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Are we concerned that gold has not done much since the price fell from its high of $1030 even though the fundamentals suggest it should have done otherwise?

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Are we concerned that gold has not done much since the price fell from its high of $1030 even though the fundamentals suggest it should have done otherwise?

Not a all. It's a healthy sign for the longer term bull.

 

From August 07 to March 08 gold got a little overheated in part due to the banking solvency crisis which i expect we'll see again later this year with gold heading to $1200+

 

 

 

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Are we concerned that gold has not done much since the price fell from its high of $1030 even though the fundamentals suggest it should have done otherwise?

 

Nope. Not at all. A standard period of consolidation. Absolutely necessary. Nothing goes up in a straight line and I fully expect the gold bull to see far greater falls/rises in the future.

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Nope. Not at all. A standard period of consolidation. Absolutely necessary. Nothing goes up in a straight line and I fully expect the gold bull to see far greater falls/rises in the future.

 

I must be learning from you all because - thats what I believe too and I knew nothing whatsoever about any of this 18 months ago.

 

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If it really is peak oil, this ratio will remain low, or at at least the peak when gold recovers should be low compared to previous peaks IMO.

 

Perhaps in the future gold/Dow and gold/av house price ratios will be a better guide to gold being in a bubble.

 

completely agree. I think gold/oil ratio is wrong at the fundamental side. One resource is renewable, the other is not. It worked at the time when oil perceived to be endless, but now we are seeing a correction to this error.

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completely agree. I think gold/oil ratio is wrong at the fundamental side. One resource is renewable, the other is not. It worked at the time when oil perceived to be endless, but now we are seeing a correction to this error.

 

What makes you think gold is endless?

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Peak oil or not, its just noise for the media to get a handle on.

 

Oil price high, gold price is very low. The only way to redress thee balance is for oil to come back down to $90 a barrel, where gold is indicating it should be now.

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What makes you think gold is endless?

 

Gold isn't endless, but the end of gold is of less concern for the world economy than the end of oil - there will still be extant gold whereas oil is used up. And the price of oil is mainly based on current production, whereas the gold in circulation includes gold that was dug up years and centuries ago. So a gold supply shortage should have a less direct effect on the price than an oil supply shortage, in theory.

 

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completely agree. I think gold/oil ratio is wrong at the fundamental side. One resource is renewable, the other is not. It worked at the time when oil perceived to be endless, but now we are seeing a correction to this error.

 

I understand your point but I don't agree. A large part of the gold price is a function of the price of energy that is needed to mine and refine gold. High oil translates into a high oil price, but the two prices do not move up in perfect alignment, the gold price in normal conditions will lag the oil price and I expect that most of the mining companies are aware of what is happening globally to the price of commodities and the weakness of the dollar so they have probably purchased their energy in the futures market.

 

If the price of energy stays high and gold remains low then the mining companies will not be able to produce gold at a profit. This is part of the reasons that the junior mining shares are not performing, eventually as the high costs of oil work their way through to the miners then the supply of gold to the market will fall. True that a gold remains a durable product and most of the gold ever mined is still around, it is what happens to the price of this existing gold when there is a falling supply from the miners.

 

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True that a gold remains a durable product and most of the gold ever mined is still around, it is what happens to the price of this existing gold when there is a falling supply from the miners.

 

Yes, so there is an indirect effect - if the price falls too close to the price of production, production falls, and overall the supply is constrained. But how big a proportion of the gold market is newly mined gold? A few per cent at most?

 

So the effect is far less direct than some would suggest - there is a connection, but it's a relatively weak one.

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Phew... just got through reading this post. Was exhausting but worth the effort.

 

I am new to this site though have been familiar with HPC for some time. I am considering asking the moderators there to re-name it to something like G8 crash, in order to re-invigorate it, but I suspect that will not go down well.

 

Such issues seem to be freely discussed here.

 

 

To add to the conversation, I noticed a couple of pages back gold being compared to oil, dollars etc, with predictions were it could possibly go. I finally got round to reading Peter Schiffs book "Crash Proof" and was impressed with his use of the DOW/Gold ratio of the last century. After each boom in financial assets and with each bust [with each one going progressively higher than the previous] the ratio of the Dow to gold has returned to 1:1. I think most here would agree that gold priced in dollars is irrelevant if it is in terminal decline. The Dow is now I think half way down from its peak against gold in 2002. Where it was at 44 to 1, it is now somewhere around 14 to 1. This is the ratio to follow I think. If the Dow stays around where it is, we have around $12,000 for Gold. Perhaps the Dow will drop to 5000. Then again, The Dow could possibly go to 36000 if we had a chronic/ hyperflationary outbreak.

 

I think the point is we need to really break our habit with dollar pricing things. This involves a paradigm shift, which most here have already evidently made. Some commentators refer to a paradigm shift in the world, which really means to say the world has changed. I think this word is more aptly used in referring to our own "world view". The volatility of currencies, commodities and the general price of things will confuse the hell out of people in the next few years, that is, if things unfold as I think they will. People will continue to be confused; tossed by this wave and blown by that wind, in so far as they are stuck in the old paradigm of the dollar.

 

I believe the Dow/gold ratio will provide an effective compass when navigating the financial storm to come.

