/watch?v=DNSakO8Z11o

Thanks HC, brought back memories of Ray Smith and Goldcorp in 87.

Smith departed NZ with his mistress for Park City, Utah.


The curious case of the missing gold of Goldcorp, which collapsed in 1988, also proved fascinating to the investing public. Listed in February 1986, chairman Ray Smith predicted people would soon be embracing gold as an investment. The company sold "unallocated gold certificates", holding the real gold in its vaults. But it turned out there was not enough gold to go around, and what was there was claimed by funder BNZ.

About 1600 certificate holders fought back, but in the end the lawyers were the winners, pocketing an estimated $2m for a legal battle that went all the way to the Privy Council. BNZ got its gold.

Fraud charges were laid against Smith, who was acquitted. He later wrote Where's the Gold? in which he claimed BNZ helped squeeze the company dry in the six months before the towel was thrown in.

The litigation and investigations that followed the collapse of the 1980s corporates cast a shadow for years, and there is no reason to expect any different of the modern finance company collapses, where receiverships, civil and criminal cases and moratoriums guarantee headlines for years to come.

[STRAT]

I hear gold investments are being advertised on the TV in the US as frequently as American Cars and Skin care products.

Thats a sign if ever I heard one that the Dollar will be heading north and gold in the other direction. Wada ya reckon Skol? :lol:

[Skol]

I hear gold investments are being advertised on the TV in the US as frequently as American Cars and Skin care products.

Thats a sign if ever I heard one that the Dollar will be heading north and gold in the other direction. Wada ya reckon Skol? :lol:

You've got it, I was living in Los Angeles for a while in 1982, when the gold price took off. All of a sudden there's endless ads on TV selling gold and precious metals.
Gold did not exceed the 1982 price until 2006.

[Skol]

Looks good but will it last? I doubt it. Gold ETF vs All Ords.

[lissica]

George Soros doubled his investment in the world's largest gold fund – just weeks before claiming investing in the precious metal is now the "ultimate bubble".
do as I say not as I do.........LOL

He has been quoted as saying that when he sees a bubble, he buys into it.

[STRAT]

He has been quoted as saying that when he sees a bubble, he buys into it.Nothin wrong with that as long as one sells before it pops eh?

[Skol]

Hi Skol, late November is a little over four months ago. Go right back to the four year or eight year charts for gold and then tell us about trends.:ohmy:





http://findata.co.nz/images/findata_logo3.png (http://www.findata.co.nz/)Saturday, 3 April 2010



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GCGold01/04/10 00:00


LAST:

1,126CHANGE:
http://findata.co.nz/images/up.gif 11.60OPEN:
1,115HIGH:
1,129ASK:
0VOLUME:
108,481CHANGE(%):
1.04PREV:
1,115LOW:
1,112BID:
0OPEN INT:
283,090



1 Month 3 Months 6 Months 1 Year 5 Years 10 Years 15 Years Moving Averages: MACD: Stochastic:
http://chart.findata.co.nz/?e=COMEX&s=GC&w=476&h=360&n=3700&ma1=5&ma2=20

FundamentalsTechnicalPrice RangesOther
Sector:Metals52 Wk Range:843.84 - 1227.5PE:0EPS:0Div Yield:0Market Cap:0NTA:0.0000Div Date:

MA5:1,132STO9:44:MA20:1,120MTM14:18:MA50:1,136RSI1 4:51:

Week High:1,147Month High:1,163Year High:1,228Week Low:1,108Month Low:1,075Year Low:844Week Change:26Month Change:1Year Change:169

ISIN: CUSIP:




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NZ sharemarket up in early trading (http://findata.co.nz/News/7064609/NZ_sharemarket_up_in_early_trading.htm)

23 Mar 2010 10:48NZPA
http://images.findata.co.nz/nzpa_7064609_90x68.jpg (http://findata.co.nz/News/7064609/NZ_sharemarket_up_in_early_trading.htm)
Shares in NZ Refining Co gained a further 6c in early trading to reach a two-month high of 396, as they climbed away from 325 in early March, their lowest level since mid-2005. more... (http://findata.co.nz/News/7064609/NZ_sharemarket_up_in_early_trading.htm)
NZ dollar lower as euro, Australian dollar weakens (http://findata.co.nz/News/6757240/NZ_dollar_lower_as_euro_Australian_dollar_weakens. htm)

18 Feb 2010 17:24NZPA

















http://secure-nz.imrworldwide.com/cgi-bin/m?rnd=1270246598108&ci=findata&cg=0&cc=1&sr=1440x900&cd=32&lg=en-nz&je=y&ck=y&tz=13&ct=lan&hp=n&fl=10&si=http%3A//findata.co.nz/Markets/StockQuote/COMEX/GC.htm&rp=http%3A//findata.co.nz/Markets/StockQuote/COMEX/GC.htm

Your chart looks a little like this.

The Road to Ruin.

[Skol]

I hear gold investments are being advertised on the TV in the US as frequently as American Cars and Skin care products.

Thats a sign if ever I heard one that the Dollar will be heading north and gold in the other direction. Wada ya reckon Skol? :lol:

Better make sure you've got exposure to $US all right. It won't be long before lines start heading in the opposite direction.

[JBmurc]

Investors often seek safety from financial market turbulence in US government bonds since they offer virtually no risk of default and, unlike cash or gold, provide a yield. At the same time, sovereign debt default concerns outside the US, e.g., Iceland, Dubai, and Greece, have been linked to short-term rallies in the US dollar and have diverted attention from the fiscal challenges facing the US. However, since seven US states are in worse financial condition than Greece, Ireland, Portugal or Spain, shelter may prove hard to find. With a $3.83 trillion budget, a $12.3 trillion federal government debt, a $1.35 trillion 2010 budget deficit and $63 trillion in unfunded liabilities, the fiscal condition of the US has come into question and foreign interest in US Treasuries has declined. In late March, it was reported that the 10-year US Treasury Note yield had risen 30 basis points and that foreign holders of 10-year Notes were selling in record numbers.

- http://www.kitco.com/ind/Hera/april082010.html

[shasta]

I hear gold investments are being advertised on the TV in the US as frequently as American Cars and Skin care products.

Thats a sign if ever I heard one that the Dollar will be heading north and gold in the other direction. Wada ya reckon Skol? :lol:

Even Facebook is showing Gold ads about using leverage to make quick profits up to 70%...

When everyone is talking Gold, perhaps its time to look elsewhere, hmmm maybe Uranium?

[STRAT]

Better make sure you've got exposure to $US all right. It won't be long before lines start heading in the opposite direction.Reckon not Skol. I try and avoid buying things that are worthless even if their price is going up.:lol: I will leave Forex to others. Ive had a crack at it on paper only and didnt do all that well :blush:

[Huang Chung]

As much as I have little time for all the conspiracy theorists gold seems to attract, I do think the gold price will remain firm for some time to come. I also don't see the demise of the USD anytime soon either.

Probaby more of the same, give or take, so, I'm happy to be holding 2 goldies, each with good growth prospects.

[STRAT]

I'm happy to be holding 2 goldies, each with good growth prospects.Hi HC. Investing in companies who are digging it up seems sound enough but Im not so sure about bars under the bed

[Skol]

There was a Gold Buyers stall outside the supermarket today, another sign a mania is setting in.
How far will it go? Who knows, but the POO went up 8 times in 8 years before it crashed. Depends on how big the mania becomes and what kind it is.
As a scholar of such phenomena I find them endlessly fascinating and have quite a number of books on the subject.
The final confirmation will come when there are gold conferences, media clips and newpaper articles exhorting the masses to buy gold.
Problem is the masses are unable to recognise a bubble and are mesmerised by the profits until they're staring down the barrel, like the '87 crash.

Will it end with a whimper or a crash?
When it comes how much fraud will be exposed and how many banks, mutual funds and high net worth individuals will tremble as it makes its final gut wrenching lurch southwards?
Will there be enough gold to go around as the punters cash in their ETF's?

[Skol]

Reckon not Skol. I try and avoid buying things that are worthless even if their price is going up.:lol: I will leave Forex to others. Ive had a crack at it on paper only and didnt do all that well :blush:
I'm not into forex either but I have exposure to $US through a few mutual funds. Next time I'm in Europe I might investigate betting against gold at the local betting shop. William Hill, Ladbrokes etc have any number of financial products you can bet on and it's either win or lose, a bit like options, but you don't need an account.

[shasta]

There was a Gold Buyers stall outside the supermarket today, another sign a mania is setting in.
How far will it go? Who knows, but the POO went up 8 times in 8 years before it crashed. Depends on how big the mania becomes and what kind it is.
As a scholar of such phenomena I find them endlessly fascinating and have quite a number of books on the subject.
The final confirmation will come when there are gold conferences, media clips and newpaper articles exhorting the masses to buy gold.
Problem is the masses are unable to recognise a bubble and are mesmerised by the profits until they're staring down the barrel, like the '87 crash.

Will it end with a whimper or a crash?
When it comes how much fraud will be exposed and how many banks, mutual funds and high net worth individuals will tremble as it makes its final gut wrenching lurch southwards?
Will there be enough gold to go around as the punters cash in their ETF's?

I noticed a "we want to buy your gold" stall in the North City Plaza (Porirua, Wellington)

Has anyone actually sold any gold to these stalls, if so, what kind of price are they offering?

I'd imagine these stalls are strategically placed to cash in on those unaware of the gold price.

Porirua is a low socio-economic area with a largely maori & pacfic island population, surrounded by dodgey finance companies

To my mind the easy money has been made on Gold

[Aotea]

I was told by a cobber at the Oceana Macraes mine a while ago, that the Newmont CE spoke to Oceana staff..he tipped gold was going to creep up to AUD$2,000 an oz....one opinion I know, but I have several gold stocks and my own gold claim with plenty in it, so those words are music to my ears. God knows why gold is worth what it is...

[JBmurc]

There was a Gold Buyers stall outside the supermarket today, another sign a mania is setting in.
How far will it go? Who knows, but the POO went up 8 times in 8 years before it crashed. Depends on how big the mania becomes and what kind it is.
As a scholar of such phenomena I find them endlessly fascinating and have quite a number of books on the subject.
The final confirmation will come when there are gold conferences, media clips and newpaper articles exhorting the masses to buy gold.
Problem is the masses are unable to recognise a bubble and are mesmerised by the profits until they're staring down the barrel, like the '87 crash.

Will it end with a whimper or a crash?
When it comes how much fraud will be exposed and how many banks, mutual funds and high net worth individuals will tremble as it makes its final gut wrenching lurch southwards?
Will there be enough gold to go around as the punters cash in their ETF's?

Oil crashed then it went back to a fair market value a mere blip..
Gold may well crash as go down sub $1000 but like Oil it's market value will return as like silver,platinum etc It has an will aways hold value unlike paper promises(for tender)

Do any study into the history of fiat currencies shows time n time again it's value doesn't return once the printing presses go full tilt to help prop up their fail economic systems

[upside_umop]

Better make sure you've got exposure to $US all right. It won't be long before lines start heading in the opposite direction.

Have you got an updated chart? I'm pretty sure the USD index has taken a rise since then hasnt it?

[upside_umop]

I noticed a "we want to buy your gold" stall in the North City Plaza (Porirua, Wellington)

Has anyone actually sold any gold to these stalls, if so, what kind of price are they offering?

I'd imagine these stalls are strategically placed to cash in on those unaware of the gold price.

Porirua is a low socio-economic area with a largely maori & pacfic island population, surrounded by dodgey finance companies

To my mind the easy money has been made on Gold

Yeah, I've seen them about in Riccarton mall for a while too. They take anything...rings, necklaces etc. Almost encourages theft huh?

[Skol]

Oil crashed then it went back to a fair market value a mere blip..
If gold crashed as much as oil it would plunge to US$255.

Looks about right, that's where it started.

[Skol]

Have you got an updated chart? I'm pretty sure the USD index has taken a rise since then hasnt it?

