GOLD

[G0ldfinger]

So you don't think 1.65 anymore? What about the dollar/gold correlation then? History not going to repeat after all?

...

I think we could see 1.65, no problem. But all these currency turds that are floating in the bowl will be flushed down the tube in the end. So, gold will not stay flat in Euros either. Also, at some stage (long before the Greater Depressions and also the USD inflation are over), the EUR might encounter massive problems and reverse.

[notanewmember]

i dont know if anyone uses this, but traders in gold might want to take a look.

 

Its sell recomendation $967 looks pretty spot on.

 

http://www.britishbulls.com/StockPage.asp?...cials&TYP=S

 

PHAU ticker used

[wrongmove]

I think we could see 1.65, no problem. But all these currency turds that are floating in the bowl will be flushed down the tube in the end. So, gold will not stay flat in Euros either. Also, at some stage (long before the Greater Depressions and also the USD inflation are over), the EUR might encounter massive problems and reverse.

 

So you are bullish Euro now? And the correlation will stay intact? Sorry, I'm a bit slow tonight. I think I get the message though. "gold will go up".

[wren]

i dont know if anyone uses this, but traders in gold might want to take a look.

 

Its sell recomendation $967 looks pretty spot on.

 

http://www.britishbulls.com/StockPage.asp?...cials&TYP=S

 

PHAU ticker used

Interesting. I have it bookmarked.

 

Is there a silver equivalent which they monitor?

 

On edit: I found 2 silver ETFs which they monitor:

 

http://www.britishbulls.com/StockPage.asp?...cials&Typ=S

http://www.britishbulls.com/StockPage.asp?...cials&Typ=S

 

And another gold one:

http://www.britishbulls.com/StockPage.asp?...cials&Typ=S

[G0ldfinger]

Champagne everyone! Finally half a trillion has been reached.

 

NOTE: trillions are the new billions. (LTCM my @r$e! Peanuts!)

 

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

Banks' Subprime Losses Top $500 Billion on Writedowns (Update1)

 

By Yalman Onaran

 

Aug. 12 (Bloomberg) -- Banks' losses from the U.S. subprime crisis and the ensuing credit crunch crossed the $500 billion mark as writedowns spread to more asset types.

Uh, oh, and remember back in the times when we thought 100 lenders going bust is an insanely huge number? :lol:

 

273 @ http://ml-implode.com/

[notanewmember]

Interesting. I have it bookmarked.

 

Is there a silver equivalent which they monitor?

 

On edit: I found 2 silver ETFs which they monitor:

 

http://www.britishbulls.com/StockPage.asp?...cials&Typ=S

http://www.britishbulls.com/StockPage.asp?...cials&Typ=S

 

And another gold one:

http://www.britishbulls.com/StockPage.asp?...cials&Typ=S

 

Yeah - PHAG or SLVR

 

You can play about with daily or weekly settings.

 

Type in any stock in the box and it will give you a recommendation.

 

E.g. JKX. Its back to where it started - but if you followed it - you would be 3x up.

 

 

This is the closest you get to black box trading - and its pretty successful mostly it seems.

 

The home page lists stocks that are buy now [dark green] or sell now [red] too.

[notanewmember]

Oh British Bulls says sell oil on 11/8/08 - so I guess we might have further to fall

 

[CRUD - oil ETF]

[UpTheKhyber]

I am not convinced by the "gold is money" theory (as discussed elsewhere) and without that, gold has a certain amount of physiacl demand for jewelry, which should keep prices ablove the cost of production, but beyond that it is all just speculation...

Gold is not currently used as legal tender in many countries (if at all), and nor is it likely to be any time soon (i won't digress into that discussion). However that does not mean that gold does not have a monetary role; it still plays a key role in the asset backing of credit money, particularly fiat issued by central banks. Its ease of storage, liquidity, and lack of counterparty risk make it attractive in this role. What made it unattractive until recently was the lack of income yielded by gold compared with US government bonds. With these bonds now giving a negative yield, gold looks a whole lot more attractive, especially for asian central banks with a huge over-exposure to US Treasury Bills. It's no coincidence that the strength of the US dollar and the price of gold are inversely related. As long as the medium-long term outlook for the US dollar looks weak, gold is for me a hold/buy. The demand for gold (including in the form of jewellery) as a store of wealth by individuals, especially in poorer parts of the world should also not be underestimated. To deny the monetary role of gold is as daft as denying the sheltering role of housing.

 

...But it seems to me that with gold so far above the cost of production, gold is now more speculative than wealth preserving...