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KE Report -

 

Al talks "gold" with Casey Research's Ed Steer.

http://www.kereport.com/DailyRadio/Daily061208.mp3

 

"The next move in gold ... will take your breath away."

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I think the point is we need to really break our habit with dollar pricing things. This involves a paradigm shift, which most here have already evidently made. Some commentators refer to a paradigm shift in the world, which really means to say the world has changed. I think this word is more aptly used in referring to our own "world view". The volatility of currencies, commodities and the general price of things will confuse the hell out of people in the next few years, that is, if things unfold as I think they will. People will continue to be confused; tossed by this wave and blown by that wind, in so far as they are stuck in the old paradigm of the dollar.

 

I believe the Dow/gold ratio will provide an effective compass when navigating the financial storm to come.

 

Welcome romans holiday. Great first post.

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Looks like the Iranians got their money out in time, eh ?

 

http://edition.cnn.com/2008/WORLD/europe/0...iref=newssearch

 

Brown said new measures against Iran, including a freeze on overseas assets of the country's biggest bank, would be continue if the Islamic regime failed to address concerns over its nuclear ambitions.

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Hi Steve Netwriter,

 

I see you are a fellow kiwi! ;) I am heading to NZ soon to stock up on silver and gold. Was thinking of using the New Zealand mint. Any suggestions?

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This is a good listen. Specially the 2nd hour, on the 4x phases on inflation.

 

June 14, 2008

3rd Hour with Jim & John

* Commodity Bull Market: Higher Prices Ahead

* The Four Phases of Inflation

 

http://www.netcastdaily.com/broadcast/fsn2008-0614-3a.mp3

 

from: http://www.financialsense.com/fsn/main.html

 

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Nice rally so far in gold today, it will be interesting to see how the market reacts if we get the usual NY trading 'smackdown'. If they see it as a predictable move and buy the dip, then I think we're in for a substantial rally over the next few days. If not, it's still anyone's guess but I'm siding with a rally.

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Hi Steve Netwriter,

 

I see you are a fellow kiwi! ;) I am heading to NZ soon to stock up on silver and gold. Was thinking of using the New Zealand mint. Any suggestions?

 

Steve recommended NZ Mint to me (especially the Gold 1 oz Kiwi coins) and I was very happy with thier service. Might want to think about insurance and storage in advance as there are few vaults here and insurance seems to be only something you can get as an add-on to your contents insurance. A little pricy but you might just want to dig a hole in the garden instead!

 

Cheers

Sylvester

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Steve recommended NZ Mint to me (especially the Gold 1 oz Kiwi coins) and I was very happy with thier service. Might want to think about insurance and storage in advance as there are few vaults here and insurance seems to be only something you can get as an add-on to your contents insurance. A little pricy but you might just want to dig a hole in the garden instead!

 

Cheers

Sylvester

 

Thanks Sylvester,

 

Being a transient [working in Korea], I was thinking of just using a safe-deposit box. Less than ideal I know. I am more worried about being left out of the silver market which I think will do well. Also, like the look of those silver ferns. ;)

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Hi Steve Netwriter,

 

I see you are a fellow kiwi! ;) I am heading to NZ soon to stock up on silver and gold. Was thinking of using the New Zealand mint. Any suggestions?

 

I wish that were true, but I'm only a Pom :(:) :)

But loving this great country and its people.

 

The cheapest way to buy silver is with GoldMoney. Much cheaper

The NZ mint charges about 16% above spot.

 

As Sylvester says, the 1oz gold coins are the best deal. The price is better than bars, and they buy back at spot :) :)

Talk to Michael O'Kane. He's very helpful and informative.

 

I know for a fact that he even talks people out of buying if he thinks it's a bad time.

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I wish that were true, but I'm only a Pom :(:) :)

But loving this great country and its people.

 

The cheapest way to buy silver is with GoldMoney. Much cheaper

The NZ mint charges about 16% above spot.

 

As Sylvester says, the 1oz gold coins are the best deal. The price is better than bars, and they buy back at spot :) :)

Talk to Michael O'Kane. He's very helpful and informative.

 

I know for a fact that he even talks people out of buying if he thinks it's a bad time.

 

 

Ha Ha... thats cool.. the more the merrier.....

 

Thanks for the information. Even though I want physical maybe it is unpractical for silver, and something like Goldmoney would be best. Not so for Gold itself, have to have my precious with me at all times. :lol: I am really looking forward to buying some coins. In Korea, I have only been able to buy bullion bars.

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Thanks Sylvester,

 

Being a transient [working in Korea], I was thinking of just using a safe-deposit box. Less than ideal I know. I am more worried about being left out of the silver market which I think will do well. Also, like the look of those silver ferns. ;)

 

Try Customhouse vault in Auckland http://www.customhouse.co.nz/ or Central vault in Wellington http://www.centralvault.co.nz/contact.php

Personally, I preferred the Auckland vault as it seemed more secure and slightly more geologically stable than Welly. Plus the fact I leive nearer to Auckland helps.

 

PS I'm a pom too (for my sins) but live here now :rolleyes:

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Gold at important resistance now, if it can break through to $885 it will probably head back to $900 today.

 

Edit: Gold just cleared it, I think we're in for a good rally here if it can hold.

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