You're quite correct UU.

[JBmurc]

If gold crashed as much as oil it would plunge to US$255.

Looks about right, that's where it started.

So you really think GOLD will crash to $255?? an stay low for that to happen we'll need to see production costs fall massively , for one OIL will have to go sub $20 an wage deflation with or your see all gold production get mothballed.

How could this happen? well you're need a massive deflation of real assets an a massive increase of cash&loan interest rates returns(basically the dead opposite of want Central banks an Governments have an been doing of late)

Or maybe some Alchemy being able to turn lead into gold with some special spells or chemicals etc(Many central banks have created alchemy they push a button on their computer an create a currency for free they then give to the hard working miners for their rare GOLD)

Maybe a mass near extinction of mankind less humans more gold less value

Or maybe we'll have overall Inflation of real assets an a increasing world population like wants happening

Also Skol if you think golds going back to 1985 levels do you also think property will ???

[Skol]

Well JB 'experts' do lose money, quite often actually.

Pickens’ Loses $1 Billion on Energy Bets, Report Says
September 24, 2008, 7:51 am
T. Boone Pickens, it seems, has taken a bath on his energy investments.

According to The Wall Street Journal, funds run by the 80-year-old oil magnate have lost around $1 billion this year, a figure that includes $270 million of personal losses.

Apparently blindsided by the downturn in energy prices, one of the investor’s energy-focused hedge funds is down own almost 30 percent through August, while a smaller commodity-focused fund is down 84 percent, The Journal said.

“It’s my toughest run in 10 years,” Mr. Pickens told The Journal. “We missed the turn in the market, there’s nothing fun about it.”

[elZorro]

So you really think GOLD will crash to $255?? an stay low for that to happen we'll need to see production costs fall massively , for one OIL will have to go sub $20 an wage deflation with or your see all gold production get mothballed.

How could this happen? well you're need a massive deflation of real assets an a massive increase of cash&loan interest rates returns(basically the dead opposite of want Central banks an Governments have an been doing of late)

Or maybe some Alchemy being able to turn lead into gold with some special spells or chemicals etc(Many central banks have created alchemy they push a button on their computer an create a currency for free they then give to the hard working miners for their rare GOLD)

Maybe a mass near extinction of mankind less humans more gold less value

Or maybe we'll have overall Inflation of real assets an a increasing world population like wants happening

Also Skol if you think golds going back to 1985 levels do you also think property will ???

JB, it's a real pity there's no spell checker on this forum, I've had a beer or two but I still can't understand where you're coming from.

[Skol]

Hey JB,
Did you buy the Ronco's pocket fisherman? Could be handy with all those trout down there if it really does go pear shaped. You can't eat gold bars. LOL

[JBmurc]

Well JB 'experts' do lose money, quite often actually.

Pickens’ Loses $1 Billion on Energy Bets, Report Says
September 24, 2008, 7:51 am
T. Boone Pickens, it seems, has taken a bath on his energy investments.

According to The Wall Street Journal, funds run by the 80-year-old oil magnate have lost around $1 billion this year, a figure that includes $270 million of personal losses.

Apparently blindsided by the downturn in energy prices, one of the investor’s energy-focused hedge funds is down own almost 30 percent through August, while a smaller commodity-focused fund is down 84 percent, The Journal said.

“It’s my toughest run in 10 years,” Mr. Pickens told The Journal. “We missed the turn in the market, there’s nothing fun about it.”

Are you calling me a expert Skol?? how nice LOL

Also all you guys saying where in a """"GOLD MANIA""" ya what?? GOLD STALL outside a food store oh no deflation is here quick sell your assets get hold of that paper cash quick smart

IMHO there will be a gold mania an it will be a bubble that does pop but where a long way from that price wise

[Huang Chung]

The thing is that, unlike oil, coal, iron ore etc, gold is pretty much a useless metal. We dig it up, pour it into bars, and then stick it in a locked room for eons. Crazy behaviour. It's value is completely psycological....you can't eat it, wear it, cook with it, or shelter from the elements with it.

Yet, for all the lunacy associated with it, gold is percieved by us to have value, it has since the Ancient Egyptians, and will continue to long after you and I are digging up daisies.

[JBmurc]

The thing is that, unlike oil, coal, iron ore etc, gold is pretty much a useless metal. We dig it up, pour it into bars, and then stick it in a locked room for eons. Crazy behaviour. It's value is completely psycological....you can't eat it, wear it, cook with it, or shelter from the elements with it.

Yet, for all the lunacy associated with it, gold is percieved by us to have value, it has since the Ancient Egyptians, and will continue to long after you and I are digging up daisies.

Yeah for sure HC why do people value Diamonds so high --

Gold is the most malleable and ductile substance known. It can be flattened out to less than .00001 of an inch (less than .000065 cm) and a 1 oz. (28 gram) mass can stretch out to a distance of over 50 miles (75 kilometers). Gold is also one of the most resistant metals. It won't tarnish, discolor, crumble, or be affected by most solvents. This adds on to the uniqueness of this mineral.

Personal I'd much rather hold silver bullion

[Skol]

My guess HC is that about every 25 years there's a gold boom.
Unlike oil where it's not so easy to have a punt, gold is easy, and a it's a new generation of retail investors with a 'new era' vision.

Unfortunately a generation of investors who are going to learn the hard way. Of course that's not to say that you can't make a bit of money in the meantime, as long as you're out when the bell rings.

[Skol]

The final confirmation will come when there are gold conferences, media clips and newpaper articles exhorting the masses to buy gold.

Golden times
Created:9 April 2010Written by:Jonathan Eley
Almost 200 people attended our recent afternoon conference devoted to investing in gold, hearing presentations on the supply-demand background, various ways of buying exposure to the yellow metal, and an insight into the best times to buy and sell.


A step closer to the final confirmation.

[tricha]

If gold crashed as much as oil it would plunge to US$255.

Looks about right, that's where it started.


Actually I do have a lot of fun trying to poke hole in the arguments of not only peak oilers but that other snake oil science, global warming.
I can't help myself especially when I see supposedly sensible people investing in oil stocks because it's running out, and when I get told by bermuda that peak oil occurred
on Friday 8th Nov 1973 at 1100hrs or whenever it was (I was given an exact date and time) I,m afraid the temptation's too much.

Does this remind u of a stirrer on another thread Skol, hmm, u should be banned for all the scrap u print.

[JBmurc]

--manipulation


http://www.huffingtonpost.com/nathan-lewis/its-ponzimonium-in-the-go_b_519893.html

[Skol]

Actually I do have a lot of fun trying to poke hole in the arguments of not only peak oilers but that other snake oil science, global warming.
I can't help myself especially when I see supposedly sensible people investing in oil stocks because it's running out, and when I get told by bermuda that peak oil occurred
on Friday 8th Nov 1973 at 1100hrs or whenever it was (I was given an exact date and time) I,m afraid the temptation's too much.

Does this remind u of a stirrer on another thread Skol, hmm, u should be banned for all the scrap u print.




Well being one of the sheep that got involved in the oil boom tricha, you've got to ask yourself the question:
Who was right and who was wrong? Let me refresh your memory, oil crashed 78%, remember?

Get on board the gold boom tricha, the more the merrier. You see the graph I posted in #92, those two lines are going to cross, it's just a matter of when.

Being an amateur scholar of herd behaviour there have been some extremely interesting booms and crashes in my lifetime, some hardly even noticed. For example did you know there was a boom and crash in fibreglass boat moulds? True. About 30 years ago high earners sought shelter from Piggy Muldoon's extortionate 66% marginal tax rate. Needless to say they ended up worthless, like the angora goats.
About 1990 some guys I know bought an angora buck for $44,000 (1990 dollars). A few weeks later it was worth goat curry.

Adolf Hitler wasn't perfect but he had one extraordinary talent - crowd behaviour. Just imagine if someone with his talents had been selling real estate, mortgage-backed securities and more recently, gold, he'd have a fortune to rival Bill Gates.

With gold there's always something, the PIIGs, the Euro, US debt, Chinese property, ad infinitum, heaps of conspiracy theory.

[JBmurc]

Yes I don't disagree with you SKOL on the boom bust system gold will fall many $100's dollars at some stage in the future ,but without question it's not for a few years yet an esp. not going to happen this year..

A great clips from the very smart an muti-millionaire investor Jim rogers-

http://www.youtube.com/results?uploaded=w&orig_query_src=2&orig_query=max+keiser&search_query=jim+rogers&search_type=videos&suggested_categories=25


Jim Rogers was born in Baltimore, Maryland and raised in Demopolis, Alabama.[1][3] He started in business at the age of five by selling peanuts and by picking up empty bottles that fans left behind at baseball games. He got his first job on Wall Street, at Dominick & Dominick, after graduating with a bachelor's degree from Yale University in 1964. Rogers then acquired a second BA degree from Balliol College, Oxford University in 1966. After Oxford, Rogers returned to the U.S. and enlisted in the army for a few years.

In 1970, Rogers joined Arnhold & S. Bleichroeder. That same year, Rogers co-founded the Quantum Fund. During the following 10 years the portfolio gained 4200% while the S&P advanced about 47%.[4] It was one of the first truly international funds.

[JBmurc]

Trader blows whistle on gold & silver price manipulation
By Michael Gray

There is no silver lining to the activities of JPMorgan Chase and HSBC in the precious-metals market here and in London, says a 40-year veteran of the metal pits.

The banks, which do the Federal Reserve's bidding in the metals markets, have long been the government's lead actors in keeping down the prices of gold and silver, according to a former Goldman Sachs trader working at the London Bullion Market Association.

Maguire was scheduled to testify last week before the Commodities Futures Trade Commission, which is looking into the activities of large banks in the metals market, but was knocked off the list at the last moment. So, he went public.


Maguire -- in an exclusive interview with The Post -- explained JPMorgan's role in the metals pits in both London and here, and how they can generate a profit either way the market moves.

"JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the US dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the US taxpayer," Maguire said.

In the gold pits, Maguire sees HSBC betting against the precious metal's price without having any skin in the game in the form of a naked short.

"HSBC conducts an ongoing manipulative concentrated naked short position in gold. Silver is much easier to manipulate due to its much smaller [market] size," Maguire added.

"No one at JPMorgan is familiar with Andrew Maguire," said Brian Marchiony, a company spokesman. HSBC declined to comment.

[Skol]

Gold scams - I'm shocked.


MUMBAI (Commodity Online): Confusion confounded. That is the apt description for the global bullion markets now. Talk of gold, you will get a bunch of positive advices from market analysts saying that Indian festival and wedding seasons are round the corner and the demand for the metal is set to go up in the coming days.

And gold production is not as much good as expected, so there will be a demand rise which will cause price gain. Then, the Chinese buyers who have been showing insatiable appetite for the metal during the past few months.

Then comes the negative stories. Some market analysts have already started hammering the gold market with their predictions that most of the Gold ETFs are just Ponzi schemes and big banks and cartels are doing a fraud on bullion market. They have obvious example to show with the recent Commodity Futures Trading Commission (CFTC) hearing opening a can of worms as far as gold market is concerned.

The hearing has brought to light the fact that there is no gold left in this world if all the Gold ETFs ask for physical delivery. And, if that happens only god knows what will be the gold prices in the coming months.

It seems the bullion analysts are as confused as the gold prices now. So, with the ETF scam hitting the market hard, most probably people are bound to stay away from that sector for now.

To add to that, Indian buyers are not very keen to purchase gold at present prices. This means even this year’s festival season and weddings may not see as much gold buying as in the previous years in India.
But, China is still going strong with its intentions to buy more gold.

Moreover, gold always under performed while the economic outlook brightens and industrial commodities tend to do well in this period. This is why silver has done well compared to gold, as it is used more for industrial purposes.

All over the world good news is pouring in that recession is a thing of the past now and most of the countries are on way to great recovery. India and China are doing extremely well and this will also hit gold prices.

