enrieb

Think of it this way - my house has been half knocked down by a hurricane and is about to fall over. The gubbermint gives me enough bricks to shore up the lower levels so it won't collapse. Hey, now I have loads of inflationary bricks I can sell or lend to other people who suffered storm damage, right?

 

Wrong.

How about phrasing it this way, the bold is mine

Think of it this way - The speculative value of my house has been half knocked down by a financial hurricane as the credit derivatives that flooded the market allowing people to bid up the price of houses unwind yet further and is about to fall over. The gubbermint gives the banks who caused the whole mess lots of free money in the hope that they may pass it to me so that i can buy enough bricks to shore up the lower levels so it won't collapse thus keeping the value of my house up in la la land. Hey, now I have loads of inflationary bricks I can sell or lend to other people who suffered storm damage, right? or better still I can now continue to Mew and borrow even more money to spend on goods that we import propping up our our service economy and sending even more money abroad so that foreign investors can reinvest it back into my country to borrow to other consumers!

What do you mean by that - that there is no other possible outcome?

 

What if.......

 

.....after years of profligacy and pointless expensive wars which drove the dollar to all time lows against both other currencies and gold..............the US began to wake up. Military efforts were scaled down and the responsibility spread to other countries, the house market collapsed, massively reducing lending and hence monetary inflation, and making the public 'smell the coffee' of the reality of last few years.

 

i.e. is it utterly inconceivable that the dollar has put in a bottom after years of decline? It wouldn't be the first time the US have turned a situation like this around (e.g. post Reagan/Bush)

The US military is the only thing holding up the dollar.

Me too, I got my second 1 oz Kruger yesterday morning.

 

Bloke before me just picked up a couple of large gold bars!!! I felt a little inadequate when the lady behind the counter asked how much gold I wanted.

Its good to have two, they make that nice 'clink' sound when you drop them gently into your hand.

I've had a few people I know question if I still think gold is a good investment given the recent falls, but they are often quite surprised when I tell them that in terms of the falling pound the sterling price of gold is holding up quite well, unlike their other sterling denominated investments.

$805 gold spot price is £450

You can look at the sterling price of gold on goldline.com and see Krugerrands at £482, Britannia, Panda and Eagles at £496

Gold only has to go back into the low $900s for the sterling spot price of gold to go over £500, then it would be difficult to by bullion coins for much less than £550.

http://www.goldline.co.uk/bullionCoinsPage.page

(I stole this entire post from HPC, thanks Alfie Moon)

From Reuters details of the 'rescue':

LONDON (Reuters) - Prime Minister Gordon Brown will announce a package on Tuesday to prop up the slumping housing market. The Department for Communities and Local Government said the package would include:

* A new mortgage rescue scheme to help 9,000 vulnerable families struggling with payments avoid losing their homes. Eligible home owners will have three options under the scheme:

-- a registered social landlord clears all secured debt and occupants will then pay a rent they can afford.

-- a registered social landlord buys a share in the home and converts the property to a shared ownership lease.

-- a registered social landlord provides an equity loan allowing mortgage payments to be reduced.

A government source said the scheme would cost about 300 million pounds.

* A new shared equity scheme to help up to 10,000 first-time buyers earning less than 60,000 pounds buy new homes over the next two years. Buyers will be offered an equity loan of up to 30 percent of the house value, interest-free for five years, co-funded by the government and the housing developer.

A government source said this scheme would also cost about 300 million pounds.

* New social housing. The government will bring forward funding from existing budgets for affordable housing schemes which could deliver 5,500 more homes over the next 18 months.

A government source said this measure would be worth 400 million pounds.

see: http://uk.reuters.com/article/domesticNews...02?rpc=401&

The 30% scheme to help FTB'ers will only be available for up to 10,000 FTB'ers - NOT ANY AND ALL FTB'ers!!!

This 'rescue' will not stop the house price crash - it won't even put the brakes on a little bit. Move along, nothing to see here, etc.

