Gold

[Skol]

A sure sign of a bubble is when new lisitings begin.
A new gold ETF is starting in China, the gold will be stored in China rather than the usual strongrooms in New York or London.

I'm not that interested in the economic minutiae, I'm a big picture man. You can argue to to the nth degree that gold or anything else should be higher than it is but at some stage something's gonna give.

Was it Keynes that said "the market can remain irrational longer than you can remain solvent"?

Or words to that effect.

[lewinsky]

US Banking system strikes again

http://www.cnbc.com/id/39617381

They securitized bad loans then forgot or couldn't work out who to assign them to.

[JBmurc]

Worth keeping an eye on the Silver:Gold ratio is now down at 57:1 was a high as 70:1 long long term average 16:1 - geologic est 8:1 more silver in the earth than gold

So Gold could hold these levels an Silver could well go many multiples to $90oz-$150oz if the long term average ratio value was once again reached

[macduffy]

Was it Keynes that said "the market can remain irrational longer than you can remain solvent"?

Or words to that effect.

Yes, that's it.

That's why it makes sense to invest with the trend and be prepared to bail out when the trend reverses.

Meanwhile, investment in gold miners has been a winner for some of us!

[Skol]

That's why it makes sense to invest with the trend and be prepared to bail out when the trend reverses.

Very very few will make it out, more likely they'll get cleaned out. Who knows when it's a reversal or a minor correction, others will pile in thinking it's hit rock bottom.
It's all a matter of risk, simple as that, the same as smokers don't think they're the one that's gonna die of lung cancer or emphysema or the local boy racer thinks he's gonna be the next one in the morgue.

[elZorro]

Very very few will make it out, more likely they'll get cleaned out. Who knows when it's a reversal or a minor correction, others will pile in thinking it's hit rock bottom.
It's all a matter of risk, simple as that, the same as smokers don't think they're the one that's gonna die of lung cancer or emphysema or the local boy racer thinks he's gonna be the next one in the morgue.

But aren't we the early adopters? We've done some research, we'll be a bit more careful than most. Here's a paraphrase from goldprice.org for yesterday:

Silver and Gold Prices are NOT in a Bubble


Gold Price Close Today : 1345.70
Change : (7.60) or -0.6%

Silver Price Close Today : 23.147
Change : (0.200) cents or -0.9%

Gold Silver Ratio Today : 58.14
Change : 0.173 or 0.3%

Silver Gold Ratio Today : 0.01720
Change : -0.000051 or -0.3%

Platinum Price Close Today : 1680.00
Change : -2.00 or -0.1%

Palladium Price Close Today : 588.00
Change : 0.00 or 0.0%

S&P 500 : 1,169.77
Change : 4.45 or 0.4%

Dow In GOLD$ : $169.29
Change : $ 1.12 or 0.7%

Dow in GOLD oz : 8.189
Change : 0.054 or 0.7%

Dow in SILVER oz : 472.78
Change : -2.85 or -0.6%

Dow Industrial : 11,020.40
Change : 10.06 or 0.1%

US Dollar Index : 77.29
Change : -0.148 or -0.2%

Frankly, market are out so far off the edge of the curve that it's very difficult to make any intelligent statement about them. No matter what everybody may think, a falling dollar is not the universal penicillin for economic disease.

As always, Wall Street is getting it wrong. They are honking about silver and gold being in a bubble and at a top. Now why should we believe that the same dullards who missed calling the Stock Market Bubble, the Dot Com bubble, the Real Estate Bubble, and even the soap bubble can accurately spot one in silver and gold? Alas, their over-sized Harvard-trained crania have overlooked the most fundamental principle of investing: always identify the primary trend and align your investment with, not against it. But then, they have stocks to sell, stocks that are locked in a bear market (primary down trend), so maybe they cannot afford to meditate on primary trend, let alone mention it.

The MBAs in the skyscrapers are confusing a runaway bull market (primary uptrend) in a third wave up with a bubble. Not only are silver and gold NOT in a bubble, but they will grow wilder, furrier, and more unpredictable, all in one direction: up. Now beware, and overlook not the metals' short-term oversold condition, which could fall off in a sharp, sudden, but shallow correction any time. I don't mean that silver and gold will perpetually rise. The last 60 days or so have been very unusual, fuelled by more than bull fever alone, and that same force is pushing stocks up, too.

Stocks, on the other hand, are locked in a primary down trend (bear market). Remember, primary trends run 15 to 20 years, so this stock bear market won't end before 2015, maybe 2020.

Oh, wow. Did I neglect to mention that the US dollar is also imprisoned in a hopeless primary downtrend, and beyond the technical picture is doomed by the institutional and political framework of central banking and government spending? Well, it is, so Wall Street's other investment offering, bonds, are also a Killer Investment -- that is, they will kill any purchasing power you still retain.

Okay -- anybody confused about where I stand? Good, then let's look at today's market.

Before I say anything about the US DOLLAR INDEX, I want to remind you that under our central banking system, all currency exchange rates are government- manipulated. All means all. Thus if the dollar is falling, it's falling because somebody -- Treasury or Fed Reserve or more likely both -- has decided to let it fall. Ditto if it rises. Not true only if the currency escapes their nasty, damp clutches, and usually that means heads into a collapse.