Market researchers have also come up with the fact that the present gold fraud can bankrupt not just a few banks but entire countries along with their central banks. Prime in this network are the Bank of England and the FED reserve which have been caught on the wrong side.

So, at a time when the bullion market is throwing up only confusion, it is better for any prudent investor to stay away if you don’t want to burn your fingers in this trillion dollar scam

[JBmurc]

So, at a time when the bullion market is throwing up only confusion, it is better for any prudent investor to stay away if you don’t want to burn your fingers in this trillion dollar scam

Confusion confounded your not wrong stay away from honest money? because of the trillion dollar scam --an do what buy bonds, keep cash in the bank
when the ETF scam does blow up I'd think the worse thing to do is not hold real gold & silver because it's been held down for so long once the free market opens REAL Gold & Silver will trade at real prices which will be much higher than current prices.

[Skol]

Let me see if I've got this right JB.
There is an assertion that more gold ETF's have been sold than all the gold on earth.
If that is the case or even rumoured to be the case this would create a stampede as the punters rushed to sell their ETF's and get out.
In the mean time the ETF's would need to sell their store of gold, hundreds, maybe thousands of tonnes, that probably no one would want. Correct?

That's all it would need to send gold back to where it was a few years back.

[macduffy]

Let me see if I've got this right JB.
There is an assertion that more gold ETF's have been sold than all the gold on earth.
If that is the case or even rumoured to be the case this would create a stampede as the punters rushed to sell their ETF's and get out.
In the mean time the ETF's would need to sell their store of gold, hundreds, maybe thousands of tonnes, that probably no one would want. Correct?

That's all it would need to send gold back to where it was a few years back.

Does an ETF confer a right to receive the physical gold in certain circumstances?

If it does, that would have the effect of increasing the PoG if holders demand their gold and issuers scramble to meet the demand.

If it doesn't, I can't see holders being concerned whether or where the gold comes from to back their bits of paper. Just as no-one "backs" our $100 bills!

[Skol]

Some do, some don't. A quick search on the internet says there are doubts about how much gold some funds have in their vaults.

A bit like Ray Smith's Goldcorp.

Wouldn't it be hilarious if there was a colossal scam at work. The very thing that is supposed to guarantee punters against US debt, Greek meltdowns, $US crashes et.al. is actually a scam itself.

[STRAT]

there are doubts about how much gold some funds have in their vaults.

.I suspect the truth there if it got out would be astounding. I will wager there are many such, shall we say " less than full :D " vaults about the world

[JBmurc]

Let me see if I've got this right JB.
There is an assertion that more gold ETF's have been sold than all the gold on earth.
If that is the case or even rumoured to be the case this would create a stampede as the punters rushed to sell their ETF's and get out.
In the mean time the ETF's would need to sell their store of gold, hundreds, maybe thousands of tonnes, that probably no one would want. Correct?

That's all it would need to send gold back to where it was a few years back.

-well if they haven't got it how will they sell it ?
-Probably no one will want it ? well if that was the case why has JP morgan got and has had for a long time Moz's Shorts of GOLD yet the price has hit new record high in the pound an euro of late esp. as It's well know theirs round a 100:1 leverage of paper gold/silver to the real thing with no limits on shorts but limits on longs It's well known to be a larger amount of shorts to longs

-the real stampede will be into real gold an silver bullion an out of paper contracts of so-called owership

So yes in the short term we could well see paper gold fall but real gold increase....time will tell

GOLD price -$1166usd Silver-$18.53





Gold ETFs - Introduction#
Gold backed Exchange Traded Funds (ETFs) are securities designed accurately to track the gold price.

BullionVault simply allows private individuals to buy gold bullion and own it directly as personal property - storing it in high security accredited vaults in London, Zurich or New York.

Both have been very successful at increasing gold bullion investment.

[Huang Chung]

Seems to me that, if the stories about not enough gold to back the bank's IOU's is correct, then PHYSICAL gold would skyrocked at people would want to take possession of what gold is out there.

[JBmurc]

Seems to me that, if the stories about not enough gold to back the bank's IOU's is correct, then PHYSICAL gold would skyrocked at people would want to take possession of what gold is out there.

Exactly----Add in the fact most of the worlds easy to mine large discoverys are in the past going forward it's going be a dog eat dog world for the best discoverys(Is why the likes of NCM is trying to takeover LGL rather than try an find a 40milloz It's far cheaper)

[Skol]

Any hint of a major scandal involving ETF's and the amount of gold they own will make gold as about as popular as the plague.

[JBmurc]

Any hint of a major scandal involving ETF's and the amount of gold they own will make gold as about as popular as the plague.

It will make ETF's as popular as the plague-Real Physical precious metals will soar in value

[tricha]

Any hint of a major scandal involving ETF's and the amount of gold they own will make gold as about as popular as the plague.

Hey Skol, wake up and stop your constant stirring, oil will hit $25 a barrel, it would have had the world entered Depression, which it still is sitting on the edge of.

Gold could be King, money is becoming not worth the paper it is printed on, a wise man would put 10% of his assets in gold for insurance, I'm not that wise.


No one knows what gold will do, all

[Huang Chung]

Any hint of a major scandal involving ETF's and the amount of gold they own will make gold as about as popular as the plague.

I'd agree with you if you were right, Skol, but you aren't, so I won't.

It would make EFTs as popular as the plague, but, unless you are going to paint tungsten bars with gold paint, physical gold will remain untarnished (no pun intended), and in fact, MORE desirable as it cannot be manipulated.

[hal]

Any hint of a major scandal involving ETF's and the amount of gold they own will make gold as about as popular as the plague.

I think it will make the suppliers of the ETF as popular as the plague. Could be a bit different to what you are saying. I also think you might mean 'paper gold' not physical

[Skol]

Here's a couple paragraphs from Yahoo Finance on the top investor scams:

Leveraged Exchange-Traded Funds (ETFs)

Leveraged exchange-traded funds (ETFs) are a relatively new financial product, which is why investors may not be aware of the risks they carry. The funds, which trade throughout the day like a stock, use exotic financial instruments, including options, other derivatives and promise the potential to generate better returns than the market return. Given their volatility, these funds typically are not suitable for most retail investors.

Gold Bullion and Currency Scams
With the high price of gold, investors should beware of gold bullion scams in which the seller offers to retain "purchased" gold in a "secure vault" and promises to sell the gold for the investor as it gains in value. In many instances the gold does not exist.




Owning physical gold is for the amateurs. I want to see what happens when the gold price crashes and all these losers queue up outside their local bullion shop, which will, probably, coincidentally, be closed for the day. LOL

[Skol]

I will put some little dittys here from time to time to amuse you all. These are paragraphs from my collection of books on manias and bubbles.

"Investors overpaid for gold and silver (and also for hard currencies) in the late 1970s, not because they were optimistic about the future, but because they felt that the US Dollar would become worthless and that inflation would accelerate."

Sound familiar? History repeats itself.

This para. if for you tricha.

"According to Hitler, propaganda had to 'forever' target the masses, 'forever' repetitive and extremely simple. Also, it had to target the intellect of the least educated people in the crowd, and the larger the masses were, the lower the quality had to be."

This para. reminds me of the brokers endlessly exhorting us to buy gold or else.

[JBmurc]

Here's a couple paragraphs from Yahoo Finance on the top investor scams:

Leveraged Exchange-Traded Funds (ETFs)

Leveraged exchange-traded funds (ETFs) are a relatively new financial product, which is why investors may not be aware of the risks they carry. The funds, which trade throughout the day like a stock, use exotic financial instruments, including options, other derivatives and promise the potential to generate better returns than the market return. Given their volatility, these funds typically are not suitable for most retail investors.

Gold Bullion and Currency Scams
With the high price of gold, investors should beware of gold bullion scams in which the seller offers to retain "purchased" gold in a "secure vault" and promises to sell the gold for the investor as it gains in value. In many instances the gold does not exist.




Owning physical gold is for the amateurs. I want to see what happens when the gold price crashes and all these losers queue up outside their local bullion shop, which will, probably, coincidentally, be closed for the day. LOL

-Anyone that buys any bullion buys it for the long term just like if you brought a house debt free if the property market crashs down 10%-20% It doesn't mean you going panic an sell your house for 20% less than what you paid for it cause you know both Bullion a well built homes go up with Inflation long term...

Worldwide debters well know the only way out of their increasing debts is through Inflation the higher the Inflation they can cause the less the debts will burden them
just look at the massive increase of Fiat money worldwide

[Skol]

[QUOTE=JBmurc;300373]-Anyone that buys any bullion buys it for the long term just like if you brought a house debt free if the property market crashs down 10%-20% It doesn't mean you going panic an sell your house for 20% less than what you paid for it cause you know both Bullion a well built homes go up with Inflation long term...[QUOTE]
'
Then how come inflation for the last few years is about 8%, but gold has gone up 200%?
Just like the late '70s before the gold meltdown.
Gold peaked then at $970 and crashed to $300 under similar circumstances.
I can remember that crash quite clearly because one of the guys I worked with loaded up on dozens of Krugerrands shortly before the crash.
We haven't reached that stage of the mania yet so we've probably got a way to go.

Let me guess, "it's different this time" right?

"I can calculate the motions of the heavenly bodies, but not the madness of people."
Isaac Newton.

[Skol]

Maybe the final hysteria is close.
An idiot on another website says that "seeing gold at $37,000 or even $200,000 will be no big deal".
"Society will be a state of upheaval, chaos and martial law".

Here's something from one of my books which applies in this case.
"According to some analysts, the principal cause of the low level of intellect in crowds is that, for ideas and beliefs to be understood by all members of the crowd, they must be extremely simple. Only then can they appeal to and be adopted by the lowest intelligence within the crowd."

[Huang Chung]

Maybe the final hysteria is close.
An idiot on another website says that "seeing gold at $37,000 or even $200,000 will be no big deal".
"Society will be a state of upheaval, chaos and martial law".

Nah, just sound like your every day, garden variety gold bug......

[ENP]

I assume everyone thinks the gold and silver bubble is about to crash sometime in the next 6-24 months?

[Huang Chung]

Note that the following was written in 2007:

http://www.fool.com/investing/mutual-funds/2007/09/28/gold-vs-the-sp-500.aspx

If you take a long term view, there is no gold bubble....just catching up after centuries of underperformance.

[JBmurc]

I assume everyone thinks the gold and silver bubble is about to crash sometime in the next 6-24 months?

No not everyone just Skol Gold isn't going back to $250 I'd be very surprised If we even see sub 1000 US again

[ENP]

Note that the following was written in 2007:

http://www.fool.com/investing/mutual-funds/2007/09/28/gold-vs-the-sp-500.aspx

If you take a long term view, there is no gold bubble....just catching up after centuries of underperformance.

It made me worry that the chart might inspire some people to move some -- or even most -- of their money from the broad stock market into gold.

Did you read that part?

[Huang Chung]

Hopefully nobody gets inspired to make any significant move without doing their homework first.

Personally, I'm happy to be holding Silver Lake (gold producer) and Papillon (gold explorer), and am not interested in holding physical gold (for the obvious security/cost reasons), and wouldn't touch gold ETFs etc, as 1) i don't know anything about them and 2) they seem to have a bit of a smell to them. SLR and PIR seem to me to have a bright future, even if gold doesn't rise any further.

I really have no idea what the POG will do, but I don't expect it to go down considerably, because of the rising cost of production and the fall out from printing presses that have been working overtime.

[Skol]

Here is an excerpt from 'Manias, Panics and Crashes ' by Kindleberger.

"On Jan 1st 1970 the market price of gold was less than $40 an ounce, on Dec 31st 1979 the price was $970.
One of the cliches is that 'gold is a good inflation hedge'; for 400 years the price of gold or its purchasing power in terms of a market basket of commodities has been more or less 'constant' over the long run. In the 1970's, in contrast, the annual percentage increase in the price of gold was many times greater than than the average percentage in the consumer price level.

