bitbigt
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Posts posted by bitbigt
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Yer, Im suffering.... Its weird to look at the charts and see Gold USD up and then gold GBP down. I dont know weather to feel happy or sad. But then Id be worried about being in GBP when I'm not ready to buy a pwoperdee yet.
Indeed - its important to really dissect what is driving what just now, as its all becoming a bit extreme.
Key thing is to remain coldly objective, and not "feel happy or sad", or wedded to preconceptions. There be dragons...!
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gilt auctions later this week.
I expect it will have a similar effect on GBP as last week's treasury sales had on USD.
Could be!
A 10% drop wouldn't hurt, as I'd then still be even with my gold sales, but significantly up on my oil ETF and would sell some of that
The beauty of diversification
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Someone who sold his gold and was hoping for a low to get back in? That would make him more of an optimist
Yeh - there could be idiots around like that I suppose.
Personally, since I work in GBP, I'm glad I sold a while back as the Sterling price is still way down and not rising. For me its not about looking for a way back in, its about being relieved I am not suffering the current downtrend in the GBP PoG
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...There seems to be agreement to what a Inv H & S usually shows and it is a reversal....
I think the concerns raised about this happening after an uptrend rather than a downtrend are significant. Plus there's the question of the low volume.
But perhaps more worryingly, this recent rise in PoG to form the second shoulder is not due to a fundamnetal rise the PoG, but simply reflects a depreciation in the USD. Gold in virtually all other currencies shows no such shoulder.
A real pessimist might even argue that we've just had an ominous double top, and we're now on our way down - with that fall simply hesitating just now due to the current weakenning of the USD and the impact this has on the USD PoG. ...but who would dare suggest such a thing
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I believe we are in a much worse situation now than in 1980, so gold should go a lot higher. This is the worst financial crisis since the 1930's not the 1980's.
The PPT has not done a good job controlling the price of gold, they have just allowed china and others to get in cheap. They have not managed to sort anything out by their attempts, they have just delayed and escalated the inevitable. I think they now realise this and will not be trying so hard in the future.
The current situation as I see it, is that the US has started on the route of buying their own treasuries (QE), as they now have to, as no-one else wants them enough for the amounts they require to be sold. As we can see from the "Thrilla in Manila" article the situation is about to escalate. Do people think the US didn't know this was going to happen when they started to QE? I think they were very aware that they had started on a path which they couldn't then change direction on. Which was part of the reason for trying other methods before doing so.
So I guess the question is wether the US is going to increases the amount of QE or have another wave of asset deflation. Everything I have read about Ben Bernanke tells me that deflation is his worst nightmare and all that needs to be done to combat it is print more cash.
So I expect a doubling of the amount of bond buying to be announced over the next couple of weeks. Which should be about when gold next goes through $1000 which will give us the momentum to push through this time. on it's way to the $1200-$1300 range.
Even if I am wrong I would rather be in metals than cash or real estate. I see holding PM's being the best place for my money during these times of currency crisis and QE. PM's are my insurance and why would I want to sell it just as the government is running out of suckers to buy their debt and now having to buy it's own.
As Goldfinger was saying earlier, you have to be in it to win it. Camp #2 "This is the big one, back up the truck, you can never have enough gold!" all the way for me
Seems we agree on 99% of things, other than
- how well the PPT have, can, and will suppress the PoG
- the timing at which Western currencies will weaken significantly, both due to, and causing, high inflation
Hence I'm not yet conviced that we're right now at the start of 'the big one'
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The thing is, many buying gold are not so much concerned with the price as what it is priced in. The ground for currencies today is on shifting sand and accordingly to ask what a fair price is could become increasingly problematic. This question of price remains relevant for now but would become irrelevant if a currency's value quickly erodes. Then the only thing of relevance would be the price in a more stable currency or against real assets. You do not seem to be at all concerned about the likelihood of coming currency crises.
Of course, if you think economic growth has resumed and everything has returned to normal, you have a point. In that case, pack away all those economic books, sell all your metal, stop frequenting fringe economic forums, put your feet up and rejoin the masses.
Difficult to convince yourself happy days are here again isn't it.Hi RomansH
Firstly: am I "concerned about the likelihood of coming currency crises"? Yes, but I see it unfolding far more slowly and intricately than simply a 'going Weimar in next 12 months' scenario.
