Manual labourer

 

This looks like a decent spot to get on board. I ended up getting back in a bit too soon after the drop ($37). It's looks like a double bottom is in the process of being completed and with the near $2 up move today I wouldn't be surprised if this is the start of a new rally.

Agreed,

However should this support area break then the $22.5-27.5 would be the area to buy at?

Silver is very volatile so if it breaks to the downside it could be a very quick move!

Regards

ML

Posible bank failure on cards?

Price of gold about to rocket?

Regards

ML

Hi Errol, thanks for the last post, I was only thinking today the world is awash with "cash"!

Could you have a cash bubble?

If so what would be the antipathy of fiat cash?

Precious metals and farmland?

Swop any false paper cash for those two items soon!

Regards

ML.

Ron Paul worries Fort Knox gold is gone!

http://money.cnn.com/2011/06/24/news/economy/ron_paul_gold_audit/index.htm

Oh DEAR !

^^ You guys are speaking as if the central banks surrender physical control of the gold. I don't think that's ever been confirmed.

Central bank gold has provided liquidity for many gold market operations, whether gold loans or forward and option books by mining companies, masking gold sales by central banks until the moment of delivery, underwriting speculators' short positions, underpinning bullion dealers' consignment stocks, or simply providing jewellery manufacturers with working metal

I think a lot has gone!

Regards

ML

The "lease holders" are the bullion banks, who then sell it to 'all and sundry.' The bullion is expected to be returned at some point in the future, however in the meantime, the "lease holder" will pay the "lease rate" on the metal. They aren't concerned with specific serial numbered bars being returned to them, just as long as the same number of troy ounces are returned. So the metal leaves the CB and is deposited in the bullion bank's vault, the CB lose control but receive an IOU plus a yield from the "lease holder". The reason they do it, "so they say...." is because gold produces no income and so they put it to work, however as chris ct says, possession is 9/10th of the law and as Schaublin says, a prerequisite is a gold bear market...

Thanks for the replies guys!

How dumb is that, here is my insurance policy, I will lease it to you FOR NOW if the SHTF SENARIO HAPPENS, I expect you to give it me back?

Ha Ha Ha!!!

http://info.goldavenue.com/info_site/in_mark/in_offgold_lease.htm

Initially, leasing often came from central banks in developing countries, eager for some return on gold but, increasingly, major European central banks, including the Austrian, Belgian, Netherlands, German and UK central banks, came to participate. Even the Swiss National Bank joined in. GFMS estimate that between 1995 and 1999 over 60% of new leasing came from European central banks.

I think it's more pertinant to think of how many calls there are on all of this gold.

How many owners 'own' an ounce in the vault?

 

If you don't hold it.... you.. are... gonna.. be.... toast...

Sorry to seem a bit thick here but how do you lease gold out and what are the ramifications of it?

Who do you lease it to, do you maintain control of it or does somebody give you an IOU?

I.e. what has the Belgium government actually done with its gold?

Regards

ML

The only asset I see falling in price will be property. Otherwise, energy and all commodities will inflate driving up labour costs. Interestingly, some sectors are prospering (Farming,mining) where others are struggling (Retail and services) and I would expect that to be reflected in stock prices.

I agree with that other than re falling UK property, interest rates of 0.5 percent, and inflating rents via inflated wages will keep UK property strong in sterling terms.UK Property has already dropped 50% in Dollar terms, the world ticks on Dollars at the moment? It won’t fall much more in Sterling terms! It HAS already crashed in gold terms and will drop further over the next five years!

Regards

ML.

Hi ML, I'm good at the mo enjoying a life of leisure.... though will start manual labouring myself on a long time acquaintance's orchard next week for a month or so. Funds earned will go into a pretty flash metal [gold] detector, which will be put to work in the Central Otago/ Queenstown area this summer. Bring it on.

 

All you say in regard to "printing" I see as part of the equation. Other aspects such as the deflation of asset prices, and then currencies against gold, bring me to a novel view of things which seeks to accomodate both inflationary and deflationary aspects. The crucial point is that "money printing" will not lead simply to more money chasing goods and assets, and hence conventional inflation. Rather, QE adds to the debt burden on currencies/ economies, this in turn weakens currencies against gold [now being effectively monetized]. This at the international level. At the national level, continued debt deflation leads to the possiblity of fiat currencies appreciating against local assets [even as both depreciate against gold... assets doubly so]. Within this context, commodity prices could remain volatile, where they first spike on speculation [inflation expectations], and come off again with moments of deleveraging/ short-covering [deflation expectations].

 

The solution could be a matter of gold slowly and steadily rising to a market price where it effectively "recapitalizes" economies... and where it also becomes more economical to mine.