At some stage in the 1970's the market price of gold was increasing because the market price of gold was increasing.

Investors were extrapolating from the increase in the market price from Monday to Tuesday to project the market price on Friday; they purchased gold on Wednesday in anticipation they could sell at a higher price on Friday.
The 'greater fool' theory may have been at work, some of the buyers of gold may have realised that the increase in price was a bubble and anticipated that they would be able to sell their gold at a profit before the bubble imploded.
At the end of the 1990's the market price of gold was a bit less than $300 an ounce; and once again the cliche that gold is a good inflation hedge seemed valid; the price of gold had increased by a factor of 15 since 1900 and the price of a market basket of US goods had increased by the same amount."

Answer my question from above JB.
Why has the CPI for the last 3 years been a total of about 8% but the POG gone up by 200%?

Answer: the 'greater fool' theory is at work.

The actual CPI in the USA from 2000 to 2010 was 28.3%, so $300 + 28.3% = $385.

So the real value of gold should be $385.


Gold is overvalued by 301%.

Guess what will happen when the 'herd' realise that?

[JBmurc]

If Gold did go to $385 Skol I'd be the first to accept that you were right--------------But I think you wrong an I think your see this when Gold heads through 2000ozUS some time over the next 12-18months

[ENP]

Gold is overvalued by 301%.

Guess what will happen when the 'herd' realise that?

The sheeps will be slaughtered for lamb chops?

[Skol]

If Gold did go to $385 Skol I'd be the first to accept that you were right--------------But I think you wrong an I think your see this when Gold heads through 2000ozUS some time over the next 12-18months

Well it might do JB, but again a long period of unjustified price rises will bring about a terrific bust.

Could go for a while, like I have alluded to in my former posts, when I mention the 'herd', I'm not talking about a bunch of Rhodes Scholars.

[trackers]

Well it might do JB, but again a long period of unjustified price rises will bring about a terrific bust.

Could go for a while, like I have alluded to in my former posts, when I mention the 'herd', I'm not talking about a bunch of Rhodes Scholars.

So it could go up, or it might not?

135 years of doing zip, surely time for a rerating?

http://www.kitco.com/LFgif/au883-999.gif


Note that the world population hasincreased from approximately 1billion to 7billion people in this period

[upside_umop]

Population in 1300-1500 was ~500 million and gold was.....


2527

http://www.sharelynx.com/chartsfixed/600yeargold.gif

[Skol]

Since the present increase in the gold price has been going since 2003, this will be perceived by some as being more or less permanent, so what can we expect as the boom continues?

An expansion of credit to buy gold.
Cold calling.
Excessive optimism
Media exposure.
Gold conferences.
An increasing amount of fraud. Mostly this will have to do with falsifying inventories. Swindles often have to do with statements like "our price target is $2500 per ounce".

Here's an interesting rip-off used in the 1960's to obtain credit.
"Tino de Angelis stung American Express by using tanks of 'salad oil' as collateral for loans. Tino knew that the oil was less dense than water and he floated a six inch layer of salad oil on top of twenty feet of water."

[ENP]

What's everyones opinion on hyper-inflation?

If not gold/silver then what to protect againt hyper-inflation?

[JBmurc]

What's everyones opinion on hyper-inflation?

If not gold/silver then what to protect againt hyper-inflation?

Well any real asset thing is Gold silver is the best just try an keep 100k worth of Oil or wheat at home

[ENP]

Well any real asset thing is Gold silver is the best just try an keep 100k worth of Oil or wheat at home

Is there any way we can buy an agricultural ETF here in NZ?

Or would you just buy into an agricultural company in NZX or ASX?

[JBmurc]

Is there any way we can buy an agricultural ETF here in NZ?

Or would you just buy into an agricultural company in NZX or ASX?

you can also buy warrants an futures in many commodities personal I like silver bullion an shares I am also currently getting a house built so I could get some Inflation growth with the porperty even though it a real long term investment 20yrs+

[ENP]

Is everyone changing their strategies dramatically since the economic crisis or are you staying with the same strategies that made you successful from 2000-2008/09

I'm just not sure what are the best options to take in 2010 as there are so many different opportunities that could possibly win and lose BIG time.

[JBmurc]

Is everyone changing their strategies dramatically since the economic crisis or are you staying with the same strategies that made you successful from 2000-2008/09

I'm just not sure what are the best options to take in 2010 as there are so many different opportunities that could possibly win and lose BIG time.

Well I personal have moved into more jnr goldies over the last couple months that a taking 20% out of the market to use for the new property
Any major profits going forward will be meant with some profit taking

[Skol]

What's everyones opinion on hyper-inflation?

If not gold/silver then what to protect againt hyper-inflation?

What hyperinflation?

The reason gold crashed in 1980 was because punters were concerned about the US dollar becoming worthless, and, you guessed it, hyperinflation.
Heard that before?
I have, in 1980.
And neither of them happened, just like what's going to happen this time around.

[ENP]

What hyperinflation?

The reason gold crashed in 1980 was because punters were concerned about the US dollar becoming worthless, and, you guessed it, hyperinflation.
Heard that before?
I have, in 1980.
And neither of them happened, just like what's going to happen this time around.

Skol, you seem very very informed on the situation. Any books, websites, etc you can give me to read up on?

Thanks.

[Skol]

Tomorrows Gold, by Marc Faber has a very entertaining chapter on 'New Eras, Manias and Bubbles'.

Manias, Panics and Crashes, by Charles P. Kindleberger is also excellent, some of it's hard going, but it goes into bubbles and crashes in great detail.

They're a lot more common than you think, recently the oil bubble, real estate to name two. One thing common to every bubble, easy credit.

I do have another book which was first published in 1841, an historical account of bubbles and manias from early times, like the Crusades, the Alchemists, Witchhunting, Tulipmania, Magnetisers, etc.
An apt name, 'Extraordinary Popular Delusions and the Madness of Crowds', by Charles McKay.

Happy reading ENP, you'll learn a lot.

Wanna laugh?

I used to spend a lot of time in Hawaii in the 80's. The whole of the island chain was pretty much brought out by the Japanese, all with easy credit. It was a joke that what they didn't achieve in the Pearl Harbour attack they achieved by going to their bank.
Several 747's would arrive in Honolulu every morning with big spending tourists from various Japanese cities. They were also big spenders on the mainland. I couldn't believe it, but at the time everyone adored how efficient and expansionist the Japanese economy was and did their best to emulate them.
In 1988 the 1 sq. km of the iImperial Palace in Tokyo was reckoned to be worth more than the entire state of california.
The Mitsui Real Estate Company paid $625 million for the Exxon building in New York even thought the asking price was $310 million, because they wanted to be in the Guiness Book of Records.
The Japanese economy has never recovered since the 1990 meltdown, 20 years ago.

[Skol]

Skol, you seem very very informed on the situation. Any books, websites, etc you can give me to read up on?

Thanks.

Once you've trained your mind to spot a mania or herd behaviour actually its very easy.

Here are just a few off the top of my head I've observed in my lifetime.

It's great fun, see if you can come up with some more, there's always crowd psychology going on somewhere.

The 2008 oil implosion (which a few on this forum thought would never happen)
The anti-apartheid herd demonstrators.
The Albanian financial pyramids
The 1980 gold and silver crash.
The anti-Omega Queen Street demonstrators
The 1990 tech wreck
Real Estate (twice)
The great 1990 Japanese meltdown
Y2K
80's pyramid schemes
Asian implosion of '97
Blue Chip
Savings and Loan crash in the USA mid 80's

[JBmurc]

Yeah Marc faber is a smart man one of the many I listen too...he's very bearish US dollar,euro,pound--he's also bullish Gold

[ENP]

Once the crash happens in 2010-2012 in commodities (gold) and stocks and potentially real estate, where are the best opportunities at the market lows?

Stocks or commodities (gold, silver, oil)?

[JBmurc]

Once the crash happens in 2010-2012 in commodities (gold) and stocks and potentially real estate, where are the best opportunities at the market lows?

Stocks or commodities (gold, silver, oil)?

Personal I like a bit of both stocks an real commodites

World markets all looking so bullish with the record profits ,thing is unfunded US liabilities or debt to gdp is not talked about ??

[ENP]

What is in your portfolio as at today JB? No major details, just general overview...

Which commodities will you be investing in at the market bottoms? Gold, silver, oil, agriculture?

[Skol]

Yeah Marc faber is a smart man one of the many I listen too...he's very bearish US dollar,euro,pound--he's also bullish Gold

Yes I'm aware of that but he's not perfect and investment analysts often get caught up in the mania themselves.
I'm a contrarian, too JB. Do the opposite of what the 'experts' say.

[JBmurc]

What is in your portfolio as at today JB? No major details, just general overview...

Which commodities will you be investing in at the market bottoms? Gold, silver, oil, agriculture?

Well currently my share portfilo is made up of--

CFE-Iron ore,base metals,gold--90% cap in cash & cash equ
NAV&NAVO-Gold soon to be producing, rare earth metals
CVX-Gold exploration,CFE major holder
PEN-U308
STX-Nat gas,oil,CSG producer
ROC-Oil gas producer

Also holding 50kilos of silver bullion

An hopefully by Nov 55% equity in a new Queenstown home(hoping to pay of within yrs

[ENP]

You aren't going to sell before the crash?

[JBmurc]

You aren't going to sell before the crash?

Well for one no one knows when the crash is going be IMHO I believe we'll see the correction of some size later this year round OCT
I have been taking profits out of the market an investing in into Silver bullion & into are house to be built by NOV
As the months go by I'll looking at taking more profits with the goal of being 20%-30% in cash in the AUD call account by AUG (with smaller holdings in my resource shares)
Of course this could well change ...I may we invest some funds into some high yield Infrastructure stocks like TSI keeping Diverse is the plan

--Silver bullion-- Inflation investment an longer term depletion investment(land based Silver resources will be all but extinct in 20yrs)
--Property--Inflation hedge ,base to run businesses from,rent out etc(As it's in the Queenstown valley cheap land here will also become very extinct)
--Shares---riskier high growth investment with safety of company structure

[Skol]

--Silver bullion-- (land based Silver resources will be all but extinct in 20yrs)

Crowd psychology at work.
All the silver will be gone. LOL Wanna bet?

That's like that idiot Simon Boxer from Greenpeace who said we shouldn't build nuclear power stations because all the uranium will be gone.

Hey ENP,
I can remember back in '73 the whizz kids, scientists, analysts and experts told us all the oil on earth would be gone by 2004. Isn't it hilarious?

[JBmurc]

Crowd psychology at work.
All the silver will be gone. LOL Wanna bet?

That's like that idiot Simon Boxer from Greenpeace who said we shouldn't build nuclear power stations because all the uranium will be gone.

Hey ENP,
I can remember back in '73 the whizz kids, scientists, analysts and experts told us all the oil on earth would be gone by 2004. You gotta laugh!

Land based SKOL how about you fronting up where your moneys invested AWE,VBA? what else

[Skol]

Land based SKOL how about you fronting up where your moneys invested AWE,VBA? what else

Land based or anything else, if you believe that JB you'll believe anything!

Bought TOL after it crashed a few weeks back, sold VBA, have AWB, TLS, CSR, and ALS after if folded the other day. MGR and SGP.

And PDN.

I have funds in the BT Natural Resources fund and have done for about 14 years. Good enough return for me.

[ENP]

Silver at the moment... http://repairstemcell.files.wordpress.com/2009/02/bubbles.jpg

And the people buying silver right now... http://www.freefoto.com/images/01/16/01_16_5---Sheep_web.jpg

I'm fully in cash now. Good thing my job is sloooow right now, gives me all day to research investing.

[JBmurc]

Silver at the moment... http://repairstemcell.files.wordpress.com/2009/02/bubbles.jpg

And the people buying silver right now... http://www.freefoto.com/images/01/16/01_16_5---Sheep_web.jpg

I'm fully in cash now. Buying in stocks (RYM) at this point in the market was a silly decision, don't know why I got talked into it. Good thing my job is sloooow right now, gives me all day to research investing.

