GOLD

[Nevl]

Nevl somewhere in my archives there is a report on gold useage. India has a huge gold processing industry, jewlery and stuff.

Yep just checking on the interent. It seems that about 80% of gold consumption is for Jewelery. But a lot of that Jewelery is just another way of storing gold as anyone who has being to the middle east has seen in the gold markets. The gold is processed and then buried or put into a jewerly box or kept in another bank vault

[Dr_Who]

Unlike us, the Indians and Chinese buy 22-24 carat gold jewellery as a stored value and for security as an insurance. So if you wanna rob a house, and Indian house is my first pick.

[JBmurc]

Yep just checking on the interent. It seems that about 80% of gold consumption is for Jewelery. But a lot of that Jewelery is just another way of storing gold as anyone who has being to the middle east has seen in the gold markets. The gold is processed and then buried or put into a jewerly box or kept in another bank vault

I know even mid-class Indian parents buy their daughters 10-15kilo of gold each which the daughters then pass on to their daughters which they pass-on an when a grandmother dies her gold is then passed on to family

unlike western cutures which would buy their daughters a car or cash etc

[Nevl]

I know even mid-class Indian parents buy their daughters 10-15kilo of gold each which the daughters then pass on to their daughters which they pass-on an when a grandmother dies her gold is then passed on to family

unlike western cutures which would buy their daughters a car or cash etc

Saving for a rainy day is no good if you don't recognise thats it wet. But yeah it seems as silly as Kiwi's payibg a fortune for second houses at the beach which they use for 3 weeks a year.

[Aussie]

OK It seems that everyone is buying gold! Is that a signal to sell?

Maybe my previous post on the uselessness and waste of mining gold got a larger audience than i thought.

No-one's really buying gold yet. Even though gold is making some headlines, the general public is largely unaware of gold still . . . so this bull market still has a long way to go. Once the public decides to enter it will be too late, there won't be any that's for sale that they can afford - may 5g bars. Silver will be the go to alternative.

[JBmurc]

Silver Stock Report
by Jason Hommel, November 19th, 2009
The best witty observation this week came from Bill Murphy with www.gata.org. Bill noted the irony of how media pundits who bash gold will argue that gold is in a bubble (gold's expensive) in one breath, and then bash it again by saying it's a bad investment because gold has underperformed (gold's cheap) inflation rates since 1980's peak. Murphy's main point is, "how can an asset be in a bubble if it's underperforming inflation?" Or, as I'll put it, how can gold be cheap and expensive at the same time?

If the gold naysayers had the capacity to utilize at least three sets of neurons in their brains simultaneously and engage in rational logical thoughts, they might perceive the contradictory nature of their two arguments, and recognize that at least one of their assumptions might not be true. In other words, gold can not be in a bubble now.

Therefore, gold must be cheap, which is why it's good to buy as an investment, since investors should want to buy cheap things that have underperformed inflation, which then, later, after buying it, it should then outperform inflation, as gold has been doing quite easily since 2001.

It's also dizzying to hear other gold bashers claim that "There is no inflation, and thus no reason to own gold." What?

Well, that's fantastic to hear, because that must mean that all of gold's recent gains from $250/oz. back in 2001, to $1145/oz. today, must be all pure profit, showing that gold's recent 8 year performance is clearly outperforming inflation.

So that brings me to my main point that I've been asking for years.

Why are people happy earning 1% or less in their bonds, when gold has been going up so much for the last 8 years?

How much has gold gone up, on average, per year?

My favorite online compound interest rate calculator does the math.

http://www.smartmoney.com/compoundcalc/

From a $250 initial investment to a $1145 final amount, over 8 years, gold provided a 21% per year average rate of return.

So, which is better, 1-4% in bonds or 21% in gold per year?

You only need half of one synapse firing in your brain to recognize the clear answer to that question.

In case you were not paying attention, 21% per year in gold is better.

If you don't own gold (or something better like silver) by now, after 8 years, you have not been paying attention. So, if that includes you, then pay attention to the following.

I'm shocked to hear people think that higher interest rates will slow down this gold bull market. Do they think that interest rates will exceed 21% anytime soon?

Wouldn't 21% interest rates bankrupt many public companies who would not be able to refinance their debt, and thus destroy stock values, driving many to zero?

Wouldn't such rates crush the housing market, as nobody would be able to afford a 30-year loan at 25% interest?

And wouldn't the transition to such high rates destroy the bond market, as bond values move inversely to interest rates?

Wouldn't 21% interest rates cause the national debt to increase so fast that they would have to print money to pay the interest which would further destroy the currency at those rates if not higher?

And if stocks, housing, and bond values and the currency are all cratering to zero, wouldn't the only place left to put one's assets be gold and silver?

Gold will thus be in a bull market until AFTER interest rates exceed 21% again.

I think it would be wise to assume gold prices will continue to increase at much higher rates going forward, because the gold price has been manipulated lower during this recent time frame, through central bank sales and leases, and the sales of many fraudulent paper gold products (such as "gold pool accounts," allocated and unallocated accounts, certificates, and futures and options) which divert investment demand away from the real thing. But when the manipulation ends, through recognized defaults, the gold price will go much higher, much faster.

Why is gold doing so well? It's rare. It's not created as easily as money on a printing press.

[Laxmi]

What is curious is that none of the respected agencies and mainstream commentators predicted this recent dramatic rise. The facts are: Gold is closing in on $1200 per ounce. This is a price so far outside of official estimates that it suggests that official estimates may be nothing more than wishful thinking. In this case, they are out by at least 2 years.

[blackcap]

Im still not convinced on the gold story. After all what is it really when one gets down to it.... yes a metal, but what is it used for and why is it so important.... what can you make from gold.....

[JBmurc]

Im still not convinced on the gold story. After all what is it really when one gets down to it.... yes a metal, but what is it used for and why is it so important.... what can you make from gold.....

hard currency always has been an aways will(unless you can convinice the eastern worth paper is,like what the western has be doing for the last 36yrs) personal I think silvers a far better investment because it's both a bullion an a high demand industrial metal

[Laxmi]

The US dollar is going to come under increasing pressure until the US economy starts to show definite signs of improvement. This may take some time. Meanwhile, the value of the US dollar is now a leading indicator on the price of a large range of commodities including oil and gold. (never more acutely)

Up to now, the US dollar has reigned supreme in that any movement in its value has an opposite impact on commodity prices. In recent weeks, this correlation has been broken for gold. More and more investors are seeing the need to have gold in their portfolios as a hedge against inflation and possible devaluation of filial currencies. You know something is up when the Indian government buys ½ the amount of gold for sale from the IMF. The IMF in turn is only selling because the agency urgently needs more transferable funds. Funds to bail out countries like Iceland, Pakistan, Ukraine, It would appear that ‘Indian’ type investor sentiment is growing especially in Asian countries such as China. It is greatly encouraged by the value of gold increasing 20% in recent months.