I am fully aware that the economic system is extremely stressed as loads of bad debts are being paid off or defaulted, as national productivity/employment fall, and as government debts increase. If only the UK were suffering this way, Sterling would nose dive far further. But its a global problem, and so all fiat currencies are in an equal mess. Consequently, they'll all work together to save the fiat system, and supress the gold canary that would otherwise be announcing the problem. In the end, the debt load carried by especially UK and USA will cause those currencies to fall the most, but I do not think they'll absolutely and suddenly fail! This is not a hollywood disaster movie. Instead, I'm expecting high (not hyper) inflation quite a few years from now, unfolding slowly, after a period of deflation. ...with gold suppressed all the time.
Given the above, I certainly don't want to be in cash long term, but feel quite safe being so positioned just now whilst house hunting and whilst equities and gold could correct down significantly.
Secondly: do I "think economic growth has resumed and everything has returned to normal". Well hardly! And sarcasm doesn't suit you
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...the situation today where the world population is bigger, more gold has been mined and more paper gold exists plus loads of other factors.....
In 2008 average earnings were £29,864/year
In 2008 the average gold price was £593.08oz
That means in 2008 you got around 50oz of gold for a years average earnings in the UK - incredible!
So gold does not look as expensive as it did in 1974 and 1975...
Very interesting analysis.
On a detailed point, we should note that a small number of people have had very high earnings these last few years. So average salaries might be misleading. Median earnings were 25k last year, putting us on 40oz rather than 50oz for a years earnings - much closer to the 1974 peak.
Additionally, we should remember that the gold standard had just been broken a short while before 1974, so the world was in the middle of a reactive gold rally at that time, which arguably overshot to the upside.
So overall, I still feel comfortable with my view that current gold price is a little above long term average.
But far more importantly, I suggest we focus on questions like
1. why did PoG go so high in 1980
2. is the PPT doing far more effective job now than its equivalent did then
3. what will happen to the economy and inflation in next decade
I suggest the answers are
- because of high inflation and an attempt to corner the silver market
- Yes, dramatically so! (gold should have hit USD 2000 already otherwise)
- price deflation for a few years before high (and not HYPER) inflation become a problem in the West
I think our differing views on these 3 points may explain our different investment strategies better than our guestimates of the relative price of gold
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I got in at £315 (about $605) in 2006. Thanks to posters on this type of thread.
I undertook careful research and fully understood the wealth preservation and insurance reasons for holding.
At the time holding dollar denominated assets, not sterling, was identified as a yielding strategy.
I put in what would have been the equivalent of a typical FTB property deposit. (but this is only a small share of my total funds)
I am not too worried about fluctuations in gains because I hold a core position of insurance against my other currency deposits. My Au hedged my Yen, Swiss Franc, Euro deposits for some time which have since been converted to sterling and Canadian dollars.
I doubled up my PM holding by buying Ag in 2008 and then added 50% more metal on the low of $8.81. I sold off my Ag at the end of February (when Ag overshot from its low channel excursion) because this represented a possible high and Ag is very susceptible to deflationary forces. I 'preserved' the dollar gains against sterling by doing this.
I bought some more Au after the February correction but am keeping an open mind to possible scenarios. The main one being PMs may not necessarily be a one way ticket to wholesale wealth preservation. (longer term-yes, shorter term-maybe no) This is only because the additional Au is on top of my core position.
I hope to be in a position to respond to price rises as well as buy in at lower values should they arise.
By being not over committed I can afford to take a longer term view if necessary.
Masterful
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Conclusion: flush the inflation adjusted chart down the toilet. The numbers are rigged. Gold is still massively undervalued.
I tend to agree for inflation these last 10-15 years - which is when inflation figures have been particularly rigged. But I'm not sure it massively changes ones interpretation of where we are compared to long term average PoG (atypical peak in 1980 notwithstanding).
My fear is that the current PoG is just like the initial peak in very early 1970's. Indeed, I think the whole picture argues exactly for that. Hence I'm feeling safer with less in gold just now, planning to buy more if/when we get a 40-50% pull back the next few years, prior to a 10 fold leap over the subsequent decade.
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That's the whole point. Who said anything about trying to make money?
Well... pretty much the majority of people who who post here!
If the goal was preserving wealth over the course of ones lifetime, then we should be looking for any non-cash asset that did not come with massive volatility. That implies steadily drip feeding into a healthy and mix of property, stocks, company debt, and inflation protected bonds held to maturity. It would not imply buying only or mostly gold (or any PM), where the volatility can be immense and prices can rise or fall many tens of fold over a short number of years.