-- very funny SKOL would like--personal I let the future decide who the sheep are......

--Goerge Soros economic warnings

http://www.smh.com.au/business/george-soros-issues-stark-economic-warning-20100415-seyy.html

[ENP]

-- very funny SKOL would like--personal I let the future decide who the sheep are......

--Goerge Soros economic warnings

http://www.smh.com.au/business/george-soros-issues-stark-economic-warning-20100415-seyy.html

Did you see the 2nd comment below that article.

[JBmurc]

Did you see the 2nd comment below that article.

Yep it could get very ugly

[ENP]

Then why are you holding and not selling? I'm a bit confused.

[Skol]

Bad news I'm afraid JB.


Record gold prices ‘unsustainable’
By Jack Farchy

Published: April 14 2010 14:08 | Last updated: April 14 2010 18:07

The current price of gold is unsustainable in the long term and prices will have to fall to stimulate demand in the jewellery sector, the precious metals consultancy GFMS has said.

But the group, which compiles industry benchmark supply and demand statistics, also predicted that gold prices would move higher in the short to medium term, and said it was “very likely” that gold would exceed $1,300 a troy ounce within the next 6-12 months.

Demand from investors for the yellow metal soared last year, overtaking jewellery demand for the first time since 1980, GFMS said on Wednesday in its annual report on the gold market.

Philip Klapwijk, executive chairman of GFMS, said a “hefty drop in prices” would be needed to boost jewellery and bring the market into equilibrium.

Investor inflows would need to be maintained near current record levels to take up the slack from lower jewellery demand, he said. But while continuing jitters over the strength of the global recovery may sustain investor demand in the near term, Mr Klapwijk believes it is unlikely to be maintained in an environment of rising interest rates.

“It is difficult to argue that prices could be sustainable” in the long term, he said. “This is a market that has moved out of kilter with its underlying fundamentals.”

Investment in gold more than doubled in 2009 to $58bn, with exchange-traded funds drawing high levels of interest.

Mr Klapwijk said any return of concerns about the global recovery – especially the state of US government finances – would trigger renewed investor interest in gold and may push it to new highs.

But in the longer term, he said, investment demand would not be able to offset subdued demand for jewellery.

Jewellery demand is sensitive to price, particularly in the key market of India, the world’s largest gold importer. A record high average gold price of $972 in 2009, combined with financial pressure on consumers, sent jewellery production 19.8 per cent lower to a 21-year low, according to GFMS data, the industry benchmark.

Mr Klapwijk said there had been some improvement in demand for jewellery in early 2010, particularly in India and China, but he said this was unlikely to be sustained at current prices. He attributed the improvement to seasonal factors such as the Chinese new year, as well as consumers bringing forward gold purchases in expectation of even higher prices.

Prices would need to fall below $900 to revive the fortunes of the jewellery market, he said. “At $700 to $800, you’d see really good demand from places like India.”

On the supply side, high prices have increased the rate at which gold is being recycled, with scrap gold reaching 1,674 tonnes in 2009, up 27 per cent from 2008. Mine production, meanwhile, increased by 7 per cent to 2,572 tonnes. Mr Klapwijk predicted production would remain steady in the next few years.
Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from

[drillfix]

Then why are you holding and not selling? I'm a bit confused.

Why?

Why in the short term are you not holding would be more what I would have thought.

When its time to hit the rip chord on the parachute then sure, act accordingly.

ENP, was that you writing comments in the 2nd paragraph? No need for antics on this forum as this is by no means Hot Copper.

[JBmurc]

I happy to hold for the short term

[ENP]

Why?

Why in the short term are you not holding would be more what I would have thought.

When its time to hit the rip chord on the parachute then sure, act accordingly.

ENP, was that you writing comments in the 2nd paragraph? No need for antics on this forum as this is by no means Hot Copper.

No I didn't write on the article. Ahh I see, so your going to hold on and reep the last of the gains?

[drillfix]

No I didn't write on the article. Ahh I see, so your going to hold on and reep the last of the gains?

enp, no worries, you sound though like you did, though please dont take offence.

Going to hold to reep? Isn't that the name of the game?

So you know, I am not in love with any stock, they come and go with no intention on trying to pick lows or highs, quite simple really.

[ENP]

Ok thanks guys I've learnt heaps and heaps from this discussion. Happy Investing!!

[Skol]

Hope you read the article on why the current gold price is unsustainable JB.

I guess those guys just haven't taken into account the coming chaos, anarchy and martial law when everyone finds out Fort Knox is empty.
Could be a bad winter, urban warfare, no power as we light the fire with US$100 notes and gold is $300,000 an ounce. LOL

[drillfix]

Skol, by reading your post I am still uncertain if you are taking a favourable position or view towards gold, or against it.

[Skol]

Skol, by reading your post I am still uncertain if you are taking a favourable position or view towards gold, or against it.

Read my previous posts, I've already had a 'word with the herd'.

[Skol]

Is anyone here familiar with the name Mark Lundeen? This is in relation to gold speculation.
There is a fan of this individual on another website who says "an offer of a million dollars for an ounce of gold will not produce a sale".

They reckon there's one born every day!

[Huang Chung]

Prices would need to fall below $900 to revive the fortunes of the jewellery market, he said. “At $700 to $800, you’d see really good demand from places like India.”



That argument is a bit like the cart pulling the horse, I'm afraid. Gold is subject to many market forces, not just jewellery demand. The gold price need not do anything to suit the jewellery market. Maybe the jewellers suffer for a while as others put a higher value in gold than they and their clients do....

[Dr_Who]

You will find that most Asian countries buy jewellery as an investment, hence their jewelleries are usually 22 ct and above.

[drillfix]

Read my previous posts, I've already had a 'word with the herd'.

Skol, I asked you a cut and dry question and you reply about your post and cant get a simple answer.

Your so called previous post is a cut and paste job of somebody else's thoughts, not yours. Talk about following a heard, sheezus.

How about just forget it.


ps: its not about what gold will or wont do, its about a posters attitude, IMO.

[Skol]

Skol, by reading your post I am still uncertain if you are taking a favourable position or view towards gold, or against it.

I wouldn't own gold or gold stocks for all the tea in China.

Here's a para. from 'Contrarian Investing'.

"In a mania, anyone with the audacity to point out that price are too high, or to predict a terrible crash, is ridiculed. Warnings are cavalierly dismissed."

[Skol]

From a chapter entitled "New Eras, Manias and Bubbles"

"In the late 1970's a large number of books emerged stressing the merits of investing in high P/E growth stocks.
All argued that the US Dollar would become worthless (the US Dollar index bottomed out in late 1979 and almost doubled by 1985) and that hyperinflation, which would push precious metal prices into the sky, was around corner (gold and silver prices topped out in 1980). Investment conferences and newsletters focussed principally on gold, silver and oil.
It was a time when the 'gold bugs' enjoyed huge popularity and and drew massive crowds to their seminars all over the world."

Yep, deja vu all over again.

[JBmurc]

Skol, I asked you a cut and dry question and you reply about your post and cant get a simple answer.

Your so called previous post is a cut and paste job of somebody else's thoughts, not yours. Talk about following a heard, sheezus.
How about just forget it.
ps: its not about what gold will or wont do, its about a posters attitude, IMO.

LOL yeah it's hard to get a straight answer SKOL rather likes pushing the herd,mania buying point much like he did with oil all the way back to $86
One thing many GOLD haters have to realise is GOLD is yet another world currency but one without debts outstanding unlike say are NZ dollar which is connected to are economy an are 131% foreign debt to GDP
I can't think of any counties with a Fiat currency that wouldn't accept GOLD in exhange for their dollars peso's etc
how many countries would be so keen on taking NZD's
-(US air force pilots aren't given USD but gold bullion rounds in there emergency bailout kits)

[Skol]

And for the Jim Rogers fans here's an excerpt from his book.

"History shows that gold has not always been the best investment. By some estimates, more money has been lost over the past century or so in gold shares than in any other industry, and that includes railroad and airline companies. Those poor investors should have listened to Mark Twain, who once said that a gold miner was a liar standing beside a hole in the ground."

LOL

[JBmurc]

And for the Jim Rogers fans here's an excerpt from his book.

"History shows that gold has not always been the best investment. By some estimates, more money has been lost over the past century or so in gold shares than in any other industry, and that includes railroad and airline companies. Those poor investors should have listened to Mark Twain, who once said that a gold miner was a liar standing beside a hole in the ground."

LOL
Marc Faber: I own my gold and I will never sell it, especially when I see clowns like Ben Bernanke, Larry Summers, Tim Geithner...When I'm looking at all these characters in government, I want to own physical gold.

The question is will there be a crisis of confidence in all paper monies and what will the reaction of investors be? I would imagine that when the crisis really emerges, you'd see people flee from all paper currencies into precious metals," Faber added.

[ENP]

Let me ask you this...

If someone loses their job, is un-employed for 6 months and needs to feed their kids, they have $20,000 worth of physical gold. I think they would sell it to put food on the table. Wouldn't you?

[JBmurc]

Let me ask you this...

If someone loses their job, is un-employed for 6 months and needs to feed their kids, they have $20,000 worth of physical gold. I think they would sell it to put food on the table. Wouldn't you?

well yes?? an best of all they would have even more paper tender to buy food with the longer they had held gold over the last 10yrs Skol

[MrDevine]

I find the GOLD thread always quite interesting. Whoever is right or wrong is irrelevant, GOLD is just another physical commodity, like real estate or art. It has a perceived market value based on many external factors at the time. Unlike a company it doesn't generate any cashflow.

But heres the thing isn't it true that GOLD is valued in whatever currency is going, namely USD? So if hyperinflation kicks in, won't I get a similar return by sticking my money in the bank at super high interest rates?

Those who think GOLD will replace fiat currencies are seriously underestimating the geopolitical environment. The United States will not allow GOLD or any other currency to become a 'world currency'. The US controls the worlds oceans, they can send a carrier group anywhere they like. NOTHING happens without the US saying so. Whoever has the biggest gun and can point it where they like can ultimately tip the balance in their favour.

By all means having some GOLD will be useful in anyones portfolio.

Eric Sprott likes GOLD a lot:

http://www.benzinga.com/trading-ideas/long-ideas/226552/a-look-at-superstar-hedge-fund-manager-eric-sprott-s-portfolio-gld-s

Mr D.

[fwu005]

Let me ask you this...

If someone loses their job, is un-employed for 6 months and needs to feed their kids, they have $20,000 worth of physical gold. I think they would sell it to put food on the table. Wouldn't you?

if food price and gold price are both up, plus you have $20000 cash in hand, you can't buy $20000 of food for one or two years' usage, but you have to do some investment in order to get same amount food after two years .

China have reduced US government bonds in 4th consecutive month. I guess more like they change to gold. The only problem is the gold market is too small. If they buy gold direct form market, the gold price will skyrocket very easily. So they turn into buy gold asset, like gold miners.

I guess that is the really some investors, such JB buy gold shares.

[JBmurc]

The United States will not allow GOLD or any other currency to become a 'world currency'.--
I think your find it really is, just not one the Central banks or Goverments want their populations to see it as anything more that a metal as if the population did it would undermined there paper of tender exhange an the TAX the exhange has with it.


If it wasn't the means of exhange of wealth why would Central banks have it in the vaults an like's of Russia,china,india,Arabs,investors etc be exchanging their paper tenders for it..

I'd much rather take silver or gold bullion than a cheque from a person I did know or trust --Honest money

[MrDevine]

You would find if we had still had a gold backed paper currency, not many of the innovations and 'progress' of the past 50 years (since the Bretton Woods agreement) would have happened. The reason is this, there is only so much gold around, so of course there will be ceiling to how much value can be created.

GOLD is the perfect place to park your money if you're a bear and you look forward to a grim future for the world.

I still think that the sovereign debt issues will be worked out on a geopolitical level, there will be some pain, there will be some defaults, but ultimately investors will play second fiddle to what government leaders decide to do. This may or may not impact the GOLD price.

By the way, I think China is going to cause the world economy a few headaches in the short to medium term.

Remember this is the first truly global downturn, it is in everyones national interest to work together.

[hal]

You would find if we had still had a gold backed paper currency, not many of the innovations and 'progress' of the past 50 years (since the Bretton Woods agreement) would have happened. The reason is this, there is only so much gold around, so of course there will be ceiling to how much value can be created.

GOLD is the perfect place to park your money if you're a bear and you look forward to a grim future for the world.

I still think that the sovereign debt issues will be worked out on a geopolitical level, there will be some pain, there will be some defaults, but ultimately investors will play second fiddle to what government leaders decide to do. This may or may not impact the GOLD price.


By the way, I think China is going to cause the world economy a few headaches in the short to medium term.

Remember this is the first truly global downturn, it is in everyones national interest to work together.


I don't think it is a matter of looking forward to a grim future for the world. It is a matter of being a little prepared in case the current crisis goes the way it seems to be heading.

I saw a video of Zimbabwe the other day and the people selling grains and bread would accept gold but the currency was hyper inflated and most people who didn't have gold were really struggling. It was only a video but it showed that as the currency was being destroyed by hyperiinflation Gold was actually worth something.

good luck

[JBmurc]

I don't think it is a matter of looking forward to a grim future for the world. It is a matter of being a little prepared in case the current crisis goes the way it seems to be heading.

I saw a video of Zimbabwe the other day and the people selling grains and bread would accept gold but the currency was hyper inflated and most people who didn't have gold were really struggling. It was only a video but it showed that as the currency was being destroyed by hyperiinflation Gold was actually worth something.

good luck

yeah I seen a similar video clip if you didn't own real assets you would stave as the paper tender exchange failed for the people ,Now I don't think thats going to happen here any time soon but I do believe you have to keep you savings well diverse GOLD SILVER bullion etc have an will aways be a great form of wealth protection for any human.

getting back to Mr D point on Gold halting world development yes you wouldn't have be able to go out an create masses of easy credit for wars etc unless the gold price was allowed to float against the debt created so if more credit was made than gold was mined an held by the central banks the gold price would increase to meant the outstanding increased debt ratio.
Nation's that spent more than they saved(ie increased their gold,silver,Plat etc holdings)would have Gold priced very high in their paper tender currencies which would in turn make their exports worth less to wealthy Nations that did have good savings ---Honest money for honest humans--
So putting this into some context at present --the likes of the US ,UK would have a very high gold price because they have taking on too much credit to gold held
the like of the swiss or chinese say would have a much lower gold price as they have much more savings than credit
this would mean the like of UK,US etc would command a much lower world currency rate in turn increasing their export values in their currency..
Basically If you Nation spent more that it earned via exports =Inflation If the nation grew within it's savings=no major Inflation

Now this is all my own thoughs an I'm sure many will pick holes in the idea ---But I really can't see how the USA having the world currency is good for the rest of the world esp. as they have proved they just keep creating new currency for free to pay the rest of the world

[Skol]

I saw a video of Zimbabwe the other day and the people selling grains and bread would accept gold but the currency was hyper inflated and most people who didn't have gold were really struggling. It was only a video but it showed that as the currency was being destroyed by hyperiinflation Gold was actually worth something.

You can't possibly compare Zimbabwe with almost any othe country in the world. Theft, corruption, violence, genocide and political chicanery has turned this paradise, the former bread basket of Africa into a basket case.

[JBmurc]

You can't possibly compare Zimbabwe with almost any othe country in the world. Theft, corruption, violence, genocide and political chicanery has turned this paradise, the former bread basket of Africa into a basket case.

Germany in the 20's

[JBmurc]

I don't think it is a matter of looking forward to a grim future for the world. It is a matter of being a little prepared in case the current crisis goes the way it seems to be heading.

I saw a video of Zimbabwe the other day and the people selling grains and bread would accept gold but the currency was hyper inflated and most people who didn't have gold were really struggling. It was only a video but it showed that as the currency was being destroyed by hyperiinflation Gold was actually worth something.

good luck

yeah I seen a similar video clip if you didn't own real assets you would stave as the paper tender exchange failed for the people ,Now I don't think thats going to happen here any time soon but I do believe you have to keep you savings well diverse GOLD SILVER bullion etc have an will aways be a great form of wealth protection for any human.

getting back to Mr D point on Gold halting world development yes you wouldn't have be able to go out an create masses of easy credit for wars etc unless the gold price was allowed to float against the debt created so if more credit was made than gold was mined an held by the central banks the gold price would increase to meant the outstanding increased debt ratio.
Nation's that spent more than they saved(ie increased their gold,silver,Plat etc holdings)would have Gold priced very high in their paper tender currencies which would in turn make their exports worth less to wealthy Nations that did have good savings ---Honest money for honest humans--
So putting this into some context at present --the likes of the US ,UK would have a very high gold price because they have taking on too much credit to gold held
the like of the swiss or chinese say would have a much lower gold price as they have much more savings than credit
this would mean the like of UK,US etc would command a much lower world currency rate in turn increasing their export values in their currency..
Basically If you Nation spent more that it earned via exports =Inflation If the nation grew within it's savings=no major Inflation

Now this is all my own thoughs an I'm sure many will pick holes in the idea ---But I really can't see how the USA having the world currency is good for the rest of the world esp. as they have proved they just keep creating new currency for free to pay the rest of the world

[JBmurc]

Well as theres only so many hrs in the day I can only stand to study I keep to what I have invested interest in or what I have in the past had interest with the odd company I do like but don't know really well If I had 100k to invest today I'd be looking at investing into- NAV & NAVO ,CVX,PEN,CFE,STX at or near there day low
-Study is your best friend if you want to make money IMHO

[Skol]

Germany in the 20's

Hyperinflation is caused when the population lose faith in their currency, do you see that, except maybe in Zimbabwe?
You've been reading too much conspiracy theory which reminds of the proliferation of goldbug websites on the internet.
Many of these will be fraudulent, and unmasked when gold falls. Let's see how many of the ETF's, trust deeds, promissory notes, unallocated accounts, gold certificates, gold-linked bonds etc. stand up to scrutiny.

I can see it now, the usual collection of widows, suckers, senior citizens, and naive investors pleading with the government to intervene, their road to riches turned into the highway to hell.

When things get out of hand there's plenty of fraud and corruption. Here's one that came to light following the great 1990 Japanese stock market and real estate crash.

"Once real estate prices began to decline some of the hanky panky in the loan approval process became known. A woman who owned a small restaurant in Osaka had borrowed the yen equivalent of several billion dollars from the local branch of Sumitomo Bank; she had a 'friendly relationship' with the local banker.
Some of the real estate appraisers for the banks had been bribed-or perhaps frightened-by the yakuza, who had figured out that the low-risk way to rob banks was to secure loans on highly inflated appraisal values of the real estate that was being pledged as collateral. The senior officers of several of the large regional banks made loans to real estate developers so that they could buy the land that was owned by the bank officials.
Several senior officials of the august Ministry of Finance were entertained at a 'pantyless shabu-shabu restaurant' that had a mirrored floor; the suspicion was that these officials provided advance information to their hostsabout impending changes in financial regulations"

[drillfix]

Skol, how about just telling us "briefly", what stocks do you like, both fundamentally and technically?

Seems pretty hard to have a conversation with you mate, especially when you continually come across like you dont have your own opinion, but rather "always have somebody else's opinion".

Here is mine, gold prices are high, buy a stock that has bottom and is moving upwards both Technically and Fundamentally.

When it reaches a certain target, I sell it or a portion of it. DONE, simple.

Non of the emotional cr@p about what others say, so or rant about. So for now that is my opinion, its simple.

No hard feelings hey mate :)

[Skol]

I put here yesterday what I have, didn't you read it?
Bought ALS & TOL when they folded a while back. Bought TLS, good TA and 9.3% div. Good contrarian stock, will go up or hold its value when market heads south.
Got MGR & SGP. PDN too, only mining stock.
Have sufficient exposure to resources through BT Natural Resources fund. Best performing of any Ozy fund for years and reinvest dividends, been in it for 15 years.
Sold VBA, will buy it back later. Bought and sold PPX recently. Bought and sold ALL recently. Own CSR and AWB. Like agriculture, will do well bought and sold AAC and will buy back.
Have taken money off the table because the markets due for a breather.
I'm a contrarian always looking for bad news, so many people say sell the US dollar might be time to put a bit more there.
And AWE, but looks like a duster, too bad.

[drillfix]

I put here yesterday what I have, didn't you read it?
Bought ALS & TOL when they folded a while back. Bought TLS, good TA and 9.3% div. Good contrarian stock, will go up or hold its value when market heads south.
Got MGR & SGP. PDN too, only mining stock.
Have sufficient exposure to resources through BT Natural Resources fund. Best performing of any Ozy fund for years and reinvest dividends, been in it for 15 years.
Sold VBA, will buy it back later. Bought and sold PPX recently. Bought and sold ALL recently. Own CSR and AWB. Like agriculture, will do well bought and sold AAC and will buy back.
Have taken money off the table because the markets due for a breather.
I'm a contrarian always looking for bad news, so many people say sell the US dollar might be time to put a bit more there.
And AWE, but looks like a duster, too bad.

Skol, Excellent, now thats what I call a good post, so I here ya, so thanks for your efforts.

ps: no I didn't read too many previous posts of yours.

[JBmurc]

Bought and sold ALL recently so you have only AWE? now skol

[Skol]

Bought and sold ALL recently so you have only AWE? now skol

Don't you read either, 198, 2 posts above. Have TLS, TOL, ALS, CSR, AWB, MGR, SGP, PDN.

No gold.

Here's a quote especially for you JB.

"History repeats itself all the time in Wall Street."

Edwin Lefevre,
Reminiscences of a Stock Operator.

[JBmurc]

Don't you read either, 198, 2 posts above. Have TLS, TOL, ALS, CSR, AWB, MGR, SGP, PDN.

No gold.

Here's a quote especially for you JB.

"History repeats itself all the time in Wall Street."

Edwin Lefevre,
Reminiscences of a Stock Operator.

"Have taken money off the table because the markets due for a breather"
"Bought and sold ALL recently"

Your are hard man to understand but I guess as long as your making a dollar

[drillfix]

Edwin Lefevre,
Reminiscences of a Stock Operator.

Dont you mean,

Jesse Livermore - Reminiscences Of A Stock Operator

[axion]

Well officially it is Lefevre. But IIRC after the publication Livermore said that he wrote it and Lefevre edited it, which makes sense since given the way it is written, it would be far easier for the actual person to write it like that than some third party.

[Skol]

"Have taken money off the table because the markets due for a breather"
"Bought and sold ALL recently"

Your are hard man to understand but I guess as long as your making a dollar

ALL - Aristocrat Leisure.

[Huang Chung]

Gold stocks will probably be hit for 6 next week, with the fallout from the Goldman Sachs charges. Sounds all a bit tenuous, with Paulson being a big holder of golds ETFs and shares such as Anglo Gold. A few more Silver Lake (SLR) or Papillon (PIR) could be on my shopping list come Monday, if they take a hit.

[JBmurc]

ALL - Aristocrat Leisure.

Right makes sense will setup a watchlist see how your picks go over the next 6months------

Gold down dollar up

"Jim Sinclair's Commentary

If you think that Goldman's problems are not shared by the entire derivative market, you are bonkers.

If you see the Goldman situation as negative to gold you are a total fool.

If you see the Goldman situation as being bullish to the dollar, you are hopeless."

