wrongmove

Sorry cg. My post was meant to be toungue in cheek. No-one gets it right every time. 100% guarenteed. Serious question though. What has changed to make the downward pressure so much stronger than you knew/guessed/whatever last week?

This is not a comment on gold BTW. You can be in love with a beautiful, witty, intelligent girl, or in love with a moaning, manipulative minger. Either way, you will exagerate their good points and be blind to their bad points. It's the love I am talking about, not the girl. But it is why business and emotion don't mix well, in the opinion of many, including me.

So it's CHFs now? Sorry - couldn't resist. Won't happen again.

Let's face it. Gold up is good, gold down is good, gold sideways is good. True love indeed. Re the credit crunch. It has been public knowledge for a year now, even the so called "sheeple" have been talking about it for some time. Banks and builders valuations have had at least a chunk of the damage priced in. Mortgage spreads have risen, and LTVs reduced. Billions have been written off (i.e. accounted for). PMs rose strongly for the first 6 months, but have been generally sideways since. The big question to me is how big is the chunk so far? And can we use an estimate of this to guess the implications for PMs. Also, PMs are still tracking commodities, it seems, or basically acting like a geared bet against the USDX. What will it take, and what sort of timescales, to see a massive change in things from here?

Well, as long as you are not geared to high, this won't be the end of the story.

Alas, they also seem to know when to stop!

or "silver knocking on the gates of hell" ? Most here prefer it when the price is falling anyway, it seems - fill yer boots and all that.

I love the look of silver myself - find gold a bit brash and tacky. Does that mean silver should cost more than gold? True love blinds you to the downside. That is it's point.

Well, at least you keep your emotions and your investment strategy well seperated.....

The post GF linked to was this: So SS is holding. According to GF's sig, he is a "contrary indicator", so what is the opposite of "hold"?

It actually start's at 8:08 pm 08/08/08 in China - the most auspicious minute of the century! GF - thanks for the explanation

Pardon my ignorance, but what do the colours represent - I assume time?

I have heard of it, but I don't believe it. Gold is quite evenly distributed in the Earth's crust. We mined out the "nuggets" a long time ago. Now we just shift huge amounts of rock - typically several tons to produce 1oz of gold. As the price increases, more dilute deposits become economical. In general, more dilute deposits are far more widespread that concentrated ones, so each time the price rises, much more gold becomes minable. Compare with peak oil. We seem to have peaked in oil, but only for light, sweet crude. We haven't even started on the really low grade stuff yet. But the price of oil has shot up, so even oil shales and oil sands are now being exploited. You cannot do this at $30 a barrel, but at $130, it is profitable. Gold is the same. (And the environmental implications - destruction of environment, massive energy consumption, nasty chemicals used to extract Au - are pretty horrendous) So even today, the producers are inflating the gold stock at 2% YoY. And according to cg's graph this seems to be increasing again after a few years of decline. But worse that that, a small handful of arbitrary countries control this supply. You wouldn't want to be using gold in that situation, unless you could mine it. One years output, carefully aimed, could buy your country. No-one would know if the producers were telling the truth about production levels, or just storing excess for a "smah and grab". I can see that gold made good money, long, long ago (when the inflation of the supply was pretty much zero due to lack of mining technology - it took the whole of history up to 1848 to mine the first 10%). But the history of fiat is almost as long, going back to ancient Babylon. And if you have FRB, then gold is just as bad as what we have now, i.e. you can expand the money supply indefinitely by simply changing the reserve requirement. But the fact that it can be inflated, and controlled by so few, makes it a useless form of money in the 21st century, in my opinion. But good luck with you punt, all the same. I don't see this has much implications for that. Even I would have a little bit if I had any wealth worth "protecting".

You're thinking in fiat! I've not got an opinion on the PoG and its future - I personally feel more uncertain about the economy than I did last week, last month etc. If the market agrees, that should be good for gold. I'm just questioning whether some of the more outrageous claims of gold's "real" value hold water.