'Free loans' offer to homebuyers

Tuesday, 2 September 2008 08:28 UK

http://news.bbc.co.uk/1/hi/uk_politics/7592852.stm

I think the 'free' 30% loan for 5 years is designed to trap foolish people, how will the 30% loan be paid back? simple, idiots will believe that this will kick-start the housing market and that the value of the house they buy will rise over the next five years. They will think that they can pay back the 30% loan with an increase in house prices. In reality this measure will trick people into allowing the government to own 30% of their home, thus nationalizing private housing by stealth and deception.

This is of course economic insanity, when the Nasdaq shares fell in price we didn't give out 'free' 30% loans to temp first time share buyers into the market to support share prices, this is all going to end in tears.

I am reminded of the scene in Jaws where the Hooper asks Quint if he has ever encountered a shark that is able to submerge with three barrels on it, Quint responds that he has never encountered this situation before and for the first time appears unsure of what to do. The shark continues to attack the boat and Quint powers his boat, retreating towards shore with the shark in pursuit. Quint hopes to draw the shark into shallow waters to beach it, that will cause it to drown. Hooper warns Quint to lower the pressure on the engine because he's going to overload it, at which point Quint increases the revs...

QUOTE (wrongmove @ Aug 21 2008, 07:26 AM) *

The "jewelry brigade" are the only people who generate demand for physical. It was the speculative paper game that took gold up to above $1000 and back down again. Physical wasn't selling at those prices.

Thanks for the links wrongmove, though you may not be retracting the statement you may have to change it as the links do not support the statement that Physical wasn't selling at those prices, it may be better the phrase it as Physical wasn't selling 'as much' at those prices.

That may seem a bit pedantic, but I believe its necessary on a forum where the only thing we have with which to understand each others arguments are the words that are posted; unlike in normal conversation where a statement like that could be corrected in real time and not cause a fuss. A statement like 'physical wasn't selling at those prices' is simply not true as many people were buying physical, though admittedly based on your links not quite as many as before.

Is it possible to post a link to some reliable figures for this?

Since your asking Warpig to come up with some links to justify his statement, made in response to yours, could you be so kind as to return the favor and give some links to support your statement.

The "jewelry brigade" are the only people who generate demand for physical. It was the speculative paper game that took gold up to above $1000 and back down again. Physical wasn't selling at those prices.

That's the spirit! I only buy physical and I'll bet that, come morning in New York, I will not be able to buy at these levels.

 

 

Great forum, think I will settle in here quite nicely!

Welcome to the forum

Anyone know what is happening to Oil ???

Interesting yesterday, that you mentioned Gold moves are being driven by Oil moves, it reminded me of a Fox business panel discussion from last week on Peter Schiffs site, where Gary ?Calpol? was very instant that Oil prices are being moved by the Financial stocks. He said that Financial stocks are leading the market up and down and that when they top out, that will be it for the market.

http://www.europac.net/Schiff-Fox-8-6-08_lg.asp

As a medic (a long time ago) I was taught that when a disease shows itself its often too late. This is because organs have a massive spare capacity, and disease processes eat that up first with no outward symptoms. So when illness does appear, the underlying disease has been doing damage for a long time and is very advanced. In other words, symptoms show only when thresholds (of reserve capacity) are exceeded

 

Similarly, Joe Public's monthly pay served his needs and he had some reserve capacity left over each month. Then he started taking loans (pulling money from his future into the present) which added to his monthly bills, until his reserve capacity was almost all used up. Then interest rates rose and he passed his threshold - hence the disease called credit or liquidy crunch appeared. What we need to study though is not the acute symptoms (which are merely reflected in reduced money velocity), but how the amount of debt as a proportion of GDP has been growing (i.e., the full history/rate of disease progression).

Thats a very good post and an interesting way of describing the problems.

Whats your take on this sudden drop?

 

PPT again?

I suspect this must have something to do with the recent fall in price.

http://news.bbc.co.uk/1/hi/business/7560485.stm

Where the hell did spain get hold of $30bn all of a sudden?

I've been looking at that chart that seems an odd patten to me, Gold at $805 then rising to $820 for half an hour before falling back to $805, then falling to $793. I'm not really knowledgeable on charts but I've not seen anything similar to that since I've been following gold.