At http://jsmineset.com

looking forward to seeing this movie
-http://www.youtube.com/watch?v=dmwGgcCdNkU

[Skol]

Right makes sense will setup a watchlist see how your picks go over the next 6months------

Gold down dollar up

"Jim Sinclair's Commentary

If you think that Goldman's problems are not shared by the entire derivative market, you are bonkers.

If you see the Goldman situation as negative to gold you are a total fool.

If you see the Goldman situation as being bullish to the dollar, you are hopeless."

At http://jsmineset.com

looking forward to seeing this movie
-http://www.youtube.com/watch?v=dmwGgcCdNkU
Looks to me like it's the opposite, the USD has strenghtened considerably against the Euro in the last 36 hours.

[Skol]

Won't be long before you'll be using that 50kgs of silver of yours as an anchor JB.
On Monday NAV = Nil Asset Value and NAVO = Net Asset Value Zero. LOL

Note the bit that says "out of riskier assets like gold and into safer assets like the USD".

Has the bell rung?



Goldman Sachs Sinks Gold Prices



By Alix Steel 04/16/10 - 03:06 PM EDT
.
Add CommentStock quotes in this article: ABX , NEM , KGC , GG , AUY , FCX , GLD NEW YORK (TheStreet) -- Gold prices Friday were dropping steeply as investors traded out of riskier assets like gold and into the U.S. dollar.
Gold Prices Nose Dive


Barrick Gold Corporation| ABX DOWNKinross Gold Corporation| KGC DOWNSPDR Gold| GLD DOWNGold for June delivery was slipping $22.10 to $1,138.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Friday has traded as high as $1,161.20 and $1,130 after settling just above $1,160 on Thursday. The U.S. dollar index was adding 0.44% to $80.79 as the euro fell 0.67% against the dollar. The spot gold price Friday was falling over $20, according to Kitco's gold index.

The news that the SEC charged Goldman Sachs with fraud was killing gold prices as investors rotated out of riskier commodities and into safer assets like the U.S. dollar. The gold price had been finding support around $1,150 an ounce after better-than-expected earnings from big U.S. companies. But gold couldn't hold that level and is now retesting the $1,135 area as momentum buying erodes.

[Huang Chung]

A bit of argy bargy on CNBC regarding the Goldman situation:

http://www.mediaite.com/tv/cnbc-guest-calls-jim-cramer-public-relations-officer-for-goldman-sachs/

[ENP]

If you were to hold gold. Would you physically own it or own it through and ETF?

[Skol]

If you were to hold gold. Would you physically own it or own it through and ETF?

Neither, owning physical gold is very risky and owning ETF's is extremely risky.

I'll bet there's some very scared punters out there at the moment.

I wonder how many of them will have their finger hovering over the sell button at the open on Monday?

Or maybe the "buy US Dollar" button.

If you check other websites it's someone elses fault. "The usual mob" hammering gold. "Happened on a Friday". "Audit Fort Knox". LOL

Conspiracy theorists heaven.

[Skol]

"A false bull market in gold."


As of the end of 2009, Paulson & Co. was the largest institutional holder of the SPDR Gold Trust (GLD)--the world's largest physically backed gold exchange-traded fund--with 31.5 million shares valued at $3.38 billion.

Revelations of the hedge fund's involvement in the dispute between Goldman Sachs and the SEC raise questions about a factor that's helped drive gold to record-high prices above $1,200 an ounce--Paulson's high-profile bets.

"The bull market might be a false bull market in gold," said Keith Springer, president of Capital Financial Advisory Services in Sacramento, Calif.



Fraud? manipulation? In the gold market? I don't believe it, I'm scandalized, it's outrageous I say!

Any guesses what the POG will be 7 days hence?

My guess $850

[JBmurc]

[QUOTE=Skol;301275]Won't be long before you'll be using that 50kgs of silver of yours as an anchor JB.
On Monday NAV = Nil Asset Value and NAVO = Net Asset Value Zero. LOL

Note the bit that says "out of riskier assets like gold and into safer assets like the USD".

-You don't really have a clue or any understanding of real assets do ya SKOL--silver doesn't grow in the ground, it isn't man made, it's not even easy to find
It's rare and that's why like GOLD,PLAT it's classed as a precious metal...
Yet you can buy it for $30-$34oz

Has the bell rung? For the USD not yet back it will soon

Yeah yeah don't get your hopes up SKOL --NAV sell their gold in AUD--If you precious USD increase in value the AUD gold price will rise

As for 850 gold LOL

[ENP]

I don't think the USD will be "safer"

From all the info I've been reading lately, in a depression the safest currencies/banks are in Switzerland, Singapore, NZ and Australia.

[JBmurc]

I don't think the USD will be "safer"

From all the info I've been reading lately, in a depression the safest currencies/banks are in Switzerland, Singapore, NZ and Australia.

I agree with all but us--- Swiss the best highest gold to outstanding currency ratio

[Skol]

It doesn't matter what small punters do, it's what the institutions do and my gut feeling is they will unload anything to do with gold.
Doesn't matter if you lose your own money but it matters a lot if it's someone elses.

[Huang Chung]

It doesn't matter what small punters do, it's what the institutions do and my gut feeling is they will unload anything to do with gold.
Doesn't matter if you lose your own money but it matters a lot if it's someone elses.

That will be your chance to pick up a quality gold stock on the cheap Skol...make sure you don't miss it!

[Huang Chung]

An Overdue Technical Correction
Typically, when market confidence is shaken by events such as the SEC Goldman suit, it should spell bullish for gold -- an independent store of value. However, even before the Goldman news, gold, which rallied to a four-month high of $1,170.70 on April 12, was poised for a technical correction. So, the Goldman news most likely just triggered an exit opportunity for short-term traders to lock in profits from recent gains.

http://www.benzinga.com/229057/gold-euro-china-and-goldman-sachs

[Skol]

I will not be averaging down on this one HC.

If history's anything to go by gold will descend to its CPI adjusted level.

[JBmurc]

I will not be averaging down on this one HC.

If history's anything to go by gold will descend to its CPI adjusted level.

Wow isn't gold just crashing It's only a matter of time to the mass of world investor pick-up on the single best safest investment GOLD for the rich SILVER for the common man
while it's still easy available in any size--As David Morgan recently said in a interview anyone of the many large institutions that what to take a real physical position in SILVER of even 20% of their funds available would drive the price so far north as they would be buying 70%-80% of available Above ground stockpiles which took many years of hard high cost to sales mining to produce..
Anyone that thinks holding paper USD long term hasn't a clue

[Skol]

Early days yet JB but you can't have missed the fact that the USD has strengthened half a cent today.

[JBmurc]

Till the next day the USD is in huge trouble it's not if but when it falls to new all time lows an in time to 0
fact-there's only 2 pure silver miners in the world that make any profit (from many doz producers) -so basically you can buy it for round cost how can it fall below cost?
Never in the history of modern man has Gold or silver fell to nil value -many Fiat currency's have become worthless in the history

The Song Dynasty in China was the first to issue true paper money, Jiaozi, around the 10th century C.E. Although the notes were valued at a certain exchange rate for gold, silver, or silk, conversion was never allowed in practice. The notes were initially to be redeemed after three year's service, to be replaced by new notes for a 3% service charge, but, as more of them were printed without notes being retired, inflation became evident. The government made several attempts to support the paper by demanding taxes partly in currency and making other laws, but the damage had been done, and the notes fell out of favour

[JBmurc]

Fiat Money -More Recent Times

In recent times, fiat failures have become more common occurrences. For the sake of time, I won’t go into extensive details of all these examples of paper money failures, because there are SO many. But here you have it:

In 1932, Argentina had the eighth largest economy in the world before its currency collapsed. In 1992, Finland, Italy, and Norway had currency shocks that spread through Europe.

In 1994, Mexico went through the infamous “Tequila Hangover,” which sent the peso tumbling and spread economic hardships throughout Latin America.

In 1997, the Thai baht fell through the floor and the effects spread to Malaysia, the Philippines, Indonesia, Hong Kong, and South Korea.

The Russian ruble was not the currency you wanted your investments denominated in in 1998, after its devaluation brought on economic recession. In the early 21st century, we have seen the Turkish lira experience strokes of hyperinflation similar to that of the mark of Weimar Germany.

In present times, we have Zimbabwe, which was once considered the breadbasket of Africa and was one of the wealthiest countries on the continent. Now Mugabe’s attempts at price controls, combined with hyperinflation, have the nation unable to supply the most basic essentials such as bread and clean water

[Skol]

Nice history lesson JB but in 1994 and 1997 when these crises took place the gold price was between $300 and $400 and actually descended between those dates.
I expect the POG to revert to the mean and stay there until the next generation decide there's going to be hyperinflation and a USD crisis.

[drillfix]

Today when I got up, the first thing I saw on TV while I was half a sleep was an Ad about some people setting up little stalls in supermarkets asking people to sell them their gold. (physical gold).

You know, ear rings, rings, chains, whatever.

Not exactly sure what they were called, something like We Buy Your Gold or there abouts.

Now what does this tell me, selling gold is one thing ie: retailers, markets etc etc, but when people setup companies just to get the public to sell their physical gold then to me that obviously means the price will rebound and go "Higher" IMO.

[Skol]

Today when I got up, the first thing I saw on TV while I was half a sleep was an Ad about some people setting up little stalls in supermarkets asking people to sell them their gold. (physical gold).

You know, ear rings, rings, chains, whatever.

Not exactly sure what they were called, something like We Buy Your Gold or there abouts.

Now what does this tell me, selling gold is one thing ie: retailers, markets etc etc, but when people setup companies just to get the public to sell their physical gold then to me that obviously means the price will rebound and go "Higher" IMO.

It tells me that a bunch of scumbags are setting up stalls, more particularly in low income areas hoping to buy their gold jewellery cheap.

[JBmurc]

1 ton of recycled cellphones = 3.5kg .999 silver for ever 3 ton 200 grams of gold
how many cellphones have you had I've had over 7 (lost a few)

The yanks throw out over 3 million tons of electronic goods per year-very little is recycled

I expect the POG to revert to the mean and stay there until the next generation decide there's going to be hyperinflation and a USD crisis.

-The next generation will look back on these times as the reason why Fiat money system failed yet again an on how stupid investors had been not to have loaded up on the most precious of metals while they traded at near cost to replace with new mines of production-just like this generation looks back on the cost of fuel esp in the US when they paid what 10c litre etc

[Skol]

From the HSBC gold analyst:

"Further bullion liquidation likely as risk sentiment may drop more in the wake of the Goldman news. In the near term, we expect the developments surrounding Goldman to overshadow all other issues that previously dominated gold trading. Near-term market sentiment looks bearish, and further losses are likely, in our opinion."

[JBmurc]

From the HSBC gold analyst:

"Further bullion liquidation likely as risk sentiment may drop more in the wake of the Goldman news. In the near term, we expect the developments surrounding Goldman to overshadow all other issues that previously dominated gold trading. Near-term market sentiment looks bearish, and further losses are likely, in our opinion."

Well if there's actually any real gold going come up for sale from the Fiasco watch the Large USD debt holders come out keen to take up any cheap sales going ,even though the Goldmans beat up looks more of a chest beating by the Obama admin to show that even though his adim- is full of ex-Goldman staff an the fact his run for president was well funded by the Goldmans,JP Morgan etc he is out to inforce all this bad wall streeters LOL nothing much will come of this it would have been well planned in advance...

---the investigators will come up with what their told to come up with...

[JBmurc]

GOLDMAN SACHS, the world’s biggest investment bank that is now assailed by accusations of fraud, is poised to reignite controversy over bankers’ bonuses by paying its staff more than £3.5 billion for just three months’ work.

The bumper payouts will equate to about £110,000 a head for the firm’s 32,500 employees worldwide, with a handful of top traders expected to be in line for multi-million-pound bonuses.

Close to £600m is expected to be paid to the group’s 5,500 London-based staff for the first three months of this year. This is on a par with their remuneration in 2007, the last year of the boom.

