Gold

[airedale]

I expect there will be a retracement and I see that the futures market is quoting POG at $1278. But will be happy to be proved wrong.

[Aaron]

I expect there will be a retracement and I see that the futures market is quoting POG at $1278. But will be happy to be proved wrong.

Don't follow it that closely but happy days it looks like you were wrong.
I would have thought the Fed statements last night of no interest rates increases and an "ample Balance Sheet" would have meant a fall in gold prices as the stock market shoots away again and all is well. Ample Balance Sheet I think this means QT could be put on hold and QE started up again if asset prices drop. Maybe this would debase currencies again making gold more valuable in theory. I guess I will never know what drives gold prices. Also the Fed might see some economic turbulence ahead, who knows?

Airdale suggested earlier in this thread an inverse relationship with the us$ index. Looking at a chart DXY it took a serious drop last night so maybe this is right although it must only be one of many factors.
https://www.marketwatch.com/investing/index/dxy/charts

I have to stop watching these daily moves as my theory is that the current money printing will eventually make gold more valuable relative to fiat currencies which is something that happens over years(decades) not days.

[airedale]

Hi Aaron, you can follow the POG and the US$ index at www.ino.com and bring up the charts for 1 day up to a year. The over night action shows that the $ index fell .44% and the POG rose .41% to US$ 1319. That is just the daily chart but the yearly chart shows a similar picture.

[Aaron]

We have probably discussed this but I usually need to hear something a few times for it to sink in.
https://www.zerohedge.com/news/2019-...os-buying-gold

There are 3,300 tonnes of gold mined each year and another 1,100 recycled. jewellery and to a lesser extent industrial use take up a bit over half with the rest being bars & Coins and ETFs and central banks.
Central Banks 651.5 tonnes most purchased since 1967 this is still only 15% of annual supply.


I haven't reached any conclusions. No western central banks were buying gold, all other countries like Russia probably don't want to rely on the US honouring their treasury debt. Doesn't sound like a new gold standard but gold might become a more valuable currency after the next round of QE further debases currencies worldwide.

[SBQ]

Hi Aaron,

The ZeroHedge article only points out a few aspects on gold's recent behaviour but like most things, there are many many more variables to factor. One being the rise in global population which creates a stable demand for gold. You can forget the volatility in gold and take a more long long term approach which you will see over the several decades, gold basically rises in inline with INFLATION.

I do believe for those who are high net worth with considerable assets, they should have a small position in gold. By default, most do in ways of owning expensive jewelery. It spans across all cultures around the world. But to answer why western central banks don't care about the gold has more to do with macroeconomics and fiat $. The rise of western nations came about by use of fiat currency which is tied to the economic output of the country. The previous economy from developing nations tend to rely on a 'gold standard' where the amount of physical gold held by the central bank would determine the country's currency strength. Which would you pick? If you start looking at the reasons why Bretton Woods formed and why the Gold Standard was abolished.. you'll find it's those nations that were able to elevate their standard of living through fiat currency... What countries that remain on a 'gold standard' or buying large amounts of gold by their central banks had come out at a high standard of living for their country? Even in NZ's case the RBZ had sold it's gold reserve (if I recall correctly) in the 1980s. In fact, physical gold in pure non-jewelry form attracts no GST or real restriction to bring in and out of the country. It's to show that from the NZ central banks point of view, gold serves very little purpose in the NZ currency or monetary system.

[Aaron]

By default, most do in ways of owning expensive jewelery. It spans across all cultures around the world. But to answer why western central banks don't care about the gold has more to do with macroeconomics and fiat $. The rise of western nations came about by use of fiat currency which is tied to the economic output of the country. The previous economy from developing nations tend to rely on a 'gold standard' where the amount of physical gold held by the central bank would determine the country's currency strength. Which would you pick? If you start looking at the reasons why Bretton Woods formed and why the Gold Standard was abolished.. you'll find it's those nations that were able to elevate their standard of living through fiat currency... What countries that remain on a 'gold standard' or buying large amounts of gold by their central banks had come out at a high standard of living for their country? Even in NZ's case the RBZ had sold it's gold reserve (if I recall correctly) in the 1980s. In fact, physical gold in pure non-jewelry form attracts no GST or real restriction to bring in and out of the country. It's to show that from the NZ central banks point of view, gold serves very little purpose in the NZ currency or monetary system.

I agree gold should only be an insurance policy against inflation and the debasement of fiat currencies.

Ben Bernanke says it is not money yet the US treasury holds the largest amount of gold reserves. The biggest holders of gold per a google search.
United States. Tonnes: 8,133.5.
Germany. Tonnes: 3,371.0. ...
Italy. Tonnes: 2,451.8. ...
France. Tonnes: 2,436.0. ...
Russia. Tonnes: 1,909.8. ...
China. Tonnes: 1,842.6. ...
Switzerland. Tonnes: 1,040.0. ...
Japan. Tonnes: 765.2. ...
Bar China and Russia these are all developed nations. They may not be buying but they are not selling either. It must still be considered a currency as long as central banks treat it as such. Although it is probably inconsequential compared to fiat currencies. If central banks start selling I will start selling my gold miners probably at a big loss.

GST is not charged on gold because gold is considered a currency and financial transactions are exempt from GST. (This also applies to silver and platinum)

[SBQ]

GST is not charged on gold because gold is considered a currency and financial transactions are exempt from GST. (This also applies to silver and platinum)

Yes but walking off the airplane there's a $10,000 declaration limit for currency. With physical gold there was no limit (i'm speaking from experience

Also you probably wouldn't bother with silver as it takes up too much space to carry on the plane to have a very significant value.

Interesting to know taking gold out of NZ poses no issue.

[Aaron]

Yes but walking off the airplane there's a $10,000 declaration limit for currency. With physical gold there was no limit (i'm speaking from experience

Also you probably wouldn't bother with silver as it takes up too much space to carry on the plane to have a very significant value.

Interesting to know taking gold out of NZ poses no issue.

Gold isn't used in day to day transactions so at a guess too many paper dollars going offshore might require them to order more to ensure we don't run out for people going to the dairy for an ice cream. If NZ reserve bank holds no gold I guess you are right they NZ doesn't care.

[peat]

Yes but walking off the airplane there's a $10,000 declaration limit for currency. With physical gold there was no limit (i'm speaking from experience

really?
I think you'll find otherwise.

[GTM 3442]

Not exactly gold, but close.

What's lit the rocket under the palladium price in the past six months or so?