ologhai

Thanks, Laura. Your post more or less asks the questions I would also like answers to!

It seems to be stating the obvious really, but... If you judge a big drop to be highly probably, then on average it's a good idea to sell, perhaps with a view to buying back in at a lower price.

The US election was the reason for the drop in gold's price today? I'm lost...

Quite so.

<= Clickable

As a person who has put some money into gold (and silver) largely because of the confidence of many people on this forum (and other places), it's all a bit nerve-racking. I can more or less understand the reasons why PMs may rise substantially in value in the future, but I'm sure someone could present me with reasoned arguments why PMs will fall in the future (short-, medium- or long-term), and I would be equally easy to convince. The movements of silver and gold lately are just a complete mystery to me. It seems like everything in the world is just worth less than it was -- whereas, in my simple model of the world, some money must be flowing into something and increasing that something's value, and I assumed that would be gold and silver... Basically, I lack the conviction of my own well-thought-out position[1] to be sure I'm doing the right thing. In some ways, it would certainly be a relaxing thought to know I'm just getting my 5 or 6% from some savings account... even if that means I'm only really breaking even. If I were to come out of PMs altogether, I might regret it if we have rampant inflation[2]. Moderate inflation wouldn't be too bad with some money in index-linked savings. If we have deflation, then cash will be okay, won't it? If gold does go back to $700 (and an appropriately lower value in GBP), then -- especially given the horrible things that have happened and are happening in silver -- that would just about scare me off I think... and if I'm destined to be scared off, then I may as well be scared off sooner rather than later, because my losses will be lower! If only I 'deeply and fundamentally' understood (and importantly believed) that PMs can only really go one way over the next couple of years or so... Sorry about the negative vibe I've been putting out lately. I know it doesn't quite go with the 'rah, rah, gold is great' thing! [1] Because I don't have a well-thought-out position at all. [2] I'm not sure I could predict what would happen (or even what it would feel like) to live in hyperinflationary times, so I can't say whether it would make sense to be 100% in gold under those circumstances. Do the 100%ers think that a few sovereigns will save them? I find it hard to know what would be left of civilisation by then, and what having a few gold coins would do for the cause...

I did click reply on your previous post, and then sat there with an empty reply for a while. I couldn't think of anything to say that didn't sound glib and/or just plain wrong. It is true to say that, if it'd happened to me, I'd be pretty upset, so I can certainly empathise. However, it is true that a roof over your head is a roof over your head, and, as has been said, it sounds like you have quite a buffer in terms of equity. Besides, unless you'd intended to put all of your money into gold, you'd probably be at least somewhat concerned about the safety of the cash in a bank (or similar) in these turbulent times. Even if you did invest 100% into gold, unless you have total conviction that it can only possibly go one way, I'm not convinced that there's total comfort there either -- at least for anyone even remotely agnostic. This obviously isn't the outcome you wanted, but there's always a chance that another offer will come along... and, most importantly, you're a person who's clearly keeping a weather-eye on all things financial. That can only be a good thing. Sorry I couldn't think of anything truly positive to say, and I hope things work out.

Just to put the whole gold trading thing in context, I tranferred about £1500 into BV this week in order to 'have a go' at trading for the fun of it. I don't have a history of gambling. If this trading can be called gambling, then it's the only example of gambling I can think of that I've ever been involved in -- no National Lottery, no horses, no slot machines... I'm not saying that trading is an alternative to having a more substantial long-term holding. It's just for fun, and if gold is devalued to £0, then the most I can lose is about £1500. I don't intend to derail this 'gold fundamentals' thread at all! As you were...

I think people should be allowed to discuss what they want to discuss, even on 'your' thread... or indeed on a new one...