I'm confused but still very confident about gold as an investment, I just wish I had some spare cash to buy right now.

Would anyone like to guess who made this prediction 6 months ago?

Hi marceau,

Unfortunately I've come to the game late and am still building my physical core holdings.

Currently happy with ammount of silver but sadly short on gold.

I missed a few opportunities last week to get in at $920ish due to being a wage slave and no access to web for much of the day. Being reluctant to buy into strength I may have been too patient/hopeful of bagging a bargain.

With the current strength do you reckon $950s or less are possible or should I just bite the bullet, buy and sit tight.

FWIW I intend to put about £10k-£15k in coins so I really want it as cheap as I can get it.

 

your thoughts, as are everyone elses appreciated.

I started buying gold at £650 when it jumped over $700 I though there might be a pull back where I could buy 5k more, it just kept going then it was in the $800 range and I was hoping for a pull back to $700-750 but its kept rising until it jumped up to over $1000 I seriously expected a pull back after this much of a price rise and it finally came back down to the low $900s where I finally managed to buy it, then I when I got some more money I added again when the price fell to $870.

The lesson is, I should of bought it when I had the chance at $700 or even $800, by dollar cost averaging as FSN and James Turk always say. In the time I spent waiting for a pull back I learned so much about gold and the world finical situation that I was convinced that I would be much better off having my cash in gold, then I felt comfortable buying in the $900 range.

If your unsure about buying it all now you could buy gold with 25-50% of the money you intended to invest, then buy another 25-50% next month and so on. That way if the price falls you get to buy some cheaper next month or if the price rises at least you own some at the current price.

Gold mine found in Ireland

http://news.bbc.co.uk/1/hi/world/europe/7486799.stm

A gold find is being claimed in a small village in Ireland.

A local mining company says that the find in County Monaghan could be the biggest ever untapped gold deposit in Britain or Ireland. They say there could be possibly 1 million ounces but will it be expensive to extract.

Check this guy out if you haven't seen him before. I watched these two episodes last night.... very interesting stuff.

 

Krassimir Petrov on Gold

Part 3 - http://video.google.com/videoplay?docid=976700141486118374

Part 4 - http://video.google.com/videoplay?docid=1383332369012611726

I am a big fan of Petrov and I like his presentation style he's very enthusiastic about his subject unlike most of the lecturers I had to stay awake to at Uni. I've downloaded all his lectures 25 one hour lectures on macroeconomics, 15 lectures on investment analysis, 4 business cycle lectures, 5 credit derivatives and a few others on peak oil, gold, inflation.

You can download the lectures from google video if you use Mozzilla firefox and Downloadhelper both are free programs.

completely agree. I think gold/oil ratio is wrong at the fundamental side. One resource is renewable, the other is not. It worked at the time when oil perceived to be endless, but now we are seeing a correction to this error.

I understand your point but I don't agree. A large part of the gold price is a function of the price of energy that is needed to mine and refine gold. High oil translates into a high oil price, but the two prices do not move up in perfect alignment, the gold price in normal conditions will lag the oil price and I expect that most of the mining companies are aware of what is happening globally to the price of commodities and the weakness of the dollar so they have probably purchased their energy in the futures market.

If the price of energy stays high and gold remains low then the mining companies will not be able to produce gold at a profit. This is part of the reasons that the junior mining shares are not performing, eventually as the high costs of oil work their way through to the miners then the supply of gold to the market will fall. True that a gold remains a durable product and most of the gold ever mined is still around, it is what happens to the price of this existing gold when there is a falling supply from the miners.

What is the BNTA?

I've just opened a coininvest account and am ready to buy. Do I need to do more research?

British Numismatic Trade Association

http://www.taxfreegold.co.uk/bntamember.html

I usually buy in person from a BNTA member shop, but it is a little bit more expensive. I have not heard of any problems with coininvest so I would feel quite safe buying from them now I have more experience with bullion coins.

Guys, as the thread title has gold in it I'm going to ask a naive question, but please move or delete as appropriate.

 

I want some. I've too much currency. I'm not into storing it so I would probably use Goldmoney.com

 

The two things that bother me are

 

1) seizure

 

2) avoiding the potential rapid drop when the giants all take profits, tho' that could be a decade or so away!?!

 

Can you help me out here please? Or point me to an appropriate thread as there is so much to read & possibly little time.

 

& my apologies for being out of my depth in this awesome company

There is no need to apologise anyone should feel free to ask any question they like in the gold thread or even any area of the forum, everyone has to start somewhere and no question is to naive or basic because if you have to ask it then there is a strong chance that there is lots of other people out there who would like to know the answer. As someone who had never invested before, I gained a lot of my knowledge and the confidence to invest in gold through this reincarnated gold thread aswell as learning from Jim Puplava FSN, Peter Schiff Euro Pac, Michael Hampton CWR Jim Sinclar, Von Mises institute etc

I hear a lot of good things about goldmoney and it is something I intend to use soon. At the moment though I prefer adding to my physical gold holdings, but I will start using goldmoney for the trading convenience soon.

The issue of seizure is a tricky one that cannot fully be discounted. If currency depreciation is small, gold's rise will be small and so not much chance of seizure. If currency deprecation is huge then the gold price rise will be huge and the bigger the risk of seizure. However if you have £10,000 and choose to invest £5,000 into gold and the currency depreciates to almost nothing and seizure becomes a real possibility, would you have rather kept all your assets in fiat? I would rather be holding gold that has appreciated in value against the fallen currency. Your purchasing power in Fiat is being seized daily by inflation, you have to weigh up the risks.

Holding physical gives me a better chance of keeping hold of my gold, sure they can take, they can take it from my cold dead hands. Should seizure begin to look like a real possibility then I expect my house will be burgled and my gold stolen, who knows years later when I take up a hobby metal detecting I may even find that the burglar dropped it all at the bottom of my garden when he was escaping.

If you don't fully understand the reasons why to invest in gold and you feel panicked into buying you may find yourself just as easily panicked out of gold. The weak hands in the market will be shaken out, so be sure you fully understand the reasons why you are investing in gold and make sure you understand the gold market and the sudden moves it can make both up and down with long periods of consolidation. This is going to take a little bit of research but there is plenty of information around on the web and links will appear in this thread from time to time that will add to your knowledge.

Knowing when to exit the market is also going to require some research, others here have their own exit strategies, for me it mainly comes down to price ratios gold/dow or gold/oil gold/housing. When gold starts to look over valued in comparison with another asset that looks undervalued then I will start to diversify out of gold.

The most common ratio referred to is the gold to Dow Jones ratio. In 2000 the it took 44 ounces of gold to by the Dow Jones, last year the ratio came down to 20 ounces to 1, this year the ratio peaked at 12 to 1 and I expect it will end the year it will be 10 to 1 or lower.

In 1980 when gold hit its all time high it was 1 to 1 with the Dow Jones, but that $850 high was a one day bubble so it would have been much more realistic to sell when the ration got to 2 to 1.

The trick is to diversify out of gold slowly, say you have 50 ounces of gold, perhaps when the Dow ratio is 5 to 1 you could sell 10 ounces and buy some shares, keeping the other 40 ounces in gold as the ratio drops further to say 4 to 1 sell another 10 and buy shares and so on until the price is 2 to 1 you will still have some invested in gold as insurance against hyperinflation or for the real big bargain price and should gold go 1 to 1 with the Dow then sell the remaining gold as this will probably be the high, but at least even it if did not get all the way to 1 to 1 then you will have profited from you gold.

DrBubb spoke about a good strategy for trading and it was a very disciplined way of investing, he was talking about investing in mining shares with Frizzers on Commodity Watch Radio and I hope I am not misrepresenting his advice here but I remember it as: Do your research, buy low, wait for the asset to double in value, then sell half and get back your initial capital.

Jim Sinclare has a good strategy for exiting the gold market and Goldfinger also has an excellent short list for when to sell gold.

Edit: sorry if thats a bit rushed, I will try to add some useful links later.

