Wanderer

Gold lease rates tumbling on Kitco. Rising leaserates appeared to prefigure this latest rally. Given that lease rates are now falling is it time for a pullback and profit taking for the brave? [i.e. for Goldbulls not goldbugs....]

Seems lease spikes were happening around the time of the BoE auctions. Not yet worked out cause and effect yet....

http://www.gold-eagle.com/editorials_00/peters012500.html

Also lease rates affected people trying to carry on the gold 'carry' trade...

http://www.telegraph.co.uk/htmlContent.jht...3/cngold13.html

And also to do with the 'Washington agreement' and Japan and so on....

http://www.fame.org/HTM/Howe_War_Against_Gold.htm

Bakachu,

Good question. Thats an interesting line of questioning that might cast light on future movements of the gold price. The 2001 spike seemed to occur early in the year, i.e. not after 9-11 (when one might have expected a dash into gold). Curious. Hmm, although I remember one poster here pointing out that one of the reasons for leasing gold would be to short it.

Grateful for any insights...

Wanderer

Gold just a bit tired this morning after yesterday's excitement. Down a disappointing 10 bucks or so now. No sign of shorters being forced to scramble to cover their positions...

Hi,

Is there any price people here feel that Silver must stay above to avoid complete meltdown Silver Sammy style? Or, put another way, is there a price people would set a stop loss at for their now in-the-red ETF investments?

NO PM-bug comments please - I'm happy to be invested in PMs generally and am heavily so, but not necessarily at each and every moment of a roller-coaster ride.

Is anyone clever enough to flip a chart of the FTSE over the last 2 years (i.e. invert it) and overlay it on a Gold price chart for the same period? Reading the paper just now it seems it is rather akin to the recent moves in Gold if you hold the paper upside down...

:lol: :lol:

 

I think that deserves a little more prominence

 

 

:lol:

Steve N,

Who gave you access to my trading files? Aren't these things supposed to be private? I'm on to my lawyer....

Wanderer

This article cheered me up in a not-really-that-funny sort of way

http://www.telegraph.co.uk/money/main.jhtm...bcnpound215.xml

I guess is Gold is taking a pasting its no harm if the pound plummets - kind of makes up for losses in dollar gold (and was one of the reasons I got into gold in the first place - as a hedge against sterling weakness).

Of course, $1200 gold and $1.55 pounds would suit me fine....

I am very worried about deflation too. Unfortunately, I have not so much time to spend on it, since I am busy working more so that I can keep up with the price increase by 35% from British Gas and the increased food prices, lunch has gotten 15-20% more expensive too recently. But yes, other than that, extremely worried about deflation.

Goldfinger. Thank you for this. You are worried about deflation. I am interested by your perspective on what might happen to the price of gold if deflation did take hold. How would you see this affecting PMs?

(I'm not asking how likely you think deflation is, but how you anticipate deflation affecting PMs should it materialise)

Wanderer

I have to fess up. I'm not a happy bunny about all this, not least because with precious hindsight, I've messed up big time. I started buying Gold when it was $450 something and have been steadily adding increasingly large amounts as (a) I got wealthier and ( gold rose. I bought my latest largest sum at $960. Ouch.

The paper losses are now hurting, though it looks slightly less scary in sterling. However these are real losses and will affect my ability to do what I want with my savings if they don't come good.

Similar story with Silver.

My instinct tells me to hang in there - I don't need the cash for 2 years or more. But a little part of me is saying 'jump out' before we go into meltdown. What scares me about hanging in:

- I've more fear of being poor than desire to be very rich;

- gold is a market where manipulation can clearly play at least some role;

- Mrs W is going to be mad;

- my own incompetence!

What reassures me about hanging in:

- I was right (in the end) about UK house prices and sterling;

- the 80's peak was c.$850 and that is before 20 years of inflation. The ride up to $850 was choppy.

- Plenty of sensible people on here present plenty of sensible arguments (although a few folk are less sensible and have less convincing arguments) for higher gold prices;

- I'm sure if you were wise and had waited when gold was at 960 and got in now you'd do well.

- I do believe in the case for gold and can imagine me selling now and buying in later when it was higher...., so better just to hang in .

The biggest concern I have is that I've seen people on this site argue (a) deflation will push up gold prices and ( inflation will push up gold prices.

Wanderer

I think we really need to clear away the confusion about increasing money supply, wealth destruction, CB bale outs, inflation, deflation ...as this is the most important stuff to understand when deciding whether PMs should now be bought, held or sold.

 

Please let me point you to the following:

http://www.moneyweek.com/file/5138/m3-0212.html

 

...within which it explains how CBs can create money (several options beyond just lowering base rate to promote borrowing).