So surely people are seeing the coming inflation tsunami as something that will send gold through the roof, and hence they want to ride that train - to get rich, not just to preserve wealth. The risk is they time it wrong, or don't sell at the top, and actually loose wealth.
Gold is a secure way to preserve wealth over many many lifetimes, not over any particular decade.
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Have you looked at an inflation-adjusted chart recently?
Yes - and that's exactly the reason I think as I do.
Those charts show how gold had an unprecedented and short term jump in price to USD850, as and when the gold standard was broken. Its long erm average value equates to something like USD 700-800 in todays money.
This is even more true for GBP PoG
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It hasn't been a gamble for 4000 years. What makes you think it's a gamble now?
The answer is in your question...
Over long time frames (centuries, or many many decades) gold is arguably the only thing that retains its value.
But over years (the time frame on individuals investment horizons) gold can change radically in value.
Gold is not now cheap. I actually estimate it to be somewhat above its fair price - due to the fear and problems we've had globally these last 2 years. What is even more surprising is that its price didn't go to twice the levels we've seen, and that is something I put down to manipulation by the PPT. And they aint giving up without a fight!
So to now have all your wealth in gold is placing a big bet that i) the PPT won't keep the price under control, and ii) we'll pass straight from a credit crunch period into an era of high inflation (without a significant and stable deflationary gap in between). If those two things apply, gold could simply go up from here. Otherwise, there has to be a risk of a big pull back in the PoG over next 1-4 years. ...IMHO
Get this bet right, and you could get wealthy.
Get it wrong and you might not break even for the best part of a decade (assuming you have the nerve to leave all your money so invested for that long)
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No. Slow buying and taking delivery will kill the shorts. No meltdown of any dramatic and fast kind is needed for this.
I agree in principle...
IF enough people continue to buy and take delivery, AND IF the 'system' isn't changed to prevent the deficiency of real gold becoming apparent, then the fireworks will start
But those are big 'IF's
I also wonder what those fireworks would look like... if I were holding paper gold (as most people are) then I'd be selling furiously, and the paper price of gold would plummet. Would the price of real gold concidently rocket, or would everyone just loose faith in gold generally (i.e., not distingish paper and real), and also start selling their real gold. It could be like a run on the bank, wre efear and confusion rile the day, with the result that gold would flood the market.
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This is some posters' problem on here: they want to hear and spread the gold negative. Some on here talk constantly about it going down soon (so they can buy more
). Apparently they\'ll never buy more because it always will go down soon. 
I advise these people to buy US treasuries.
You got to be in it to win it!
Its interesting you use phrases like "some posters problem" and "want to...negative". It suggests you think they've got some reason to be deliberately biased against gold?
I see very few (if any) real gold de-rampers here. Instead, some posters (including me) are just not prticularly biased against gold, or biased for gold - we're just trying to understand it and use it in the context of many other things.
Those you criticise are perhaps just less convinced than you that gold is going to the moon, or see things unfolding over a different time frame, or have other priorities beyond getting mega-rich by one single investment.
Its a big gamble to put everything into just gold. But if thats the way you've decide to play it, I admire your conviction and wish you well.
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I think you did the right thing selling in Feb, but I would have bought back in below £19,000. What price are you hoping to get back in at?
To answer, I need to set out the backdrop...
I cashed out GBP 200k because
A. sterling was ludicrously beaten up by the fearmongers (so GBP gold price was particularly high), &
B. we wanted the cash to buy a house (so the risk of another knockdown was too great)
We've since decided instead to leave the cash where it sits in Switserland for a year or two, and then convert it to CHF to pay off the mortgages on several BTL's we have there. This is because we expect sterling to strengthen significantly against the CHF in the medium term (CHF has strengthened ludicrously as a save haven over last 2 years, but will fall as recession passes and as banking secrecy in Switzerland erodes). We've already gained a further 8% on the cash in the last 3 months via this plan.
All the above is legally tax free :-)
We'll still buy a UK house in 6-12 months time (have been looking) but will do that with other investments we're steadily cashing in, plus a UK mortgage. Unless rates go very high by the time we buy, we'll lock in a 10 year and hope to pay off at the end. The monthly interest should approximately match our current rent (which I just negotiated a 5% reduction in)
Now to answer your question...
Given the above, I am not in a position to risk my cash on a big fall in PoG. And indeed, I think there is at least a 50% chance that gold may have seen its highs in GBP for the next 2-3 years, and may drop quite a bit from here. But I also think there is a reasonable (30% ??) chance gold may go up 20-40% further from here, during next two years. But that extra win wouldn't be worth the risk to me - given my housing needs/plans.
