Gold

[Skol]

Real estate is the flavour of the day in many places, pm's have had it.

Where I live 5000 acres are going into residential real estate, it's also booming in the USA, and on TV there was a programme about the unaffordability of property near London. My neighbour has just had a visit from a guy who's done an aerial reconnaissance of the area and wanted to buy his property.

The gold decline has only just begun.

Gold production will decline, if no one wants it, it doesn't matter, mines will shut and the gold price will continue downwards, for some reason you think that punters will still want it. The hoarding, which has contributed to the absurd gold and silver price has stopped.

SPDR gold trust is down 11 tonnes since July 9.

[JBmurc]

Yeah nobody wants precious metals ? the world economy's are going boom right.....how about aircraft engines like in your pic

Aircraft Engines
The aviation industry uses precious metals in the manufacture of aircraft engines. Gold and silver, as well as palladium and platinum, are used in the manufacture of different types of aircraft engines, such as CF6 and the JT3D, according to the Aviation Suppliers Association. JT8D, JT9D, and RB211 aircraft engines also contain these metals. (See References 1 & 2)

Engine Parts
Typically, an aircraft engine has up to 23 parts that contain precious metals. Various aircraft engine parts that use precious metals include vanes, stators, blades, fuel nozzles, fuel manifolds, Tobi Ducts, and heat exchangers. Parts of an aircraft's engine turbine system and avionics system use gold and silver. And aircraft blades use platinum. (See References 1 & 2)

Recovery of Precious Metals
After the life of an aircraft engine is over, the aviation industry can still recover precious metal from aircraft engines and their parts. Companies that engage in such recovery typically sort and test the aircraft parts in order to get the most value out of them. They expose the parts to radioactive source so as to identify the precious metals and separate the parts that have them. Then, the recovery process involves leaching the metals out of the parts that hold them. Recovery of precious metals can account for up to 50 percent of an aircraft engine's recycling value. The recovery value of precious metal in a JT8D engine, for instance, could go to as high as $18,625, as of 2010, Aviation Week estimates.



Read more: http://www.ehow.com/list_7517611_use...#ixzz2ZRIheJtj

[Skol]

Last 12 months.

FTSE +16%
DAX +18%
N225 +65%
S&P +23%
CAC +18%
XJO +22%

Gold -19%
Silver -29%

[Skol]

The SPDR Gold Trust is currently losing 1.8 tonnes/day. At that rate, the total gold in trust will be zero at the end of next year.

[Skol]

The goldbugs keep saying that China will overtake the US, a patently absurd assumption. The Chinese, who, according to the goldbugs, are buying the world's gold, might soon be selling it.
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'Rebalancing' ... the jargon phrase of the moment

All economic data are best viewed as a peculiarly boring genre of science fiction, but Chinese data are even more fictional than most. Add a secretive government, a controlled press, and the sheer size of the country, and it’s harder to figure out what’s really happening in China than it is in any other major economy.

Yet the signs are now unmistakable: China is in big trouble. We’re not talking about some minor setback along the way, but something more fundamental. The country’s whole way of doing business, the economic system that has driven three decades of incredible growth, has reached its limits. You could say that the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be.

Start with the data, unreliable as they may be. What immediately jumps out at you when you compare China with almost any other economy, aside from its rapid growth, is the lopsided balance between consumption and investment. All successful economies devote part of their current income to investment rather than consumption, so as to expand their future ability to consume. China, however, seems to invest only to expand its future ability to invest even more. America, admittedly on the high side, devotes 70 per cent of its gross domestic product to consumption; for China, the number is only half that high, while almost half of GDP is invested.

How is that even possible? What keeps consumption so low, and how have the Chinese been able to invest so much without (until now) running into sharply diminishing returns? The answers are the subject of intense controversy. The story that makes the most sense to me, however, rests on an old insight by the economist W. Arthur Lewis, who argued that countries in the early stages of economic development typically have a small modern sector alongside a large traditional sector containing huge amounts of “surplus labour” — underemployed peasants making at best a marginal contribution to overall economic output.


The existence of this surplus labour, in turn, has two effects. First, for a while such countries can invest heavily in new factories, construction, and so on without running into diminishing returns, because they can keep drawing in new labour from the countryside. Second, competition from this reserve army of surplus labour keeps wages low even as the economy grows richer. Indeed, the main thing holding down Chinese consumption seems to be that Chinese families never see much of the income being generated by the country’s economic growth. Some of that income flows to a politically connected elite; but much of it simply stays bottled up in businesses, many of them state-owned enterprises.

It’s all very peculiar by our standards, but it worked for several decades. Now, however, China has hit the “Lewis point” — to put it crudely, it’s running out of surplus peasants.

That should be a good thing. Wages are rising; finally, ordinary Chinese are starting to share in the fruits of growth. But it also means that the Chinese economy is suddenly faced with the need for drastic “rebalancing” — the jargon phrase of the moment. Investment is now running into sharply diminishing returns and is going to drop drastically no matter what the government does; consumer spending must rise dramatically to take its place. The question is whether this can happen fast enough to avoid a nasty slump.