Average total cost of gold mine production in Q4 2007 (@~US$520/oz) was ~65% the average spot price of gold in Q4 2007 (@~$US800). With costs increasing 17/25% year over 2006/7, and oil today at @~$US115/barrel vs ~$US85 in Q4 2007, if we get into Q4 2008 with price of gold @ $US800/oz then average gross margins will be down to ~20-25%, which is on or slightly below long-term industry average for the mining sector as a whole. Doesn't look to me much like an asset which is at the peak of a price bubble, unless you believe that energy and material costs will drop significantly in the coming years. I view this as unlikely with current demographic trends.

 

I am just trying to seperate "gold as insurance" and "gold as speculative instrument".

Depends what you mean by speculation in some ways, but gold seems a perfectly reasonable, middling risk/reward investment choice to me. That gold and bonds are favoured by central banks as assets gives some idea of how you should generally view it as an investment class. In a financial climate currently stuffed with counterparty risk and negative real returns on bonds, I would argue that a 10-20% holding in gold is sensible. If people are getting into physical gold as high risk/reward then they've chosen the wrong asset class imo. Anyone thinking they've found a low-risk/high-reward investment choice is just kidding themselves; there's no such thing.

 

Who has ever really made a big stack with gold? That tiny handful that managed to buy 40 years ago (before the last extermely short lived bubble), and hold and hold and hold and then mange to press the sell button in that week or so it peaked.

Doesn't strike me as a fair description. The bull run in the 70's ran for 10 years, with a major multi-year correction half-way through. Yes, timing the exact top would be an impossible task, but then the same applies to any asset bubble. Doesn't mean you shouldn't invest in the first place though; as always you just need to be realistic about when to enter/exit the market.

 

My main conclusion (for myself, based on my own research) is that gold is certainly not a farm bet.

I wouldn't (and haven't) bet the farm either. However, I do think your conclusions regarding gold as an investment are rather too pessimistic, just as I think some other people are rather too optimistic.

 

BTW, here's some more research for you, which is I think fairly balanced... http://www.gfms.co.uk/Market%20Commentary/...resentation.pdf.

[Steve Netwriter]

This 10% question always confuses me

 

How do you work out 10% ???

 

Is 10% of what you own now ????

 

 

How much gold/silver should I buy as Insurance ?

 

I think we are talking about your liquid portfolio. You don't expect to lose your house. It's cash in the bank, shares etc, things that have counter-party risk, that need insurance against loss.

 

I don't think you can work this out accurately. For that you'd need to know the eventual price of them.

 

So lets use the physicists approach:

 

Options:

 

1. 0% - Hmmm, somehow I don't think that's going to work

 

2. 1% - Worst case you could lose 99%, so the price of gold/silver would have to go up by 100x to compensate you. Maybe possible, but unlikely.

 

3. 10% - Worst case you could lose 90%, so the price of gold/silver would have to go up by 10x to compensate you. Is such an increase likely? I think so, in which case this level of insurance is reasonable.

 

4. 100% - You don't have anything to insure !

 

So on the physicists scale, 10% seems about right.

 

The one danger you face is that of non-uniformity. ie only the bank you have your money is goes bust and leaves you with nothing. In such a situation, the price of gold/silver would not have to rise dramatically, and so a 10% insurance would be insufficient.

The implication is that the less gold/silver you have as insurance, the more diversified you need to be with your other holdings.

 

I've copied this from a new post on the guide thread.

 

[warpig]

Interestingly, if you take the information from this site, the write downs look to be about $1.1TR.

 

Any thoughts?

 

the ensuing credit crunch crossed the $500 billion mark

273 @ http://ml-implode.com/

[njpurser]

Interestingly, if you take the information from this site, the right downs look to be about $1.1TR.

 

Any thoughts?

 

 

273 @ http://ml-implode.com/

The Option/ARM resets are just starting. Much bigger than subprime.....

 

Nick

 

[drbubb]

THERE's a BUYER ABOUT

 

 

Some of that Gap GLD:$79/80 has been filled

 

Last [Tick] 80.5200[ + ]

Change -0.6100

% Change -0.75%

Bid 79.9800

Bid Size 1

Ask 80.2500

Ask Size 1

Open 80.7400

Volume 20,114,059

Day High 81.0100

Day Low 79.5500

 

[Steve Netwriter]

It wasn't me. Promise :D

 

VERY interesting !

[warpig]

It was me, sorry boys!

 

BTW - Where do these graphs come from if you don't mind me asking?

 

THERE's a BUYER ABOUT

 

 

Some of that Gap GLD:$79/80 has been filled

 

Last [Tick] 80.5200[ + ]

Change -0.6100

% Change -0.75%

Bid 79.9800

Bid Size 1

Ask 80.2500

Ask Size 1

Open 80.7400

Volume 20,114,059

Day High 81.0100

Day Low 79.5500

 

[warpig]

Damn and blast you replied to my post before I could correct my idiotic grammatical error... My secrets out!

 

The Option/ARM resets are just starting. