GOLD

[Pluto]

I was actually offering "How can the deflation happen when the banks aren't allowed to suffer the consequences?" as a genuine question. It seems a lot of people who certainly sound like they know more about finance than me, feel it is inevitable, and I just don't see how without a change in policy?

 

Could it not be that treasury bonds are considered (right or wrong) the lowest counterparty risk that still generates an income and that is why they are so in demand? That it is not expectation of it being a profitable investment but rather a damage limitation exercise?

 

I am aware of the apparent conflict between the two paragraphs above, which is partly why they are both phrased as questions.

 

To answer your first question you have to look at what happened in Japan. Japan has a ZIRP and government bail out of banks and still no rising prices. Infact they have been suffering from deflation for years. For inflation to take hold and and end up with hyperinflating you need rising wages. Without rising wages (or borrowed money to spend) you are going to cut back which starts a deflationary spiral. At the end of the day if no-one is going to borrow from banks because of tighter standards then all the money the banks get from the fed wont get into the economy pushing up prices. The money has to get into the economy, that is why Bush is bypassing banks and giving money directly to the masses, however this will also fail if they don't buy goods and services with the money. As I said before the bond market is not seeing inflation and therefore is predicting the fed is going to fail, whether they do or not is the 64,000 dollar question.

 

Treasuries are risk free investments paying the lowest yield in 50 years - the last thing you want to get into if you are predicting inflation and the best investment if you are predicting deflation.

[marmite]

But I think Joe Public will be scared off by this correction, especially given its proximity to the smashing of the $1000 barrier. I don’t expect any more “Invest in gold” articles in the press for a while that’s for sure.

 

I really hope so

 

I would really like to see a flat summer ( $900 - $850 range ) to give me a chance to accumulate.

 

The £ is still very high against the $, the longer term average I belive is nearer the 1.7 - 1.8 mark. Gold might go up or down $100 but the fundementals are still in place. I see gold as a hedge against the falling pound and a longer term store of wealth.

 

This debt bubble has only just started to pop especially here in the UK. The housing market has only just started to turn and joe public is taking no notice. Just go to your local shopping centre this weekend, it will be packed with people picking up bargain plasmas, clothes and booking the essential summer holiday.

 

I walk past a Ford ( car dealers ) nearly every day and I have noticed that since the 2008 plates came out the sales office is packed with people. They have six desks and at least 4 or 5 have customers sitting at them trading in their 3 year old fiestas / focuses for a new one ( they all buy them on some options deal its like leasing ).

 

Its only when the banks start margin calls on homes that the fun really starts. The job losses will start 3rd - 4th quater 2008 and this will stop the spending and cause more job losses and the spiral down will continue.

 

Wall street problems have not hit main street yet. I live on main street and its still a very suuny place

 

I see the storm clouds far off on the horizon but have my Golden umbrella as protection

[marceau]

An oversold situation of epic proportions is developing in the miners. Some of them are already reflecting gold at $850 and silver at $16. A trip below $900 will be a bloodbath and I'm going all out at the moment to secure additional funds to take full advantage of it.

 

It'll take balls of steel, but i'll be a buyer below $887 and above $850. The trick will be the game of chicken as I wait to see how close to $850 I can get. At the moment I think my bottle-out point will be $965-$970. But I may surprise myself. Equally, gold may surprise me and I may not get an opportunity at all.

 

Even Nadler's precious Indian demand will reappear below $900, so the dip below will be a brief but brutal stop busting exercise as I described earlier on.

[Pluto]

To answer your first question you have to look at what happened in Japan. Japan has a ZIRP and government bail out of banks and still no rising prices. Infact they have been suffering from deflation for years. For inflation to take hold and and end up with hyperinflating you need rising wages. Without rising wages (or borrowed money to spend) you are going to cut back which starts a deflationary spiral. At the end of the day if no-one is going to borrow from banks because of tighter standards then all the money the banks get from the fed wont get into the economy pushing up prices. The money has to get into the economy, that is why Bush is bypassing banks and giving money directly to the masses, however this will also fail if they don't buy goods and services with the money. As I said before the bond market is not seeing inflation and therefore is predicting the fed is going to fail, whether they do or not is the 64,000 dollar question.

 

This is the deflationists main argument. If the masses are up their eyeballs in debt and not getting above real inflation pay rises, then who is going to be spending more money pushing up prices? For inflation to take hold you would have to "give" money away to folk who would then spend it in the economy.

 

Treasuries are risk free investments paying the lowest yield in 50 years - the last thing you want to get into if you are predicting inflation and the best investment if you are predicting deflation.

 

[wren]

But I think Joe Public will be scared off by this correction, especially given its proximity to the smashing of the $1000 barrier. I don’t expect any more “Invest in gold” articles in the press for a while that’s for sure.

I reckon Joe Public is small fry and pretty irrelevant and will be moreso when the reckoning comes.

 

But as a Joe Public myself, I find it rather fascinating.

 

[marceau]

I think we're about to see the first attempt to take $900 here. I may risk a small position just above $900 with a tight stop just below, as I think we are due a good $40 bounce before we drop below.

[G0ldfinger]

...

Thanks for posting that link. I'm so pleased that BV has answered in person.

The amount of ignorance & half-knowledge on HPC is sometimes amazing. When I started to store gold with BV, I read through basically ALL documentation. I came to the conclusion that for a private investor it is one of the best ways to store larger amounts bullion.

[alexreeve]

The amount of ignorance & half-knowledge on HPC is sometimes amazing. When I started to store gold with BV, I read through basically ALL documentation. I came to the conclusion that for a private investor it is one of the best ways to store larger amounts bullion.

If you remember on the old gold thread there, people were always asking for a summary because they wanted to invest their life savings but couldn't be arsed to read through it.

[dietcolaaddict]

Hi Wren

 

you are right, and until I started learning at places like this , I was very much a Joe Public in my thoughts on house prices only going up, how to invest money, not appreciating currency exchange and inflation on the real value of savings etc. (I have very much still to learn).

 

I can see that Joe Public might have little influence over the global spot price. Even at the mania stage when everyone in your workplace is buying gold. There are big players involved, as the last few days have shown.

 

But if you hold physical, Joe Public affects the liquidity of your PM investment.

 

But have you ever gone to the office of ATS Bullion, for example?

 

I reckon they would struggle to accomodate a queue of over 10 people. When the day to offload PM comes, say through a catastrophic event (9/11) etc., it will be a line of Joe Publics with a half-krugger each, that will extend the queue down to Trafalgar Square and stop you offloading.

 

 

[Pluto]

Hi Wren

 

you are right, and until I started learning at places like this , I was very much a Joe Public in my thoughts on house prices only going up, how to invest money, not appreciating currency exchange and inflation on the real value of savings etc. (I have very much still to learn).

 

I can see that Joe Public might have little influence over the global spot price. Even at the mania stage when everyone in your workplace is buying gold. There are big players involved, as the last few days have shown.

 

But if you hold physical, Joe Public affects the liquidity of your PM investment.

 

But have you ever gone to the office of ATS Bullion, for example?

 

I reckon they would struggle to accomodate a queue of over 10 people. When the day to offload PM comes, say through a catastrophic event (9/11) etc., it will be a line of Joe Publics with a half-krugger each, that will extend the queue down to Trafalgar Square and stop you offloading.

 

A 9/11 event is when you want to be queuing to buy PMs. No one can default on Gold it is real money.

 

[Goldilocks]

0pps double post

 

edit typo

[Goldilocks]

I'm not selling my gold/silver i don't care even if gold drops down to 2cents or silver 1 cent.

what a great gift the elite is giving away with cheap prices, i'll sell when the central banks stop pumping money into the stocks,currency's,banks, fiddling the employment figures when the trade deficit is at zero, the likes of the usa/uk start making stuff instead of service industry's, and they start cutting back of big government.

 

Its all a goldilocks economy the governments are hiding the real mess!

 

As Jim Sinclair says if you can't stomach the volatility $100 down swings and up swings get out.

 

"this is it"

 

 

 

[drminky]

To answer your first question you have to look at what happened in Japan. Japan has a ZIRP and government bail out of banks and still no rising prices. Infact they have been suffering from deflation for years. For inflation to take hold and and end up with hyperinflating you need rising wages. Without rising wages (or borrowed money to spend) you are going to cut back which starts a deflationary spiral. At the end of the day if no-one is going to borrow from banks because of tighter standards then all the money the banks get from the fed wont get into the economy pushing up prices. The money has to get into the economy, that is why Bush is bypassing banks and giving money directly to the masses, however this will also fail if they don't buy goods and services with the money. As I said before the bond market is not seeing inflation and therefore is predicting the fed is going to fail, whether they do or not is the 64,000 dollar question.

 

Treasuries are risk free investments paying the lowest yield in 50 years - the last thing you want to get into if you are predicting inflation and the best investment if you are predicting deflation.

 

Actually, Japan is a fascinating case. I have a different take on it than most analysis. I think Japan is the perfect example of exactly the type of INFLATION that we will see play out. What?, you say, but Japan had DEFLATION! Of course, they did. But they also created on hell of a lot of inflation too! Just not in Japan!! Its the carry trade! And this is exactly what will happen. Japanese banks simply weren't willing to lend on deflating assets (Domestic Stocks, Real Estate), especially with Japans' demographic outlook being so dire, hampering any chance of a full recovery. So domestically rates were punitively high - even with base rates at zero! But they were perfectly happy to lend cheaply en masse to invest abroad on any asset classes that were still APPRECIATING. So the Rampant money creation found its way out of the country, instead of where it was intended to go. Likewise Ben's helicopter drops will not laregely go into the US real estate market, the money will flow into whatever still has any hope of upside left - certainly energy, food, commodities, and perhaps eventually back into foreign emerging markets again.. And of course this time, uniquely, inflation is a GLOBAL PHENOMENON..

 

And even if you don't buy into my take on Japan, well look at how that wonderful 'deflation' affected gold priced in yen over the last 5 years..

 

http://www.goldpreciousmetals.com/charts_historic_jpy.asp

[marmite]

CNBC special report on gold comming up after the break @ 17:30pm, for anyone near the TV

 

 

I have never heard CNBC talk about gold so much

[marmite]

Nothing new said, biggest drops since Feb 1983, sell, sell, sell, run for the hills.

 

Traders see support @ 920ish level

 

I hope that means it will crack that support, otherwise why would CNBC report it, if not to shake out investors confidence.

 

Also the question was just poised " Blood on the Streets with Financials "

 

Hidden message - Buy stocks, especially banks

[marceau]

Nothing new said, biggest drops since Feb 1983, sell, sell, sell, run for the hills.

 

Traders see support @ 920ish level

 

I hope that means it will crack that support, otherwise why would CNBC report it, if not to shake out investors confidence.

 

Also the question was just poised " Blood on the Streets with Financials "

 

Hidden message - Buy stocks, especially banks

 

 

I was thinking exactly the same thing myself. These 'traders' must be absolute geniuses to identify support at $920, considering that's where it has been sitting for the last few hours.

 

I'll be amazed if $920 doesn't get taken out today, with a run down to $902-905. You're right, CNBC just setting the masses up for another fall.

 

PS - Has anyone seen the JPM share price, it's like nothing bad had been happening in the markets at all. It's barely fallen since the credit crunch started. Especially strange given that it supposedly has more exposure to subprime than even citi does. I think that will be my bank short of choice.

[azazel]

Oh yes . . . it's nasty. I bought in fairly early near $700 gold and $13 for silver and this has shown me the other side of the coin. It's made me wish I'd sold off silver as I watched it hit $21+ on Sunday night as Asian markets opened. Ah well "coulda, woulda, shoulda"

 

Yes my BV position is about the same. I'm not to bothered though as I'm confident we will be above 1000 again soon. Things are not any better in the financial world. The fundamentals are the same if not better for gold

[Pluto]

Look what is happening if you try and buy physical:

 

Dear Customer,

 

Due to the OVERWHELMING demand for precious metals, our online ordering system has been unable to keep up with our customers’ needs. We have had to disable the APMEX ordering system to allow us ample time to upgrade our site to accommodate the increased demand. We apologize for this temporary problem. In the mean time, we will be accepting telephone orders for the following items only as we have them available:

 

• 1 ounce Gold American Eagles

• 1 ounce Gold Canadian Maple Leafs

• 1 Ounce Gold Krugerrands

• 100 oz Silver Bars

• Misc Generic .999 Fine Silver

• 90% Coin Silver

 

During this time, we will have a minimum order of $5,000. We regret we have had to make this drastic change to our ordering process and rest assured, we are working expeditiously to correct the problem. As soon as we have our new site up and running, we will notify you via e-mail when you can again place orders online.

 

You may contact us during normal business hours Monday – Friday 7:30 am – 4:00 pm cst. (800) 375-9006

 

If you have existing orders with us, we have in-stock all items needed to fulfill your orders and are shipping them as scheduled. Once our new site is functional, we will be able to activate our complete inventory line again.

 

Respectfully,

 

Scott Thomas

President %26 CEO

 

www.APMEX.com

 

P.S. We are actively looking for new bullion inventory to purchase. If you have items that total $2,500 or more and are interested in selling, please call our trading offices at the number listed above. We are paying strong numbers for ALL Precious Metals!