 

It's all relative, and depends on your perpective. I could [and do] say everything deflates against gold. Or, you could say the price of gold must inflate. But I think it's problematic to say that the price of everything must inflate [hyper-inflation]. This would involve saying asset prices [property/ stocks] etc will "go to the moon" [along with gold] which I think is highly dubious.

 

I think the current trend of these past few years will continue into the future, which makes gold even a good buy here for those that haven't yet bought.

Hi RH,

Hope the detector brings you many great finds!

I can buy all what you say above; I think that is definitely a scenario that could play out and is playing out as we sit here!

I did think until recently, we would see a stagflationary period which we are seeing right now in the UK, and probably more so in the USA.

However the powers that be are frightened by what is panning out, there isn't enough gold for everyone so gold will rocket, but not until 1650 is taken out then probably a strong pullback to 1000 dollar area, hard to believe but the same could of been said about silver on its way to 50 THEN BACK DOWN TO low thirty's.

Anyway I digress, why I see hyperinflation of the dollar is because it suits the western world, they have lowered their interest rates to as low as they can, they have QE a fair amount!

Now the IMF tells the UK to QE more? Lower Taxes? The next will be large public overpriced unnecessary public works going on new motorways etc to inject billions into corporate hands raising share prices creating wage inflation and currency devaluation leading to a vicious circle of wage inflation pumping more and more into the retail economy, currency devaluation ( with the same happening in the USA) creating more import cost led inflation vicious circle again.

The purpose as I see it is to destroy the worth of fiat cash and hyper inflate external debt away? Any private savers will be decimated they will rush out of savings some into gold others into hard fixed assets,property shares of blue chip companies anything tangible other than cash. Private debtors will be saved by massive wage inflation, if I owe you a million on 100k a year and five years later I owe you a million on 200k I feel much better off especially if my asset I borrowed against has inflated to two million! Pension funds etc will rush to hard assets commodities property shares etc as they are banned from holding over a certain percentage of one asset gold silver etc they wont want to hold cash or fixed interest earning bonds.

They are so determined to protect debtors in Ireland if you pay off 100k in mortgage they give you a 10% bonus, or is it they the creditor can see hyperinflation on its way and the last thing you want to be is a creditor in a hyperinflationary environment when the cental bank/ government wont raise interest rates, due to the race to the bottom for Western currencies?

We are going through the stagflation stage now granted but the end game will be hyperinflation of western economies, to solve the west’s debt problem and more importantly even out the Eastern advantage of low production costs in the world, world trade is in for a very rough time?

China isn't building four new aircraft carriers for fun, I suspect to protect oil via Iran, Iran has been on West’s the radar for many years and when it tried to tie the barrel of oil to the price of gold instead of the dollar it took a step to far! It is going to get very volatile soon! China will want to protect it’s current assets bought with the hard earned cash they are spending. They are spending that cash as fast as they can. Unfortunately for them they can't spend it as fast as the USA can printmore and more and more of it and compete with them for other world assets!

Either way I agree with you a few ounces in a safe allocated fund in Switzerland will win win in either scenario!

I really hope you are right, your scenario sounds a lot easier to live through!

Regards

ML.

It's possible that gold could explode out of its long term trend. But today could be quite different to the 70s, where there were not so many deflationary pressures. If the trend continues at its present rate of around 20% appreciation anually, then the gold price, in US dollars will be around 1800 next year.... and then around 2160 the following year.

 

Pretty good, don't you think?

 

Hi RH,

How are things going ?

I am not a well educated man, but how can we have deflationary pressure when we have millions of new people moving from poverty in China and across Asia all spending billions of QE dollars printed by the Fed and pumped into the emerging world markets for goods and commodities?

Surely increased demand, and increased buying power created by un-backed delusionary fiat money, chasing a limited supply of oil especially, not create strong worldwide high inflation!

The west is like a heroin addict who has a dollar printing press to pay for his bad habit?

The dealer cranks the price due to shortage of goods due to increase demand from other new users, the addict prints the Dollars vicious circle till the dealer realizes the dollars are nothing but paper, the oil and goods supplied have been consumed too late.

Solution let's rebase and start again with a pre Nixon floated Dollar ?

I know I am punching way above my weight here with you intellectual guys, but in simple terms if I owed a dealer a sh*t load of money and I thought I could engineer a hyper inflated solution to my debt problems over a number of years, and I HAD THE KEYS FOR THE PRINT ROOM I would print as much as I could for as long as I could?

That’s how I see the west debt addicts and oil addicts, who have gone past the point of redemption, their spending is now out of control?

Regards

ML.

