Wol Posted May 15, 2008 Report Share Posted May 15, 2008 Me too. I've bought physical this week. I can't see the miners leading anything up with oil above $120/barrel and gold lagging. Took out this position today. Can't hold with oil stationary at top of channel. Link to comment Share on other sites More sharing options...
drminky Posted May 15, 2008 Report Share Posted May 15, 2008 When the next gold rocket flies, its gonna look even more impressive in Sterling terms. The turdling has resumed its death-spiral and looking even bleaker than last time.. Link to comment Share on other sites More sharing options...
drminky Posted May 15, 2008 Report Share Posted May 15, 2008 Took out this position today. Can't hold with oil stationary at top of channel. Oils looking pretty overbought to me. Its gonna be hard to maintain that momentum. If we see a slapback in oil, and just a fraction of that hot money rotates back into gold, which being oversold looks like a likely destination, those miners are gonna fly.. Link to comment Share on other sites More sharing options...
G0ldfinger Posted May 16, 2008 Author Report Share Posted May 16, 2008 When the next gold rocket flies, its gonna look even more impressive in Sterling terms. The turdling has resumed its death-spiral and looking even bleaker than last time.. Couldn't agree more. It doesn't look good. And pledges to maintain present base rates levels won't help that much. Link to comment Share on other sites More sharing options...
Steve Netwriter Posted May 16, 2008 Report Share Posted May 16, 2008 Following on from the scary article, and the related Karl Denninger article, I've just read this. Saturday, December 29, 2007 The Year In Review And a Look Ahead for 2008 http://market-ticker.denninger.net/2007/12...look-ahead.html This is a great read for understanding how money/credit work. But interestingly, Karl is not a goldbug: There are also a number of people who believe, despite all the evidence above, that the government (or "The Fed") will "hyperinflate" to "save the economy" (or at least try.) Typically these people also believe that the rest of the world will fare better than we will, and will come in to snap up assets in America that are "dirt cheap" as our dollar is debased. This is the central thesis of the "Gold Bug" paradigm; these folks all believe Gold is going to go to $1500 (or more) in the next year, and they urge you to buy some as a result. The problem is that if their thesis is correct they're total idiots to buy Gold! Here's why. Let's say that the dollar is debased by 50% from here and Gold doubles in price (in dollars.) You make 100%, right? Wrong - you are subject to a 28% collectables tax on the appreciation, so you in fact lose compared to inflation. Congratulations - you lost real purchasing power! That isn't so good. Well, what could you do if you believe that the government will "hyperinflate" that would stay ahead of it? In a hyperinflation paradigm where the rest of the world "does better than we do" stock markets will do a moonshot as foreign money comes in to buy all the "cheap" assets. The Dow will likely double if the dollar gets cut in half. But let's say it doesn't double - it only goes up by 30%, to 20,000 by the end of the year in 2008. Why would you not buy Index CALLs instead of Gold? A LEAP January 2009 DIA $160 CALL was selling for $2.00 Friday (Bid x Ask at $1.94/$2.10). Let's say you buy 100 of those contracts for $20,000 (each contract is 100 shares, so 100 x 100 x $2.00 = $20,000, plus commission of course) If the Dow goes to 20,000 by the end of next year, your CALLs are worth $40 each! That is a 20x profit on your original investment; that $20,000 turns into $400,000! Further, if the DOW DID double (ala China's Shanghai Market) your little $20,000 wager would turn into a staggering $1,400,000 in one year's time! So tell me again - if you believe in "hyperinflation" - why do you want to buy the clear LOSER of an asset that metals represent, when you can buy index CALLs and, if your thesis is correct, you will make an absolute stinking FORTUNE! (Of course if you're wrong and the DOW is under 16,000 by the end of the year, that $20,000 is totally flushed. That's the price of poker - but again - just how sure are you that "The Fed" is going to "hyperinflate"? And by the way, no, I don't think they are - in fact, I don't think they CAN.) To those who go even further and are in “It’s the end of the world as we know it” camp, I will humbly suggest that you remove the tin from your hat. It not only isn’t now but also won’t be tomorrow. I guess that's brings us back to the inflation/deflation debate Link to comment Share on other sites More sharing options...
malco Posted May 16, 2008 Report Share Posted May 16, 2008 QUOTE: Let's say that the dollar is debased by 50% from here and Gold doubles in price (in dollars.) You make 100%, right? Wrong - you are subject to a 28% collectables tax on the appreciation, so you in fact lose compared to inflation. Congratulations - you lost real purchasing power! That isn't so good. Well, what could you do if you believe that the government will "hyperinflate" that would stay ahead of it? In a hyperinflation paradigm where the rest of the world "does better than we do" stock markets will do a moonshot as foreign money comes in to buy all the "cheap" assets. The Dow will likely double if the dollar gets cut in half. But let's say it doesn't double - it only goes up by 30%, to 20,000 by the end of the year in 2008. Why would you not buy Index CALLs instead of Gold? A LEAP January 2009 DIA $160 CALL was selling for $2.00 Friday (Bid x Ask at $1.94/$2.10). Let's say you buy 100 of those contracts for $20,000 (each contract is 100 shares, so 100 x 100 x $2.00 = $20,000, plus commission of course) If the Dow goes to 20,000 by the end of next year, your CALLs are worth $40 each! That is a 20x profit on your original investment; that $20,000 turns into $400,000! END OF QUOTE It is this kind of "reasoning" that hardens my convictions that there is little real argument against gold as a strong store of wealth. He forgets that in UK if you get Sovereigns or Britannias you pay no Capital Gains Tax because these coins are legal tender. His logic also fails because if I have $100 and an equivalent value of gold at T1, then time passes and at T2 the dollar has slumped by 50%, my $100 bill only buys half the real value it did, while mygold still buys 72% even if I choose to sell it, which of course I don't have to. So I do win over inflation. Then he makes a specious argument that you are better getting Index calls. Yes, we all know that you can make a pile through leveraging.... if it was that cut and dried everyone would be doing it. He forgets that there is a little word "if" and within that little word there is implied the concept of RISK. And oh, how many discover that too late! I could equally argue that we were all idiots not to buy molybdenum because it went up by a factor of 20. If I buy gold and it goes to $5000 because the banking system is putting four hoofs skywards then that shows how smart I am and how dumb he turned out to be. Oh, and if the DOW did go to 20,000, that might imply inflation to take out much of his 20x profit. Link to comment Share on other sites More sharing options...
mattyboy Posted May 16, 2008 Report Share Posted May 16, 2008 not to mention the counterparty risk. Gold apart from the possible speculative gains that we are all hoping for is first and foremost an insurance policy. If my counter-party has gone tits-skyward by the time my call is in the money, I'm no better off - in fact, I'm $20k down The other point of course is that gold's price tends to increase more than the corresponding drop in the $ - otherwise there would be little point. The inflation adjusted peak of 1980 shows that we could be 100%+ up with the dollar where it is at the moment. edit:grammar Link to comment Share on other sites More sharing options...
kingfisher Posted May 16, 2008 Report Share Posted May 16, 2008 You can keep a track of how many (Zimbabwe Dollars) it takes to buy 1oz of gold here http://finance.yahoo.com/currency/convert?...;submit=Convert That link uses the "official" conversion rate of 30,000 US$ = 1 Zim$. Recently the Reserve Bank of Zimbabwe has let its currency trade "Freely" and it is currently around 255,000,000 US$ = 1 Zim$, so 1 oz Gold = 224,000,000,000 Zim$, so if you have a few billion Zim$, buy gold now as it will be far more expensive next week! http://www.rbz.co.zw/currencyexc/Forex_16052008.asp Seriously though, how could you halt hyperinflation once it gets hold? (As in Zimbabwe) Link to comment Share on other sites More sharing options...
tinecu Posted May 16, 2008 Report Share Posted May 16, 2008 Rhodium's recovery is complete...new all time high Link to comment Share on other sites More sharing options...