The revelation of the enormous pay deals comes as Goldman prepares for a legal battle with the US government. The group was sued on Friday by the Securities and Exchange Commission, the Wall Street regulator, over claims it defrauded investors of $1 billion. Goldman denies the charges.

Related Links
FSA probe into Goldman ‘fraud’
Is this God’s dirty work?
Fabrice Tourre, 31, a vice-president at the bank who works in its London office, is also being sued for allegedly helping to create a mortgage-backed product doomed to fail because it was deliberately filled with risky loans to poor people.

Royal Bank of Scotland, which is 84% owned by the UK taxpayer, appears to have been one of the biggest losers from the alleged fraud. The bank is this weekend considering legal action against Goldman.

The charges relate to a mortgage bond issued by the bank. The American regulators claim Goldman designed the bond so it would drop in value.

Goldman Sachs last year paid £10 billion in bonuses

[JBmurc]

worth a read so many scandals in government, banking and financial institutions

http://adask.wordpress.com/2010/04/12/taking-delivery/

[Skol]

I've pulled up a chart of Gold ETF and it's been in a downtrend since November.

[JBmurc]

really not like the GOLD price then which is looking very bullish currently up 1137 will be hitting a new high before the years out

[STRAT]

I've pulled up a chart of Gold ETF and it's been in a downtrend since November.Hi Skol,
One could argue that down trend ended at the end of March and Gold has been in an uptrend since early Feb.

Short term I dunno. The recent double top looks ominous though Mondays ( yesterday ) candle looks positive for a possible turn up.

Whats the price right now?

[JBmurc]

I've pulled up a chart of Gold ETF and it's been in a downtrend since November.

Yeah isn't GOLD just falling so hard LOL Skol

[fwu005]

Yeah isn't GOLD just falling so hard LOL Skol

The Gold is $1143.10 up +$7.30 at this moment

[Skol]

Here's something from Noriel Roubini who has foreseen several economic crises in the past. Note the comment about 'herd behaviour'.
Better get your guns, canned food and head for the log cabin. LOL

This is from the end of 2009, so the bubble is now bigger.


The Gold Bubble and the Gold Bugs
Nouriel Roubini

NEW YORK – Gold prices have been rising sharply, breaching the $1,000 barrier and in recent weeks rising towards $1,200 an ounce and above. Today’s “gold bugs” argue that the price could top $2,000. But the recent price surge looks suspiciously like a bubble, with the increase only partly justified by economic fundamentals.

Gold prices rise sharply only in two situations: when inflation is high and rising, gold becomes a hedge against inflation; and when there is a risk of a near depression and investors fear for the security of their bank deposits, gold becomes a safe haven.

The last two years fit this pattern. Gold prices started to rise sharply in the first half of 2008, when emerging markets were overheating, commodity prices were rising, and there was concern about rising inflation in high-growth emerging markets. Even that rise was partly a bubble, which collapsed in the second half of 2008, when – after oil reached $145, killing global growth –the world economy fell into recession. As concerns about deflation replaced fear of inflation, gold prices started to fall with the correction in commodity prices.

The second price spike occurred when Lehman Brothers collapsed, leaving investors scared about the safety of their financial assets – including bank deposits. That scare was contained when the G-7 committed to increase guarantees of bank deposits and to backstop the financial system. With panic subsiding towards the end of 2008, gold prices resumed their downward movement. By that time, with the global economy spinning into near-depression, commercial and industrial gold use, and even luxury demand, took a further dive.

Gold rose above $1,000 again in February-March 2009, when it looked like most of the financial system in the United States and Europe might be near insolvency, and that many governments could not guarantee deposits and backstop the financial system, because banks that were too big to fail were also too big to be saved.

That panic subsided – and gold prices started to drift down again – after US banks were subjected to “stress tests,” America’s Troubled Asset Relief Program further backstopped the financial system by removing bad assets from banks’ balance sheets, and the global economy gradually bottomed out.

So, with no near-term risk of inflation or depression, why have gold prices started to rise sharply again in the last few months?

There are several reasons why gold prices are rising, but they suggest a gradual rise with significant risks of a downward correction, rather than a rapid rise towards $2,000, as today’s gold bugs claim.

First, while we are still in a world of global deflation, large, monetized fiscal deficits are fueling concerns over medium-term inflation. Second, a massive wave of liquidity, via easy monetary policy, is chasing assets, including commodities, which may eventually stoke inflation further. Third, dollar-funded carry trades are pushing the US dollar sharply down, and there is an inverse relation between the value of the dollar and the dollar price of commodities: the lower the dollar, the higher the dollar price of oil, energy, and other commodities – including gold.

Fourth, the global supply of gold – both existing and newly produced – is limited, and demand is rising faster than it can be met. Some of this demand is coming from central banks, such as those of India, China, and South Korea. And some of it is coming from private investors, who are using gold as a hedge against what remain low-probability “tail” risks (high inflation and another near-depression caused by a double-dip recession). Indeed, investors increasingly want to hedge against such risks early on. Given the inelastic supply of gold, even a small shift in the portfolios of central banks and private investors towards gold increases its price significantly.

Finally, sovereign risk is rising – consider the troubles faced by investors in Dubai, Greece, and other emerging markets and advanced economies. This has revived concerns that governments may be unable to backstop a too-big-to-save financial system.

But, since gold has no intrinsic value, there are significant risks of a downward correction. Eventually, central banks will need to exit quantitative easing and zero-interest rates, putting downward pressure on risky assets, including commodities. Or the global recovery may turn out to be fragile and anemic, leading to a rise in bearish sentiment on commodities – and in bullishness about the US dollar.

Another downside risk is that the dollar-funded carry trade may unravel, crashing the global asset bubble that it, together with the wave of monetary liquidity, has caused. And, since the carry trade and the wave of liquidity are causing a global asset bubble, some of gold’s recent rise is also bubble-driven, with herding behavior and “momentum trading” by investors pushing gold higher and higher. But all bubbles eventually burst. The bigger the bubble, the greater the collapse.

The recent rise in gold prices is only partially justified by fundamentals. Nor is it clear why investors should stock up on gold if the global economy dips into recession again and concerns about a near depression and rampant deflation rise sharply. If you truly fear a global economic meltdown, you should stock up on guns, canned food, and other commodities that you can actually use in your log cabin.

Copyright: Project Syndicate, 2009.
www.project-syndicate.org
For a podcast of this commentary in English, please use this link: http://media.blubrry.com/ps/media.libsyn.com/media/ps/roubini20.mp3

You might also like to read

[JBmurc]

Well you talk the talk SKOL how about walking the walk an short selling some Gold stocks ,or take some Bear Warrants ,futures etc

[Skol]

Well you talk the talk SKOL how about walking the walk an short selling some Gold stocks ,or take some Bear Warrants ,futures etc

Nope, don't do that stuff, just don't own it. If the POO is anything to go by the smart money will exit first showing a fall in share and ETF prices etc., leaving the suckers owning physical gold and krugerrands.
Who knows what will happen, but the bigger the boom the bigger the bust.

[JBmurc]

Nope, don't do that stuff, just don't own it. If the POO is anything to go by the smart money will exit first showing a fall in share and ETF prices etc., leaving the suckers owning physical gold and krugerrands.
Who knows what will happen, but the bigger the boom the bigger the bust.

Yep fair enough a man without conviction anti gold silver yet won't bet against it yet slag anyone than does buy it or hold shares in it LOL I'll enjoy drinking your wine

[Skol]

The price of gold is going up because _ _ _ the price of gold is going up.
You only have to look at Hot Copper to see the conspiracy mentality, Fort Knox is empty, unseen forces are manipulating the gold price, Geithner knows thing the goldbugs don't and it's his fault the POG isn't through the roof, etc. It's absurd.

[trackers]

the bigger the boom the bigger the bust.

Hi Skol, You're on to it mate with your 'contrarian' point of view that been coming through lately... if its going up you should sell... Only buy when its going down. That's a great policy and I'm sure you'll profit from it immensely

[Skol]

Hi Skol, You're on to it mate with your 'contrarian' point of view that been coming through lately... if its going up you should sell... Only buy when its going down. That's a great policy and I'm sure you'll profit from it immensely
I won't be doing either because when the bell rings it will revert to the mean, it's inflation adjusted price-all the way down.

[ENP]

Why is gold considered an investment? Is it just because it holds its value against inflation?

It pays no dividend or rent so isn't it just gambling?

[JBmurc]

Why is gold considered an investment? Is it just because it holds its value against inflation?

It pays no dividend or rent so isn't it just gambling?

It's ultimate money hard currency accepted worldwide as money for many Centuries has a will aways have value that increases on the increase of papers of tender of exhange which only causes inflation you can go to your local bank an if your a sound investment it will create money for you at interest
-If say you wanted to buy some rare GOLD now that has to be explored for then feasibility studied with masses of money raised to pay all though the many years of painstaking work to hopefully one day produce gold for a profit which alot of times isn't all the much -One of the world's largest Gold miners think it was GOLD FIELDS- MD stated in a forward report of future gold production stated if his company had to go out again looking to replace their 50moz+ resource today he believe it would cost well north of $1000 an even as high as $1500poz in costs to replace in Exploration,Fes study ,etc etc
An thats why we will see more NCM LGL takeovers over the next 5yrs+ t

[trackers]

It's ultimate money hard currency accepted worldwide as money for many Centuries has a will aways have value that increases on the increase of papers of tender of exhange which only causes inflation you can go to your local bank an if your a sound investment it will create money for you at interest
-If say you wanted to buy some rare GOLD now that has to be explored for then feasibility studied with masses of money raised to pay all though the many years of painstaking work to hopefully one day produce gold for a profit which alot of times isn't all the much -One of the world's largest Gold miners think it was GOLD FIELDS- MD stated in a forward report of future gold production stated if his company had to go out again looking to replace their 50moz+ resource today he believe it would cost well north of $1000 an even as high as $1500poz in costs to replace in Exploration,Fes study ,etc etc
An thats why we will see more NCM LGL takeovers over the next 5yrs+ t

Good post JBMurc, gold strength has been increasing this week:

http://www.kitco.com/images/live/gold.gif

[ENP]

Why do all the "die hard" gold investors prefer to buy actual gold and silver as opposed to an ETF. I've compared the spot price of actual gold in $AUS and then the GOLD etf price in $ASD and they are roughly the same. It saves the hassle of holding it, physically buying it with the margins involved, etc.

Why not just pay $30 odd dollars to buy the share and then another $30 odd to sell it almost instantly without the mucking around?

I'm curious to know this question.

[Lego_Man]

Why do all the "die hard" gold investors prefer to buy actual gold and silver as opposed to an ETF. I've compared the spot price of actual gold in $AUS and then the GOLD etf price in $ASD and they are roughly the same. It saves the hassle of holding it, physically buying it with the margins involved, etc.

Why not just pay $30 odd dollars to buy the share and then another $30 odd to sell it almost instantly without the mucking around?

I'm curious to know this question.

Because in an SHTF scenario, your ETF's may be worthless.

But if you've got the metal in your hand, youve got power.

[ENP]

If it's the same price how does it differ?

ETF will be so many $ per kg and the physicaly gold will also be so many $ per kg?

[Lego_Man]

If it's the same price how does it differ?

ETF will be so many $ per kg and the physicaly gold will also be so many $ per kg?

Yes, but the ETF relies on you being able to enforce it.

Fine in a normal situation. If the exchange system breaks down or the provider doesnt have the gold to deliver to you, then you're screwed.

Put it this way - if there was a nuclear war, how useful do you think your ETF would be?

[ENP]

But why would they deliver the gold to me? I'm just buying a share like I would in any share on the market. If telecom went bust they wouldn't send me a desk chair from their office.

Well if there was nuclear war then my ETF dollar amount in $NZD would be just as much as your physical gold in $NZD.

Can you please clarify in SIMPLE words and your way of thinking? I'm very confused. Thanks.