And the answer, increasingly, seems to be no. The need for rebalancing has been obvious for years, but China just kept putting off the necessary changes, instead boosting the economy by keeping the currency undervalued and flooding it with cheap credit. (Since someone is going to raise this issue: no, this bears very little resemblance to the Federal Reserve’s policies here.) These measures postponed the day of reckoning, but also ensured that this day would be even harder when it finally came. And now it has arrived.

How big a deal is this for the rest of us? At market values — which is what matters for the global outlook — China’s economy is still only modestly bigger than Japan’s; it’s around half the size of either the US or the European Union. So it’s big but not huge, and, in ordinary times, the world could probably take China’s troubles in stride.

Unfortunately, these aren’t ordinary times: China is hitting its Lewis point at the same time that Western economies are going through their “Minsky moment,” the point when overextended private borrowers all try to pull back at the same time, and in so doing provoke a general slump. China’s new woes are the last thing the rest of us needed.

No doubt many readers are feeling some intellectual whiplash. Just the other day we were afraid of the Chinese. Now we’re afraid for them. But our situation has not improved.

The New York Times


Read more: http://www.theage.com.au/business/ch...#ixzz2ZWc1d2E4

[Skol]

so the chinese accumulation of gold is insurance against their own crashing economy? quite interesting and typically chinese!

Gold is crashing faster than the Chinese economy, so it's a lose-lose situation for them.

Last year

Gold -19%
HSI +8%
Shanghai Composite -8.8%

[JBmurc]

China(BRICS) succeeds and takes over from the old superpowers ....

Or China fails and drags all the world down

China(and many others BRICS etc) Make and the rest of the world thanks to low cost credit takes...

there is no win win for the old worn out western powers ... only keeping afloat by free money ...and investment from the likes of China,Middle east etc

Detroit BANKRUPT....and many so called experts believed the states can just borrow their way to prosperity? ......

[Skol]

Must be depressing continually forecasting the end of the world as we know it. Fortunately nothing lasts forever and neither will the recession, the company I work for has just submitted a request to bring in qualified staff from overseas because of a shortage.

In the 1970's New York teatered on the edge of bankruptcy, but the world didn't end, nor will it this time but one thing I can accurately forecast, poverty for overexposed goldbugs.

China will not take over from the superpowers, totalitarian states have a habit of failing if you studied history at school.

SPDR Gold Trust total gold in trust down 5 tonnes in the last 3 days of last week. The goldbugs keep banging on about the gold shortage, but I haven't noticed, gold is stuck in a rut, $1200-$1300, but will break out downwards soon.

The naive goldbugs used to bang on endlessly about how they must be right because the central banks were buying gold, but anyone with an ounce of common sense knows that central banks make some terrible decisions, esp. when it comes to gold.
The central bank of Sri Lanka is licking its wounds after paying too much, like many of the world's central banks.

http://www.lankabusinessonline.com/n...all/1870873682

[Toulouse - Luzern]

This guy got some charts too

http://www.mauldineconomics.com/ttmygh/what-if

Thanks.

Excellent backgrounder.

[JBmurc]

Must be depressing continually forecasting the end of the world as we know it. Fortunately nothing lasts forever and neither will the recession, the company I work for has just submitted a request to bring in qualified staff from overseas because of a shortage.

In the 1970's New York teatered on the edge of bankruptcy, but the world didn't end, nor will it this time but one thing I can accurately forecast, poverty for overexposed goldbugs.

China will not take over from the superpowers, totalitarian states have a habit of failing if you studied history at school.

SPDR Gold Trust total gold in trust down 5 tonnes in the last 3 days of last week. The goldbugs keep banging on about the gold shortage, but I haven't noticed, gold is stuck in a rut, $1200-$1300, but will break out downwards soon.

The naive goldbugs used to bang on endlessly about how they must be right because the central banks were buying gold, but anyone with an ounce of common sense knows that central banks make some terrible decisions, esp. when it comes to gold.
The central bank of Sri Lanka is licking its wounds after paying too much, like many of the world's central banks.

http://www.lankabusinessonline.com/n...all/1870873682

-Depressing not at all,,,I'm a pragmatic kind of investor history of mankind is filled of empires/economy's rising and falling ..
..the "World Bank" predicts a new world reserve currency.within this decade...you yourself love to China bash yet your own far more chinese products than Yank...

Been reading great book .."World right side up" just blows my mind on the growth of the middle classes of the many many emerging economy's and the growth to come just one example cellphones in southern Africa from 2000 10-15mill users to 2011 450mill+ ..

..US-UK-Euro growth days are over the average western consumer is filled with debt ...are lazier...more obese ...take higher amounts of drugs.need hand-outs to survive...stupider etc that ever before

many of the blue chip companies of the Word are growing in the emerging economy's Apple,Nokia,GE,Shell etc etc

And best of all for Gold is many of these billion's of emerging middle class investors understand hyper-inflation and sound money ..

Gold $1312