Thus the buck continues to fall, but here just below 77, from 76.90 to 77.50, the dollar seems to be trying to begin -- maybe -- a little rally. Technically a small bit of support lies in the past around 76.60, but it's not huge. Keep your eyes peeled for a dollar rally. It will wreck the party fearsomely, especially in stocks.

STOCKS have climbed above 11,000. Today the Dow augmented by 10.06 to 11,020.40 and the SYP500 embraced another 4.45 points to rest at 1,169.77. Great, great, great, it's broken above the previous high and headed into a new rally! Not quite. It is completing the right shoulder of a gigantic head and shoulders top that measures out a target around 8,000. I am nothing more than a natural born fool, an ignorant ridge runner from Tennessee, but heed my warning and stay away from stocks.

GOLD and SILVER pulled another trick today. Both dropped, silver by 20c to 2314.7c and gold by $7.60 to $1,345.70. So what? Yesterday silver gained 26c and gold $9.10, so for the two days both have netted a rise. I have been observing for the last 2 months or so that instead of indicating weakness, silver and gold often jump -- and high -- the day after a little fall. Maybe they will repeat that performance again tomorrow. (yes, they did -EZ)

I feel like I have ants crawling in my bones when I say this, but I would keep on buying silver and gold. This well-muscled and determined rally has set its eyes on $1,600 and 3400c.

After the Comex closed silver rose again, higher than yesterday's close. Right now it's trading at 23.31. Silver has thrice bumped against 2045c, looking like a helium balloon searching for a way out. It will pierce the ceiling.

Gold has risen back to $1,352. Both silver and gold appear to have made some sort of high and correction last Thursday. Now they are making good the fall, recovered to rise again. Gold needs to clear $1,355 resistance.

Gold and silver are safe down to $1,325 and 2230c. If they break those levels then a correction has begun. Otherwise, they are headed for the sky. That bunching up on the 6 month gold and silver charts leaves me a bit uneasy, but other than that the fury will continue until it ends.


Maybe Skol should get a case of this ready for the bet with JB:

[upside_umop]

But aren't we the early adopters? We've done some research, we'll be a bit more careful than most. Here's a paraphrase from goldprice.org for yesterday:

EZ. If gold was to reverse quickly, I'd say you would have quite a lot of trouble getting out of OGC. Did you see what 8k shares did to the price today?!

Also:
What makes you think you're an early adopter? Gold has been going up for the last 10 years.
What makes you think your research is better than anybody elses, or even better...the markets? The theory is you can't beat the market. Don't give me 'theory is bullcrap...I beat the market all the time blah blah.' Because....on average, people don't beat the market. The average return is the market! Then...take away your fees and you make less than the market...on average. If you beat the market, you haven't, you have just taken on more risk. Its a bit like that survey that went out where 90% of drivers said they were better than average!

I'm not being doom or gloomy. Just the way it is. There are proven techniques to beat the market...not sure if they're still valid as they may have been arbitraged away:
-Small firm effect. Small firms outperform larger firms as they are perceived to be more risky. So the question is...have you really beaten the market for the relative risk?
-Value effect. Stocks with higher book to market ratios (value) outperform stocks with lower book to market (growth).
-Momentum effect. If a stock has risen for the 6 months, it has a higher chance of continuing that rise for the next 6 months. The opposite is also true. The trend is your friend is actually true. Some say this exists in the commodity markets too.

Just some things to think about.

[elZorro]

Thanks for fair comment UU. As far as I'm aware, the only NZ blog site talking about OGC is here, and despite over 60 of us reading each post, no-one rescued OGC today. I think Direct Broking wouldn't have allowed that sale, it was way out of line. But the point is that the traffic is too light over here some days, and since I have bought most of my OGC locally, I might be in a bad spot if the worst happened. Can't help wanting to support a local business - even if the managers are in Aussie and determined to raise some funds at our temporary loss. But this share is a lot stronger than many others (try GEL or HGD).

I'm a very slow adopter of most things, only started with shares 3-4 years ago, and I'm a slow learner. But I'm like a speeding bullet compared to Skol, in his attitude to Gold. In a few year's time, Skol will be proved right, and gold will drop back a bit from its high. Hopefully by then I'll have made my gold investments pay off, and in any case I'm making far easier money outside the sharemarket, while it holds. I couldn't agree more, I find it hard to beat the market, but I don't mind risk at the moment.

[inghamp]

Hey all,
Not sure if you have noticed of late the large number of companies marketing gold as a secure store of wealth. The public are clearly slow on the uptake. This is likely to change as they see the consequences (lost wealth via inflation) of leaving savings in banks. Remember, people will always want to save.

It doesn't even have to happen to the US dollar. Just one rich nation's currency needs to experience major problems..

Do you think this will be enough to make a percentage of risk averse people the world over save some of their money in gold and silver?

I haven't done the numbers. Has anyone here?

[Skol]

Hey all,
Not sure if you have noticed of late the large number of companies marketing gold as a secure store of wealth.

Sure have, we're in bubble territory, what do you expect, meantime is the black swan on the wing?

There was an article in the FT yesterday calling on the Obama administration to sell gold. You know what's gonna happen then?




1980. C-R-A-S-H

Good idea-buy low, sell high.

If such an event occurred, as I've said before, it's all about market forces, not economic trivia.

There's lots of very indignant posts following this article from the goldbugs because they know the consequences.

The article itself could be the black swan.

Lots of people who own lots of gold read the FT, a widely read, very influential publication not some trashy goldbug website.