I liked these bits

 

 

The Titanic analogy grows increasingly apt. The various major currencies all face real challenges and are like various floors on the Titanic. The massive ship is holed and water is flowing into it, gradually affecting all floors of the boat.

 

Gold represents the lifeboat.

 

When the passengers on the various currency floors(the dollar, euro and pound floors) realize that the ship is going down there will be a scramble to get into the golden lifeboat.

 

Gold and silver bullion remain tiny markets vis-à-vis equity, bond and currency markets and are thus like lifeboats which can only fit so many passengers.

 

As the ship of the international monetary system flounders and denial is replaced by a realization that the ship is going down, investors and savers (retail and institutional) and central banks, will “pile” into gold.

 

Gold bullion remains owned by a tiny percentage of retail and institutional investors and there has not been any “piling into gold” yet - contrary to some sensationalist reporting. The risks posed to all fiat currencies and the real risk of an international monetary crisis will likely lead to a gold mania phase when investors and savers do actually pile into gold.

 

This is when gold will likely go parabolic in price as it did in the 1970’s when it rose 24 times in 9 years.

 

Gold’s gradual rise in recent years is in stark contrast to its parabolic rise in the 1970’s – particularly in 1972, 1973, 1974 and 1979.

 

 

Gold surged by 49.7% in 1972, 73.5% in 1973 and by 60.1% in 1974. In the final phase of the bull market in 1979, gold surged 140% in one year. Gold’s recent rise has been tame in comparison with the animal spirits remaining subdued and media coverage remaining very limited and skeptical – especially in the UK and Ireland.

Wow!

Great Post,

That really does put the recent price rise into perspective!!

Regards

ML.

Useful chart / suggests possible cliff's edge ahead:

 

/source: http://www.housepricecrash.co.uk/forum/index.php?showtopic=152362&st=165

 

 

I also get the feeling we are now about to fall off the cliff face re property prices in the UK.

There are of course a huge percentage of people who the property value price makes no difference i.e. buy hold and paid for property owners.

However, for the younger upwardly mobile or FTB, a better time could soon be with us, with the CPI/RPI figures out yesterday then interest rates will have to rise sooner than is being stated, stagnated markets and increase in volume of property available coming to the market, combined with the increase in repossessions hitting the market all points to a big fall in market prices across the board.

Most importantly thou IMHO is the fact, that the sheeple are starting to realize their house, as a hole in the wall cash machine days are over, and that house prices can go significantly down as well as up!

One area I am unsure about is farms and farmland, if anybody has any historical data or strong views on how farm/farmland prices will fare go as domestic houses values fall I would be really interested?

My own indicator for the bottom of the property crash would be a ratio of 8xRental prices in terms of value on the average semi/terraced house in a reasonable area, seems extreme but I think we will see it.

I.e., 8K market rent equals 64k market value. Rents may rise with the expected strong inflation but the multiplier will be attained.

Debt is real value is speculative.

Regards

ML

Congrats GF,

Great trade, and thanks again for sharing it with us.

Regards

ML.

Fantastic thread and last few posts here from Doc and RH, to me these depict the different reasons why some people have gold, Doc you are a born out and out trader, and thanks again for putting out your trades virtually live on here, much as I admire and would wish to be able to emulate your style of liquidity on everything it wouldn't be for me (can't teach old dog new tricks etc. (edit :on further reflection I guess it would be good to try to learn)).

RH your style of investing proportionally and for a longer term/time period hedging in and out of Silver/ Gold is something I would like to move closer too now, and would be more comfortable with.

Thanks again both of you. Just a few question for Doc, if say a large hedge fund or CB was wanting to double it's % investment in gold would it try to run prices down or hit weak long stops on low volume before running prices up?

Or would it just buy into the market at market price?

Do these people use technical analysis or work purely on fundamental basis?

Regards

ML

Maybe just maybe a quick shakeout of weak longs taking place !

Could see a violent reversal next weak with USD/OZ high broken through at pace?

Regards

ML.

You are on an island, there are 100 apples.

There is $500 in existence on the island.

 

What is the maximum price of an apple?

 

 

 

Depends if the owner wants to sell any apples.

 

 

If they are the only food source, the vendor or owner can decide on any price.

 

IE One apple for all your dollars and your shoes, food and water will always be worth more than any currency in certain situations.

 

Regards

 

ML

Do I win an apple ?

Regards

ML

You are on an island, there are 100 apples.

There is $500 in existence on the island.

What is the maximum price of an apple?

Depends if the owner wants to sell any apples.

If they are the only food source, the vendor or owner can decide on any price.

IE One apple for all your dollars and your shoes, food and water will always be worth more than any currency in certain situations.

Regards

ML

I worry, that Gold's long recent record of being a good store of wealth

may soon take another "hit" like it did in 2008.