Just look carefully at the very end of cg's chart - you can see already the effect the recent price if having. The downtrend has just developed an uptick..............

$2,000/oz would cure all that. 100% guarenteed How much is gold valued at by the "gold is money" argument? Edit: none of this has anything whatsoever to do with short/medium term value of gold, of course, so I am on the wrong thread again. Sorry SN - cut and paste as appropriate.

But the price of gold has been pretty low for those 30 years. Production amost ground to halt at some points - the price of gold fell below the cost of production for many deposits. We used to have to make do with the very rare nuggets that sometimes occur naturally. Now we just eat mountains. Check out gold mine yields - they are a few grammes of Au per ton excaveted - not possible until recently.

And why is all this news, here of all places? Ten minutes with Google.....

What proportion are hedged? That would have them dragging their feet for now (in as much as they can). Production is tailing off slightly, but it is at a very, very high level, relative to the truish GS days and before. It looks that gold stock inflation is currently running at 2% a year now. What would $5,000/oz do to that? And why should South Africe pretty well control the process?

If a deposit is worth mining at $500 oz, then you can mine a far, far poorer deposit for $5,000 oz. A good sumary here - my highlighting on the excerts After the gold rush The history of gold production can be quite clearly divided into two eras; before and after the California gold rush of 1848. Some calculations suggest that, until then, scarcely 10,000 tonnes of gold had been excavated since the beginning of time. Thus more than 90% of the world's gold has been produced since 1848. So the crucial turning point in the history of the gold mining industry came with the discovery at Sutter's Mill on the American River in January 1848, which ushered in a new age of gold. World production at this time stood at about 280 tonnes, but was dramatically boosted again in 1886 with the discovery of the huge gold reefs in the Witwatesrand Basin of South Africa. Gold had first been found in eastern Transvaal in 1873, but it was obvious from the beginning that Witwatersrand deposits were of a completely different order. South Africa ousted the United States as the world's premier producer in 1898, a position it has held almost continuously ever since. From 1884, the first year of recorded output, South Africa has been the source of close to 40% of all the gold ever produced. ....................

The point of gold as money is that it cannot be inflated by governments, so long as you also outlaw fractional reserve banking (the ability of a bank to lend out a fraction of its deposits). If we can double our stocks in 30 years at current rates of production, just think what it would be like if gold was many $1,000s of dollars an ounce. Output would crank up massively. Current production levels are aimed at a price of much less than spot, as many miners are hedged. So a handful of countries, those with significant reserves, would replace the central banks. I.e. they would control the money supply, and could inflate it if they wish. Who would be running these countries? I dread to think. Has the "gold is money" argument really factored in the difference between a pick and an open fire and a 21st century earth mover and a large scale refinery? Or is simply that the original assumption wrong, i.e. that half the world's gold has been mined in the last 30 years?

Isn't that a little ....... er, inflationary? How hard and fast would they be digging at say $2,000 oz?

Anyone know exactly what do they mean by "above ground stocks"? Surely half the world's gold hasn't been mined in the last 30 years?

Sorry to butt in, but I agree strongly (FWIW ). For non-traders (LTBH) this is very important IMHO. The most frequently given reason for rocket propelled gold prices is the assumption that "gold will become money again".

Bonds beckon as commodity boom flags "Deutsche Bank has called the top of the commodity cycle. The uber-bulls of the oil, food and metals boom have advised clients to take profits before the downturn engulfing most of the global economy works its inevitable effects. Oil will slide back towards its "marginal production cost" of $60 to $80 a barrel; gold will slump to $650 an ounce as the dollar recovers against the euro; copper, lead and tin will slowly halve in price; grains will calm down as harvests in Australia and the Eurasian Steppe return to normal............" A newspapaer article calls the top! So, if housing is anything to go by, the bull has at least another 5 years!