Schaublin

Yes gold will fall in fiat perhaps to less than $200/oz. But there is a big difference. The gold that will fall to less than 200$/oz will be paper gold. If you go to a dealer and pay $200 you wont get any gold. That is what FOFOA was implying in his latest post.

I read this and had some trouble following his thinking. Why pick 200 USD as a price? In the scenario that he predicts where physical will not be available at any price, presumably the paper contracts would fall to near zero as there would be no chance of delivery. At this point the published prices at Comex would be completely meaningless - indeed, how could any price be put out - when the whole thing had fallen apart?

I think the use of currency as a medium of exchange and gold as a long-term store of wealth should not be confused. Unfortunately, because of the short attention span of most people, currency is often used to store wealth. With real inflation factored in, ordinary interest bearing savings, dwindle in value but so slowly that most cannot see it - indeed, many think the money is earning them interest!

The slowly boiled frog may soon however receive a nasty sudden rise in temperature which may wake him up enough to jump out of the pan!

I prefer to look at it all practically.... I mean money performs primarily a practical function right.

 

But the problem is once you state such things as "gold IS NOT a currency, gold IS money" you are taking it into the sphere of theory by stating exactly what you think gold, money and currencies ARE.

 

By leaving it as "gold functions AS money" one can leave it in the practical sphere.

 

The problem is this theory is not too well thought through, and tends just to appeal to those who have already bought into the "parallel universe" of the gold bug.

For someone who has a position in gold, you have a curiously dismissive attitude to others who hold gold. By using the term' gold bug', you are assuming that all the 'bugs' think alike and as for inhabiting a parallel universe, is that the one that is exactly the same as this one but without you?

I think that 1300 USD is around the time that the dollar price of gold will be recognized more as a barometer of the teetering fiat system. My guess is that around 1600 USD will mark the point when the roller coaster tips over the edge. The self reinforcing loop of loss of confidence, higher gold price - leading to greater loss of confidence and so on.

Those who sell at 1600 thinking that they have made a good 'profit' will no doubt be rather piqued when their profit turns to dust and they realise that they threw away the only chance they had of preserving their wealth.

I know, but it's not a good idea to write or repeat things which are not true, especially considering BV have had to come here in the past to put things straight.

How do you know it is not true? As I understand it, the BV trading bots offer less than another user would offer. I do not recall a representative of BV ever coming here to talk about their trading bots - only to reassure people that their gold would still be safe even after having taken on the Rothschilds as partners!

I've sometimes got better than the best price available and when I've traded directly with BV there is a "p" on the contract to show this. I remember that they stated in their T&C that they sometimes take the other side of the trade. I've sometimes been charged less than I've offered but never more. I don't know how the word "rape" can be used to describe this.

The quote is in italics - it is not me saying this - I am quoting from the link.

I prefer BV to GM as with BV they let me just sit on my US dollars for any length of time. Not so at GM, they asked me to move along with my US dollar position... so I only sit on gold there.

 

The trading station at BV is a bit of a gimmick imo, but it is useful for the odd time you want to switch between metals/ funds etc.

Don't you mean that BV have access to your dollars to invest as they wish and pay you zero interest

some are even starting to get worried about physical allocation in Bullion Vault. This is a sign of the times isn't it......

 

https://www.kitcomm.com/showthread.php?t=67184

Someone there raised a good point about the 'buy in at the best price' feature - I also thought it was a cynical trick to play on newbies. I closed my position there some time ago and feel better for it especially after the new 'partners' moved in.

https://www.kitcomm.com/showthread.php?t=67184&page=3

PS. I'm sure this won't affect you, but the "wizard" on their website which is designed to help noobs trade on their exchange is nothing short of a scam. I believe users have a reasonable expectation that this programme will get them the best price available, but it absolutely does not. If you use it, you are trading directly with BV (they don't tell you this) and they basically rape you. I complained to them about it, and was ignored. Another reason not to use them.

I keep posting all these great articles & links & yet virtually no replies (I think I have had one reply in 4 threads), makes you wonder who really is fully in & who really has any physical metal imo.

anyways......another nice article for you all to enjoy:

 

http://www.marketwatch.com/story/gold-futu...obex-2010-09-20

 

At the moment, there is a “lack of major news to prevent a sell-off in gold,” said Chintan Karnani, chief analyst at Insignia Consultants in New Delhi. He referred to gold’s current rise as “too much money chasing too few goods.”

 

“Investors are invested in gold ... and they are not exiting their gold investments,” he said, pointing out that “fundamental gold is bearish as there is no demand, but gold has now become a paper asset.”

 

 

 

 

 

 

 

obviously it won't be a striaght line to the top:

 

But “technically overbought conditions exist” in the gold market and “a correction of $50-$60 should happen anytime before the next leg higher to $1,376,” Karnani said.

GOM, I am sure there are many who have followed your links - guests as well as members. The guests cannot, of course, say thanks but just for the record; Thanks for the good links!

I'd be happy with silver at 100. Very happy.

Me too - I would use some of mine to buy some land.