The times we live in are not friendly to Buy & Hold, and maybe not even in the Gold sector

I guess its a fifty fity bet, all I can say is 8 months ago I had very little gold as a percentage of my liquid assets. Now it is 50%, living in the uk and I am more easy at night with the GOLD 50%

than sterling 50%,both are stored at the same bank.

I was hoping for 151/to the dollar back at 143 in May to convert into USD, the other 50% , not looking good today but who knows?

I like RH, am eventually looking to exchange all of the above into a smallholding the only difference being in the Uk, it is a gamble if it pays off great, if not so what.

I could buy a smallholding in Northern France now probably, but that’s not were I want to be.

Re gold topping out I can't see it, we have had 34 years of massive inflation in the west, ie a house personal to me, in 1974 sold for 4k =400k now on the market today by it's present owners with only cosmetic upgrades, gold hasn't kept pace but I expect to see it catch up soon.

CB'S, increasing their share of gold is a sign of momentum in the right direction I would say, intelligent fluid people like yourself can move in and out of the gold market, dummies like me are better staying put.

Spain CB throwing fiat at ever decreasing property values is where the uk will be soon, I untill recently thought uk interest rates would have to rise for this to happen, but now I AM NOT SO SURE?

Lets see what George has to say today. When uk peoples piggy banks stop paying out (ever increasing house values and re-mortgaging)and debt becomes real perhaps people will run to the other end of the scale for security, the security will be gold and silver as every other asset class tumbles IMHO ?

Regards

ML.

The truth is, I really dont care, since the Gold sale was part of a "contextual trading strategy" which has already served its purpose.

================ (the following was posted on the Strategic Downsizing thread) :

 

Using "Contextual Trading" and GOLD trades to reduce property costs

2/

The truth is, I really dont care, since the Gold sale was part of a "contextual trading strategy" which has already served its purpose.

 

THE OVERALL IDEA here is to always operate from "a position of strength", and only make major moves when they improve your strategic position.

 

I am trying to develop some better Wealth Measurement tools, which will help people to see when they are enhancing their position.

Thanks Doc, that was very enlightening, I can now see what motivates you the desire to be liquid, uncluttered and in a constantly increasing strong position of varying assets.

It is good of you to be so open about your trades, and how you see gold as just another tool for generating a better standard of living.

Rather than some of us on here who see gold as a safe place to store our current wealth at this present time and climate,

perhaps this is a result of your formidable history in constantly trading all your assets?

It is great to have many views,this is a great platform for people to share them, IMHO, it doesn’t matter who is wrong or right, now or in the future as long as each individual is comfortable with

their own position and prepared to accept other people may find comfort somewhere else and more profit.

For people like me who are a little slow to exchange their assets from A to B to C etc, it is good to see real examples of other people dong this, and provides plenty of food for thought.

Thanks again.

Regards

ML

U.S. Home Foreclosures Climb 44% to Record in May

http://www.businessweek.com/news/2010-06-1...y-update1-.html

Once interest rates rise,after RPI stays up at 5%, then this will happen in the UK.

Rising interest rate, food prices, gold and silver prices accompanied by falling housing maket and luxury goods markets?

Regards

ML

Stocks up. Euro up.

 

Dollar and gold down. How's that for correlation.

 

 

 

 

 

 

Bernanke the master manipulator back at it again:

 

Gold drops on steadier markets, Bernanke comments

 

http://www.reuters.com/article/ousivMolt/i...E64R5OH20100609

Could be Mr Bernanke, is just a little pissed, by the fact he can't just print a bit of gold as and when he wants to!

Regards

ML

Very nice! On that note, time for an update:

 

http://gold.approximity.com/since1970/Exte...Gold_Price.html

WOW!

Now through the 200oz-line.

"A picture is worth a thousand words"

Cheers

GF.

The bit in bold made me think...

 

If governments chose this route to wipe out debts and devalue the currency, does anyone know, based on actual countries' debts, what ratios would actually achieve this?

 

e.g. US 50:1

UK 75:1

 

What initial values would be used in a calculation to work this out?

You're on the right track. But even if I had the cash to buy a farm, I'd hold back as I think farm prices will come down. Better to sit in gold [as a means to the end] and watch asset prices deflate.

 

My brother in law has a small farm, and tells me many of the farmers he knows are struggling with massive debt [from buying/ expanding with mortgages at the peak]. If the Chinese markets crash again....

RH, I think we are on the same track,and I agree with most of your posts, I also see deflation of assets prices v increase in Gold. I guess I want a farm therefore my perspective may be skewed, hope your right farmland to deflate against gold= bigger farm!

ML.