I'm certainly of a mind to give the trading thing a whirl. Up until now, I've been buying with the long-term view, and I don't expect to sell that any time soon -- unless my beliefs substantially change, or I get tired of the whole thing. But I decided I'd have some additional funds just for trying out trading. I've considered it before, but what made me actually decide to do it was the reply I gave to someone a few days ago on this thread when they were expressing regret at not having bought earlier in the long run up we had last week (but before the smack down had occurred). In response to them, I said something like: I can almost guarantee that at some point in the future, the price will be lower than it is now (given the general volatility, plus the leg-up that gold had had the few days before)... and it got me thinking... 'Yes, gold WILL be lower that it is now, and if I was in a trading frame of mind, I'd be selling some now and waiting for a lower price to buy back in again.' As it happened, that was a well-timed thought because of the smack-down. I appreciate that the smack-down needn't have happened, but I'm sure most people on here who've watched gold price for a few months would agree that, after a leg-up like that, the price of gold will indeed (with almost 100% certainty) be lower again at some point -- probably within days if not (as on this occasion) hours. So, that's it really -- that's as far as I've gone with considering strategy, but I'd be more than happy to hear anyone else's views on trading. Perhaps a separate thread would be useful?

Just had my first attempt at gold 'trading' this afternoon for fun. Made £6.85!

Even though their relative strength has varied, the price of gold in the two currencies does generally seem to have moved in the same direction, though, even if it's to a different extent. Now, it seems increasingly common for them to actually move in different directions. Unless I'm imagining it and it's always been that way.

And, from the open of the DOW today, the price of gold will...?

Watching the PoG in both GBP and USD is an odd experience lately. I haven't really been paying much attention to how much they follow each other (or don't), but it has felt almost like an immutable law that the price in these two currencies has drifted up and down more or less in tandem. These days, though, there's a lot less correlation. At the moment, I'm just watching gold in the USD gently climbing, while in GBP it's falling -- at least according to BV's chart. I don't really have any point to make... other than the disconnect just feels a bit... odd...

The 'put your money where your mouth is' thing is fine, but it doesn't really address enrieb's point in my view. The opinion of someone who makes money out of selling bullion, for example, isn't necessarily as objective as that of a by-stander. You wouldn't think twice about, for example, questioning Gordon Brown's view that everything's fine -- and you'd be right to question it, as he stands to gain if everything really is fine. People with vested interests aren't automatically wrong or anything, but the fact that they have vested interests shouldn't be ignored.

I have a mere 15% or so in PMs[1], roughly 50% gold and 50% silver... although, just for fun, I've decided to do a little bit of trading with an additional, say, 1 or 2%, and, because of the overheads of buying silver, I'm planning to do that with gold, so gold will end up getting a slightly bigger share than silver for me (at least for the time being). I can't deny that silver scares me -- which is probably a sign that I should be looking to put more into it, but... for now at least that's not the plan. [1] See, I'm just a pretender...

Why? Not so much demand for pens in these tough economic times? (I'll get my proverbial...)

Man, you guys are so damned cheerful!

It's funny; I didn't feel as dejected about gold when it was $750 as I feel now. I'm beginning to think I don't really have the temperament for investing. I was never one for fairground rides...

Here we go again?

It becomes patently clear to me that I don't understand any of this. I thought I was starting to see patterns emerging, but none of it makes any sense. And as for silver... It has the reputation of being volatile, but this isn't volatility... It'd have to go up sometimes for it to be volatility. The various NS&I savings vehicles are looking more appealing all the time...

And, it seems, the markets respond to the fact he said nothing... It's pretty funny. I'm listening to BBC News 24 in the background, and they're saying: "The DOW fell off a cliff to begin with, but it's rebounded and is looking a bit stronger now -- maybe in response to Bush's speech." From where I'm sitting, the DOW was recovering nicely (and even went positive briefly) UNTIL Bush's speech!

And Bush says 'nothing'.

Something weird seems to be going on... There doesn't appear to be any gold for sale in New York vaults through BV...

So, towards the end of a dreadful week for the stock markets, the PoG has managed to shuffle it's way up to the dizzy heights of $925/oz, and now, the DOW shows a hint of rebelliousness and it gold slinks off with its tail between its legs? It's all a bit disappointing...