[Bobsta]

CNBC special report on gold comming up after the break @ 17:30pm, for anyone near the TV

 

Bloomberg update just now had the anchor reading out the usual market info ... got to Gold "down ~1.5%" ... then Silver "which usually moves in concert with Gold <pauses> down over 8.5%!" <big note of surprise in his voice>

 

Some bird giving a market update saying Gold's drop this week is approaching the biggest fall in 25 years.

 

Oh well. Makes life interesting, and makes going to work worthwhile!!

[Bobsta]

Look what is happening if you try and buy physical:

Just like the UK housing market then. No supply because people won't sell as the price is falling.

 

<this is a (poor) joke BTW>

[Pluto]

Just like the UK housing market then.

<this is a (poor) joke BTW>

 

What the poles starting buying kruggers then? No, I know, it's the olympics silly. All those gold coins for the winners...haha

[Pluto]

Actually, Japan is a fascinating case. I have a different take on it than most analysis. I think Japan is the perfect example of exactly the type of INFLATION that we will see play out. What?, you say, but Japan had DEFLATION! Of course, they did. But they also created on hell of a lot of inflation too! Just not in Japan!! Its the carry trade! And this is exactly what will happen. Japanese banks simply weren't willing to lend on deflating assets (Domestic Stocks, Real Estate), especially with Japans' demographic outlook being so dire, hampering any chance of a full recovery. So domestically rates were punitively high - even with base rates at zero! But they were perfectly happy to lend cheaply en masse to invest abroad on any asset classes that were still APPRECIATING. So the Rampant money creation found its way out of the country, instead of where it was intended to go. Likewise Ben's helicopter drops will not laregely go into the US real estate market, the money will flow into whatever still has any hope of upside left - certainly energy, food, commodities, and perhaps eventually back into foreign emerging markets again.. And of course this time, uniquely, inflation is a GLOBAL PHENOMENON..

 

And even if you don't buy into my take on Japan, well look at how that wonderful 'deflation' affected gold priced in yen over the last 5 years..

 

http://www.goldpreciousmetals.com/charts_historic_jpy.asp

 

Yeah, your take is pretty well spot on. However, the inflation they are going to create this time around is going to show up in worldwide stats like CPI. There is no way inflation on food and energy cannot show up. Also, China for the last 10-15 years has been exporting deflation, which has been contributing to our CPI numbers being subdued.

 

It is going to be a real feat for the bankers of the US to try a carry trade like Japan did. Most of the Yen Carry trade found its way into worldwide property prices, which was generally accepted by the masses and did not surface in Central Banks' targeting numbers.

 

So I not sure the same could apply again with the US.

[Goldilocks]

Bernanke's own home down 260K in value

 

"'Even though he's the Fed chairman, he's going to get hit"

 

Fed Chairman Ben Bernanke's Capitol Hill home is slipping in value and may soon be worth less than he paid for it. An economist quoted by Bloomberg estimates Bernanke's house has lost $260,000 in value. :lol: :lol:

http://www.bloomberg.com/apps/news?pid=206...&refer=home

[drminky]

Yeah, your take is pretty well spot on. However, the inflation they are going to create this time around is going to show up in worldwide stats like CPI. There is no way inflation on food and energy cannot show up. Also, China for the last 10-15 years has been exporting deflation, which has been contributing to our CPI numbers being subdued.

 

It is going to be a real feat for the bankers of the US to try a carry trade like Japan did. Most of the Yen Carry trade found its way into worldwide property prices, which was generally accepted by the masses and did not surface in Central Banks' targeting numbers.

 

So I not sure the same could apply again with the US.

 

I think they'll let inflation rip for a while - its in their interests to do so for now. As long as the public keep swallowing the line that the inflation is only temporary and will moderate in the future recession/depression. The public have done a good job at buying this spin so far - at least in the west. This is what those low bond yields are about. They got lots of mileage yet before the public fully wake up to the inverse robin-hood game of stealing from the poor to give to the rich going on. Just look at all the people on forums repeating the mantra that 'oils gonna come down to $20-$30' and all that. They fully buy it! Its when the ten year and 30 year bond yeilds head sharply north that the inflation game will be up for the Fed..

[marceau]

Silver down well over 10% from its highs. I think the best profits will come from recovery in silver rather than recovery gold. As always, the trick will be not to buy too far from the bottom.