Realistbear contra-indicator alert on HPC.

http://www.housepricecrash.co.uk/forum/ind...howtopic=151192

RB I am remaining in cash waiting for a cheap house to buy then I am not going to worry about investing.

I don't know whether to laugh or cry.

So people just bend over and pay the tax?

Seems a bit odd, to need 17.5% increase in value before you even break even.

Also - what's with ebay prices? They seem all over the place but people still bid?

 

How are people's experiences with storage?

I've been quoted ~£3-4 a year per ounce for insurance on gold stored in my house, presumably the cost would be acceptable for silver too. Worth investing in a small vault for my house?

If you think that silver is massively under- valued, the VAT issue would not put you off.

Gold IS insurance. The idea of betting that it will be stolen with an 'insurance' company (and letting people at that company know that you have it) is one of the most foolish things I have read on this site for some time.

65% Silver 35% Gold

Is that in weight or fiat values?

Help me understand this, please. (I'm not very clever with these things.)

 

I take the ads to be a good sign that I'm safe to keep buying gold (since cleverer people than me are going to a lot of trouble to do so). When they stop those ads, is it becoming time for me to sell?

It's all in the terminology. When you buy Dollars with Pounds, you are also selling Pounds for Dollars When two fiat currencies are swapped, it becomes quite clear that the buy/sell teminology is purely arbitrary. If You lived in the UK and were used to measuring value in Pounds, you would tend to see the commodity as dollars and the 'real' currency as Pounds - and vice versa.

When it comes to gold, when you think you are buying gold , you are in fact selling paper currency and when you think it is time to 'sell' your gold, you are in fact buying paper currency (the reason for this is that gold is timeless and the ultimate representation of money) the only reason to do this would be if you believed the purchasing power of the fiat currency in the future would be greater. Given the decline of the West, it is difficult to envisage how that could happen.

There was a small rocket breakout in Hong kong if you look at the second square in from 1250 -1255 i have never seen that sort of movement in the asian markets (hong kong)before.I spoke to some other gold investors ref this and it seemed very unusual a prerequisite to the rest of the days breakouts.I still think that while the CONmex is in effect and there is a predominant paper market ANYthing could happen.A major fundamental for me will be the cessation of the incessant WE WANT TO BUY YOUR GOLD ADS i feel that at this point the various elitists will have acquired what they KNOW is the above ground Gold that has been used in jewellery manafacture etc and then the REAL FIREWORK show will start.

Not too sure about that. I would guess that there is still plenty of gold jewelery about and perhaps the current 1200 USD fiat price has captured a lot of it but some of that remaining gold can still be teased out of weak hands with a higher fiat price.

At some point in the future, only a complete fool would swap gold for fiat - when they run out of fools, then the ads will cease.

Edit: sorry, I mis-read your post - I thought you had said the ads had stopped now. Yes, agree!

I have thought about this possiblity many many times. Believe me I have. Most 'serious' (no disrespect intended) gold-holders have already factored this into their equations. For instance, what are the chances of the US government grabbing gold from a pivate vault versus the chances of the Swiss or British or Hong Kong governments doing the same? The chances depend upon your own political (and geo-political) outlook. I would say the US is at the top of the potential thief list along with the UK. The Swiss however are probably near the bottom of the list. So we are talking about juristiction now right? As usual, do the calculations and hedge as best you can DYODD.

 

You might ask: so what if the whole world descided to blatantly steal private gold holdings. Really what are the chances of that? I'm not saying its impossible but I personally think it's very unlikely. That scenario sound most definately be like the NWO-era. What's some sovs and krugs in your attic in maistone going to do you for you in that situtation? Good luck trying to cash in your coins then, you will certainly need it. I think what's more realistic is the US and some of its minions going after the metal holdings in the banking system - which is what goldfinger and others have been warning about. Also FOFOA doesn't believe confiscation will happen ever again, and many GEI'ers (including myself) rate his views very highly.

 

So thus I wouldn't get so hung up about the whole issue. The major thing to consider is the juristiction of your gold holdings. Was it Arch Crawford or someone who said that the best way to protect your wealth from the government was to live in one place, have citizenship from another and keep some your wealth in a third country. But how many people can do that? Just be cautious and do what you think is best for yourself is my humble advice.

Some very well-made points - especially about the UK and US being most likely to steal from its citizens. I also, hold FOFOA in high regard and have read what he has written about confiscation but had assumed he was talking about something similar to the US in 1933. Allocated bullion storage is something rather different IMO.

Regarding allocated storage, I know that many are happy with the legal aspects of this and are convinced that it is a secure way to store bullion. My thoughts are that they well be safe today and tomorrow but I wonder what would happen for example in a currency crisis. A private company sitting on many tonnes of gold is going to look an awfully tempting fruit to pick by the State. The legal technicalities are not an obstacle to the State in extremis - if necessary, the law can be changed overnight.

I expect many have considered this possibility but it is worth remembering that at the precise time that gold becomes a financial lifeboat, someone bigger than you may grab your seat!

Very wise words from a very wise Schaublin.

Thanks - I would not say I am wise so much as not born yesterday

You'd really keep kilos at home? Seems more of a risk to me than "trusting" goldmoney, although I am not entirely comfortable with the remote aspect...