Done. What do you think about this 1927 SA Sovereign? Looks pretty fake to me. And what does "J21" mean?

I'm not sure what that 'J21' means, I've never seen or heard of it before, I don't think that it should be there and I cannot find any information about it in the Spinks catalogue. It looks like its been stamped on using individual letter and number stamps because they are not stamped in an even line. The poster says that its passed the fisch test, so it could be real but the fact its been stamped with J21 will have meant that its lost its bullion status and will only be traded at its scrap value 75% of spot price. It may have been recovered from jewelery where the reverse side (st George) would have been hidden.

Edit: Actually looking at the picture it looks like a fake to me, the sword is completely different from this 1928 coin, the picture is about the same size so it easy to spot the difference.

http://www.goldsovereigns.co.uk/pretoriamintsouthafrica.html

Cheers.

 

A thread on a fake Sovereign on GIM. Maybe of interest to some of you as well.

 

http://goldismoney.info/forums/showthread.php?t=271336

I can't reply to the Thread over there as I am not registered, but could you post and tell them that the London minted sovereigns have no mint mark, only the sovereigns minted overseas have mint marks.

http://www.goldsovereigns.co.uk/mintsandmintmarks.html

London None 1817 - Date

Sydney S 1871 -1926

Melbourne M 1872 - 1931

Perth P 1899 - 1931

Ottawa C 1908 -1919

Bombay I 1918 -1918

Pretoria SA 1923 -1932

Could three mini coopers really carry that many gold bars between them?

Faster banking transfers underway

23:20 GMT, Monday, 26 May 2008 00:20 UK

http://news.bbc.co.uk/1/hi/business/7417303.stm

Does this amount to an increase in the velocity of money?

I don't post here often so excuse my general ignorance but.....

 

For me to believe that there will be a significant increase in pog (say 50 to 100% GBP) over the next 18 months, I have to look at my own krugs and say 'will these coins be worth anywhere between 750 to 1000 pounds in 18 months'.

 

When I take this approach (i.e. my own situation) I struggle to see how it could happen without wage inflation.

 

During the gold price rises of 07, the 'man on the street' was only mildly aware of energy and food price inflation; Now in mid-08 these concerns are commonplace and widely reported. So, in my muddled thinking, the pog will rise from here on in if there is a growing demand for gold as an 'asset preserver' but with so many other commodities demanding excess cash, will we see great rises in pog without wage inflation?

 

Do many posters here believe that we will see wage inflation take off? and how will the pog feature in an deflationary environment caused by a severe recession and lack of excess cash?

 

apologies to all for the lack of clarity in the questions (at this time of the morning!)

Wage inflation will not take off all by itself, as the effects of inflation take hold and people suffer then it will precipitate industrial action, wages will only rise after workers and unions organize and hold strikes. The sector with the most power is Transport/lorry drivers they have ability to shut the country down and they also have the support of the car driving public. We have created a society that is even more dependent on an oil based infrastructure since the original fuel protests. I speak anecdotally to people who are beginning to suffer from the prolonged higher cost of fuel its only a matter of time before the public start to show unrest.

There are quite a few other areas where we can see industrial action starting over pay, in the main its public sector workers but eventually it will spread. The UK economy has only just started to turn downwards I don't think that the public are about to accept a lower standard of living without a fight. The 70s period of economic turmoil, high oil prices, high inflation and stagflation were rife with industrial action.

http://news.bbc.co.uk/1/hi/uk/7411437.stm Police's warning shot in pay row

http://news.bbc.co.uk/1/hi/england/lancashire/7404120.stm Second strike over wages review

http://news.bbc.co.uk/1/hi/uk/7365331.stm School's out as teachers march

http://news.bbc.co.uk/1/hi/uk/7341980.stm Coastguard staff strike over pay

http://news.bbc.co.uk/1/hi/uk_politics/7175503.stm Ministers seek prison strike ban

http://news.bbc.co.uk/1/hi/uk/7129299.stm Civil servants on 48-hour strike

http://news.bbc.co.uk/1/hi/uk_politics/6987810.stm Unions back 'co-ordinated' action