Longer term, however (5-10 years) I feel quite certain we will see some serious inflation problems in the West. And that will take gold up to GBP 1000 and probably higher. So I'm planning to start saving extra cash (that I usually find a way to come across) over the next 1-5 years, and will look for a good entry points into gold. We've still got 2kg gold as a core holding that will not be sold, and I'd ideally like to push that to 10-20kg. I'll decide on when to buy (i.e., time and price) without pressure or panic (always the best way) based upon prevailing economic climate, global developments, inflation, and my level of spare cash. So basically, as I get more spare dosh I'll probably be more comfortable buying at higher prices, and vica-versa. If it helps, I would say that over the next 12-24 months I wouldn't want to buy above GBP 500, but would consider changing the whole above plan and buy gold regardless if the price falls to the GBP 300-400 range. If gold rises dramatically well before I expect it to - I'll shed no tears as I've done OK, and I'd be very happy for all you guys/gals that are still holding (so long as you then sell!!!!!!!)
...so if all the BigT family plans work out, in 10 years time we'll own a decent home, have rental income of about GBP 20k per year from Switzerland, a cash pot (after selling my new big stash of gold) of GBP 400k, and a decent final salary pension. The kids will be going off to Uni and I can retire early. ....but I'm not counting my chickens :-)
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Most importantly, however, UNTIL WE HAVE COMPLETE ECONOMIC BREAKDOWN, GOLD WILL ONLY GO TO THE MOON IF THE PPT WANT IT TO ...AND THEY DO NOT!
IMHO, the above is total nonsense.
Why nonsense?
Many posters here argue that the PPT manipulate and control the gold price very effectively.
My statement merely clarifies that they can continue do this very well (as the gold market is very small compared to the other things they're manipulating) as long as they wish to, and its only a total economic failure that will cause them to give up or become impotent.
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This is and will be 100% irrelevant.
Why are people always so keen on finding reasons why gold could/would/should fall?
IMHO, the above is total nonsense.
Everyone who read this forum here for more than a month and who will still miss the gold & silver train has to be pitied.
Thanks, I'll take your pity home with me, plus the 100k profit I have already locked in, plus the 20k I'd have lost if I'd stayed in gold these last 3 months, - and feel quite content :-)
Then, when the time is right, I'll buy back in and ride the big run up from a far lower price than today. If not, then I'll tip my hat to you and wave as we sail past each other on our yachts :-)
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So maybe the team will allow the POG to go over 4 figs for once & then really murder it?
...I agree!
Also, volume is low, and this reverse head and shoulders only really applies after a long term price fall (not a long term price rise)
Most importantly, however, UNTIL WE HAVE COMPLETE ECONOMIC BREAKDOWN, GOLD WILL ONLY GO TO THE MOON IF THE PPT WANT IT TO ...AND THEY DO NOT!
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2.72% up to the big one, 2.47% up from this time yesterday
Don't count your chickens...
http://www.moneyweek.com/investments/preci...-one-14788.aspx
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Yeah, but for how long?
For instance, I wouldn't want to be sitting on pounds waiting for lower gold prices.
"how long?"...
Well at least the next several months. But my best guess overall is
- Sterling
-- vs CHF (which I'll need to change my GBP money into), about 1-2 years
-- vs gold, at least 6 months, and perhaps 2 years
- Aussie
-- vs gold, at least 2 years (as will continue strengthenning as recession ends and commodities come back into demand)
"I wouldn't want to be sitting on pounds waiting for lower gold prices"...
Really? So if you had spare cash in GBP you'd be buying gold at these levels?
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I think canadian dollars would be the safest currency to keep your spare powder in, thats where I would keep any.
Sterling and Aussie to strengthen...
http://www.moneyweek.com/investments/cash-...Money%2BMorning
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As buyers start to leave treasuries in droves and the equity bounce starts to falter the money has to go somewhere. For the head and shoulders to make sense we will need a lot of volume to pickup between $980 and $1000.
Maybe! ...but I think its equally possible that people just over-bought gov bonds when fears about the economy were at their highest (at the same time that they were repatriating USD). Now the fear has decreased, the yield for gov debt is rising to a more reasonable level
Don't get me wrong - I think we will have high inflation down the line. But that´s years away, and people with a lot invested in gold may be looking for signs of that inflation too early
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Gold May Be On Verge Of Historic Breakout
By Peter Brimelow, MarketWatch
Is this it for gold? After a good week, gold watchers of all stripes think it may be. Again.
After Friday’s 0.8% rise to $958.50 a troy ounce, Martin Pring, decidedly not a gold bug, set the tone in his Weekly InfoMovie Report: "Gold could be on the verge of a historical breakout. Watch that $990-$1,000 area like a hawk."
Pring has always laid very heavy emphasis on the predictive power of gold shares. His analysis: "The gold-share ETF, the GDX [Market Vectors Gold Miners ETF (GDX)], has just broken out from a major base. Since the shares often lead the metal, this is a bullish factor."
Dow Theory Letters’ Richard Russell has also been interested in GDX, saying this after Friday: "Ordinarily I would only add gold items on a correction. But gold seems on a roll now, so I added GDX."
Two developments are causing the excitement about gold. From a charting point of view, gold shares are generally agreed to have broken out, meaning that gold itself could well be about to do something very important. Australia’s The Privateer (whose free U.S.-dollar 5X3 Point-and-Figure chart looks very handsome after Friday) describes the situation:
"What is being traced … is a gigantic ‘reverse’ head-and-shoulders formation. The trading range between US$900 and US$1,000 was broken early in April. Over the month of April, a tighter range between US$870-US$910 was established. Now, gold has broken back above that range. The ‘right shoulder’ on the ‘reverse’ head-and-shoulders formation is getting wider. … There are two major resistance points. The first is at US$955 … where the chart is now. The second is, of course, at US$1,000, the level reached in March 2008 and again in February 2009."
Several other commentators see the same thing.
The second bullish gold development: general economic conditions.
As the Gartman Letter noted on Wednesday: "The dollar does look vulnerable. … Pushing government steadily leftward, the Obama Administration has set up the possibility of a U.S. dollar rout. … If this persists, commodity prices generally shall rise and rise materially, and gold shall too."
I think the charts are clear - these last few weeks gold has not been increasing in value. It is flat or down against most currencies.
All that is happenning is that the USD has been depreciating. ...simply because concerns and panic over the economy are subsiding, and the repratriation (buying) of USD is reversing.
There is not a major awareness and worry about QE.
And all this is exactly what the US authorities want. This way they dilute away their national debt
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Listening to it now.
It sounds like he has a "black box computersised system" to sell, and he doesnt really want
us to know what is in the black box.
My own technical work, shows recent price moves have been weak, not strong, it would be
interesting to REALLY know what he sees that is different.
What kind of track record does he have?
I read this:
"Because the supply and demand imbalance that MFA determines includes the
actions of the gold cartel, or anyone else attempting to manipulate the market,
the predictions take into account the cartel's influence (which if it is dominant will
actually determine the market direction). Market moves may be counter-intuitive
with respect to currency and economic considerations etc but they are NOT
counter-intuitive with respect to the prevailing supply and demand
imbalance...and it is that which drives price. The key is to know what the
prevailing supply and demand imbalance is and then you know what the price will
do. This is what this new use of MFA achieves - it determines the prevailing
supply and demand imbalance. The cartel influences the supply and demand
imbalance to make the price go in the direction they want it to go in; a direction
that doesn't make sense to us from macro considerations, but it is totally
coherent with their interference."
It doesnt tell me anything, and reads like BS from a con-artist.
Gata's research and analysis is on very thin ice, and Bill Murphy has admitted this
to me in a private conversation, but not in the same words.
Dont get sucked in by these shysters!
But also, dont reject all their work, some is worthwhile. But most is not. Dig deeper,
and see if it passes your own personal "makes sense test."
"...reads like BS from a con-artist."
This was exactly my feeling upon listening to this interview.
Thanks for making this point Dr B
We must be careful to be objective, and not subjectively believe the things we want to hear. I hear nothing in this guys description that objectively convinces me.
). Apparently they\'ll never buy more because it always will go down soon. 
GOLD
in Gold, FX, Stocks / Diaries & Blogs
Posted
I agree, and equally if USD stabilises/strengthens soon (as I think it might) then USD PoG will fall, meaning nothing!
But a lot of people are watching the USD PoG, and if it does fail to convincingly pass through 1000 this time around, many might cut and run.
Indeed, in my more paranoid monents, I even wonder if this isn't what the PPT are setting up. If so, they'll probably sell gold to start the fall, and then let it gain its own momentum.