I never mentioned kilos or home - just advised against entrusting it to others. Possession in a place that only you know about and can access easily - that can be accomplished in many ways.

If you would rather trust someone that you have never met over and above yourself to look after your gold, good luck to you.

Excellent advice from d2thdr. Gold is used to store wealth because men cannot be trusted to keep their promises. Entrusting your gold to others is the height of foolishness - as many will find out in the future.

It's all well and good saying that but if you buy gold at £700 it will buy you £700 worth of goods.

If it falls to £350 then it'll buy me only half as many goods.

 

Gold is a commodity like any other, except it's pretty to look at and does have a magical kind of allure. However it is subject to supply and demand. Putting most of your money into it is speculation and not wisdom.

Gold is money. Three types of people understand this;

Central banks

Uber rich oligarchs

Ordinary people - mainly in Asia and The Middle East - but a growing (albeit small) number of people in the West.

You do not appear to understand that gold is money - I hope you can be open to persuasion, as it would be a shame if you lost wealth due to being duped by MSM and banking propaganda.

Paper gold may well bring the 'price' down but not the availability. Then physical gold will become scarce to non existant. Premiums will rocket. There won't be gold for sale. We have already had a taste of this. I think people buying gold as inflation only hedge are tits personally. Gold is a bases loaded sayonara home run. Inflation, deflation, and the last swing of the bat, the safe haven home run. The only trouble is deciding which inning we are now in. (sorry about the basesball analogy-cricket just doesnt do it).

I am not sure that the motives of people to store wealth in gold and silver are necessarily linked to classic inflation or hyper inflation (although these are highly likely) - just an understanding that whatever happens in the future, (as you point out) - societal breakdown, martial law, war, pandemic, capital controls, two-for-one swap with a new currency - in fact all possible permutations will make people increasingly understand that physical gold is ultimate store of wealth.

Remember the CONMEX is all smoke and mirrors ITS A PAPER MARKET.Not a PHYSICAL price for the metal.We are really fortunate at the momment that most DEALERS are using the fix prices as the guide to sell at.

 

I couldnt agree more with FOFOA on that point.

 

Monday, August 2, 2010

Relativity: What is Physical Gold REALLY Worth?

 

What is a piece of physical gold in the hand (of a banker) really worth today?

 

 

http://fofoa.blogspot.com/2010/08/relativi...old-really.html

Yes, although I backed up the truck several years ago, the idea that it is still possible to get physical gold for fiat - at a rate linked to a fantasy market of paper futures is astonishing.

It's a little disappointing seeing people on here still thinking/talking in terms of "the gold price".

If you stick in the modern misleading paradigm where all is based around fiat currencies, you'll also be stuck in a misleading thought process, IMO.

 

Announcing the Steve Netwriter Gold Currency Index Version 1 (SNGCI v1) 19th Aug 2010

http://neuralnetwriter.cylo42.com/node/3303

 

(ID5, I've finally done it )

 

Those who say "that gold price prediction is ridiculous" are really saying "that prediction of how far the US$ etc can fall is ridiculous".

I don't think so.

 

Let's stop this "how far or fast gold is going up" discussion, and instead talk about "how far/fast the US$ etc are going to fall".

 

By the way, did anyone spot this news:

 

Singapore Mercantile Exchange (SMX) will start trading gold futures with physical gold delivery on 31th Aug 2010

http://neuralnetwriter.cylo42.com/node/3298

 

Sounds significant to me.

I agree with this but the problem is; the purchasing power of an ounce of gold fluctuates - say within a month, it may purchase 5 percent more or less than the nominal dollar price of an item. Within this short time frame, a loaf of bread or gallon of fuel will be the same or possibly a bit higher priced in dollars - so some get locked into thinking the Sun orbits the Earth! IMO, only when prices are rising visibly, monthly, will people (some) begin to use an ounce of gold as the reference point.

Even more confusingly, when very high inflation starts, the purchasing power of gold will increase faster than the decline of the fiat currency due to gold's universal store of wealth attributes being more valued.

Some refreshing insights on your blog BTW.

In a period of growth, the financial market dominates the real economy. In a period of contraction [wealth destruction] the real economy dominates the financial market. Human behavior trumps the so-called fundamentals of investors who too often have yet to catch up with what's going on. This is due to an ideological lag where the old ideas of investment haven't been fully discredited yet.

 

In a real economy, subjected to a debt deflation, the behavior of the population leads to a higher valuation on money as relative to assets/ consumables. They prefer to pay down debt and/ or save. The prices of assets will come down. The prices of consumables will come down depending on the strength of the local currency in the fx market. No hyper-inflation there... just less money, lowered velocity, and a reduced standard of living.

 

We should respect/ observe the behavior of the "sheeple" because they will determine the value of money relative to local assets... all to the chagrin of the monetary authorities... whom we should disrespect.

Not quite sure how that works in the UK where we are massively net importers of energy, food and just about everything else for that matter (although I did recently buy a Henry vacuum cleaner made in England)

I still think you are concentrating too much on what joe public thinks/does - it is not that important. Oligarchs, uber rich and other unmentionables own most of everything.