 

Additionally, there is massive money creation by companies issuing bonds

 

But perhaps most importantly I'd like to clarify that falling house prices as such do NOT decrease the money supply. This only happens when a house is actually sold and someone suffers a loss. Related to this, the mortgage securities losses also do not much affect M3 as the CBs are taking those of the retail bank's hands in return for sound assets - either real pounds/dollars produced by issuing new government bonds or by crediting the retail banks official reserves (which in both cases actually increases the money supply)

 

Then also remember this is going on globally!

 

Net result... M3 will keep on increasing rapidly, CBs will not (can not dare to) allow it to be any other way with recession looming, and this is extremely inflationary.

BigbigT - one quibble with what you say. People ARE selling houses even now - when they marry, divorce, die etc. This is reflected in falling prices and people taking losses on sales. This, therefore, DOES translate into reduced money supply in this area and is, potentially, a deflationary push (which may or may not be balanced by inflationary pushes).

Interestingly, my Royal Gold stock is currently standing up far better against this hammering than Gold itself - rather the reverse of the recent rise.

This from John Nadler neatly sums up the (currently small) 'sell/set a stop-loss' angel on my left shoulder.

"Perma-bulls continue to live in denial about the dollar and about the commodities sector. Every drop is a buying opportunity, every rise the start of a new era. But what if - this time - the turn is actually the real thing?

Speculative funds poured hundreds of billions into commodities over the past couple of years. Sensing that they had pushed the envelope well past the breaking point, the hedgies are leaving the complex as they perceive that the Fed is not joking about inflation combat, and that regulators are also not joking about oversight of what had become a giant casino - one where "the house" never won. In casino terms, "the die is cast." Rien ne va plus"

Most on this site have explained well the 'don't panic' angel on my right shoulder....

I am trying to find out if there is a price level of gold which could create a sentiment of uncomfort, malaise, disbelief and panick among gold holders.

If you could answer some of my questions, this would really be helpful as you are a gold holder.

One more point then, since you ask. CYCLICAL THINKING ALERT!!!! I'm tempted not to sell now as I obviously have made a mistake buying the wrong side of this cliff-jump downwards. If the price went down further, say to 750, and it happened before I could sell, my temptation to hold would be stronger (as I would anticipate a bounce). How would I depart Gold? I suppose there must be a capitulation price somewhere, but that in part depends upon whether Mrs W. brought pressure to bear to cut our losses.

To add more, I find today's events on the markets astonishing. Events in the Caucasus suggest a level of political risk unseen in months (set against the background of rising inflation and the credit crunch) and yet the FTSE pushes up, oil goes down and gold takes a whupping. Its as if we've got the 'August' crew firmly sat at the traders' desks right now.

Why I didn't hold fire and wait out August before I went in with my last (biggest) wadge of G+S I'll never know. And I'll kick myself big time for a while now. Muppet.

However I don't want to double-up my mistakes by selling out at a low so, Fantastic, I'll hold tight a while.

Wanderer,

 

As you have no stops, is there any level - in the most impossible scenario - at which you would have to get out even if

you didn't want to?

Fair question fantastic,

Yes, but I haven't decided it yet. This may sound naive, but it stems from a considered conviction that Gold will go up. My chief concern is that conviction stems not from a correct analysis of the situation (I still think it does) but from misjudged analysis as a result of incomplete understanding on my part or group-think at GEI etc. Perhaps I should have been hanging out at Singing Pig etc.!

I STR'd a while ago (too early, but not much much too early) and that was based on similar convictions about the unsustainability of property (now coming to pass in an aggresive manner). My biggest regret was not acting on my Gold conviction earlier. Unfortunately I didn't then have the luxury of the investment time horizon I have today.

I don't need my money to hand for a while, so as long as I remain confident in the medium-long term for Gold I don't want to risk setting a stop just yet.

Fantastic, let me ask you the reverse question, do you have a position in Gold and, if so, what is your 'get out' price?

Wanderer

I am absolutely not enjoying this ride downwards having loaded up pretty heavily at what now looks like a recent top. I am further absolutely not enjoying this ride downwards as I refused to put in stops on my recent purchases on account of having previously been stopped out of profitable occasions on account of price volatility.

Some thoughts: I was back in the UK recently and despite the recent drops I was feeling pretty confident about the longer term picture on Gold as a result of rising inflation - very evident when you come back from overseas. However today's action has eroded large chunks of that confidence - Gold always seems to move much quicker coming down than going up! I guess this is the trading dilemma - stay in and risk further losses or get out and take a real live loss. I'm holding (I think) but I guess a lot of people in situations less favourable to holding than my own will be selling up at these levels of losses.

Mrs Wanderer won't be impressed. Her 5% in a bank is looking quite profitable in some ways right now!

Short selling opportunity presents itself ! Wanderer has just put another 10% of his savings into Gold through BV... I'm hoping people will get wind, sell (this usually happens when I invest in something ) and, this is the neat trick, I'll then buy in some more at a lower price....