Steve Netwriter Posted May 16, 2008 Report Share Posted May 16, 2008 This is more like it And is timed nicely for today's upward action Correction in Gold Near End By: Jim Willie CB Thursday, 15 May 2008 http://news.goldseek.com/GoldenJackass/1210873874.php The springtime corrections are really about done. They have gone on for a couple of months. The extent of the pullbacks have been tested and retested. The long-term trends are just about ready to asset themselves again. Grand deceptions have resumed to attempt to fool the public and the investment community that the worst is over for banks, housing, and mortgage bonds. That is not even remotely true. The deeply wounded banks, the sharply corrected home prices, and the badly damaged mortgage bonds have much more pain ahead. Nothing has been fixed. Many mortgage resets have yet to take place. The New Resolution Trust Corp to facilitate secondary mortgages, to bury dead mortgage bonds, and to renegotiate home loans is not even agreed upon, let alone installed. Its operation will be sometime in 2009 at the earliest. Until then, the system burns as foreclosures mount, inventory bloats, and home prices come down much more, guaranteeing another ugly storm of bank losses in mortgage bonds. The ultimate determining factor right now is home prices, which are accelerating down. Wall Street seems unwilling even to mention home prices, preferring to talk about bank liquidity concerns having been addressed. Except that bank capital is still negative. Let’s take a whirlwind tour of relevant charts, to see that the progress of the corrections is in its last stages. Sentiment is not good for gold, but it never is when the next upleg begins, the nature of the beast. Only the mentally tough, the well informed, and the unshakable types are loaded with gold & silver when the uplegs begin. The bull market in metals and bear market in US$-based paper is ready to resume. Link to comment Share on other sites More sharing options...
Steve Netwriter Posted May 16, 2008 Report Share Posted May 16, 2008 malco & mattyboy, I rather liked Karl's video explaining Non-borrowed Reserves and why they do matter. And a lot of his writings are interesting and informative. But, I don't follow his conclusion re gold or deflation. I agree with you about counter-party risk. Link to comment Share on other sites More sharing options...
G0ldfinger Posted May 16, 2008 Author Report Share Posted May 16, 2008 Wasn't me. Someone else must have bought a little. Link to comment Share on other sites More sharing options...
azazel Posted May 16, 2008 Report Share Posted May 16, 2008 Wasn't me. Someone else must have bought a little. nice too see some positive action. Link to comment Share on other sites More sharing options...
Steve Netwriter Posted May 16, 2008 Report Share Posted May 16, 2008 Wasn't me either 894.5. Nice Link to comment Share on other sites More sharing options...
G0ldfinger Posted May 16, 2008 Author Report Share Posted May 16, 2008 The EUR and gold are rather disconnected recently, which is good for my balance sheet since I am accounting in GBP and EUR. So, a plunge in the EUR or GBP and at the same time gold stable or up makes it look much better. Too bad I have a GBP income. Oh dear. EDIT: Didn't trader Dan say that $900 is resistance? Maybe NY will just let tank gold again. Link to comment Share on other sites More sharing options...
G0ldfinger Posted May 16, 2008 Author Report Share Posted May 16, 2008 Oh-oh. Gloomberg: Oil Surges to Record Above $127 on Speculation China Will Boost Purchases http://www.bloomberg.com/apps/news?pid=206...&refer=home It's a bubble, right? EDIT: The shiny yellow one just scratched along the lower side of $900 ($899.50). Link to comment Share on other sites More sharing options...
drminky Posted May 16, 2008 Report Share Posted May 16, 2008 Oh-oh. Gloomberg: Oil Surges to Record Above $127 on Speculation China Will Boost Purchases http://www.bloomberg.com/apps/news?pid=206...&refer=home It's a bubble, right? EDIT: The shiny yellow one just scratched along the lower side of $900 ($899.50). I've starting taking profits in some of my oil positions today, and rotating these funds into gold stocks. Sure, oil supplies are very tight right now, and i would never sell my core positions, but that gold:oil ratio is unsustainably low IMO. The big opportunities right now are in gold and probably uranium too, if that floats your boat.. Link to comment Share on other sites More sharing options...
G0ldfinger Posted May 16, 2008 Author Report Share Posted May 16, 2008 I've starting taking profits in some of my oil positions today, and rotating these funds into gold stocks. Sure, oil supplies are very tight right now, and i would never sell my core positions, but that gold:oil ratio is unsustainably low IMO. The big opportunities right now are in gold and probably uranium too, if that floats your boat.. I don't necessarily disagree. I am still in physical gold and silver bullion only. Sort of waiting for an equities crash to load my boat with mining shares. Not sure whether it will happen, though. NY tries to keep gold below $900. Link to comment Share on other sites More sharing options...
Vicarious Posted May 16, 2008 Report Share Posted May 16, 2008 Posted this in the inflation thread, thought it would be relevent here also, probably the first of many calls... CPI target to 'crucify' consumers Consumers will be "crucified" unless the government changes its inflation target, a leading economist has warned. Peter Spencer from the influential Ernst & Young Item Club is urging ministers to change the 2% inflation target used by the Bank of England. He warned that interest rates would have to stay at 5% if inflation is to be brought down to 2%. He added that keeping interest rates at their current level would hurt hard-pressed households. He called for the Bank of England's remit to change so it focused on "core inflation", a measure that excludes food and energy prices and is used in the US. Link to comment Share on other sites More sharing options...
G0ldfinger Posted May 16, 2008 Author Report Share Posted May 16, 2008 Posted this in the inflation thread, thought it would be relevent here also, probably the first of many calls... CPI target to 'crucify' consumers So, I take it, Peter Spencer sees no problem in poor people being squeezed by inflation? Link to comment Share on other sites More sharing options...
G0ldfinger Posted May 16, 2008 Author Report Share Posted May 16, 2008 http://us.ft.com/ftgateway/superpage.ft?ne...4465&page=1 The UK's biggest banks are preparing to swap £80bn-£90bn of mortgage-backed assets for Treasury bills with the Bank of England - nearly twice as much as the central bank originally envisaged when it unveiled its scheme to unblock the frozen bank-lending market. ... Separately, the European Central Bank on Thursday voiced its "high concern" at growing evidence that banks are exploiting its efforts to unblock the frozen funding markets by using its liquidity scheme to offload more risky assets than it envisaged. Always keep in mind: central banks often act in an extremely stupid manner. Link to comment Share on other sites More sharing options...
G0ldfinger Posted May 16, 2008 Author Report Share Posted May 16, 2008 Oops. Just went through $900! Where is the Cartel? Link to comment Share on other sites More sharing options...
bitbigt Posted May 16, 2008 Report Share Posted May 16, 2008 ...at some point the MASSES of money sitting on the sidelines waiting to be 100% convinced that the correction is over, will feel its time to get back in or miss out. And as those investors/speculators watch the gold screen with one eye, the other eye will be watching the rising inflation figures making them even more nervous about delaying So the only question is whether a dramatic rush back in begins in the next few days, weeks, or months. Just busted through 900, and now continuing up at a rate of 1 USD per minute!!! Above 900 many will feel the bottom is behind us for golds recent correction, and so they may well pile in NOW!! Link to comment Share on other sites More sharing options...
G0ldfinger Posted May 16, 2008 Author Report Share Posted May 16, 2008 Consumer sentiment down the toilet -- Dow wants to go scuba diving, but the PPT won't let it. Anyway, some people seem to be thinking that DJIA at 13,000 is just ridiculous. Link to comment Share on other sites More sharing options...
Saberu Posted May 16, 2008 Report Share Posted May 16, 2008 Noooo go back down again I don't want it going up yet as I haven't invested enough! If it stays at 900 for the next 6 months that would be ideal but alas that could just be a dream. Cmon you central banks, short that gold quickly! Can't let the sheeple believe in a coloured metal. I'm more worried about silver going up with it to be honest as I may end up being 2/3 silver and 1/3 gold in future Link to comment Share on other sites More sharing options...
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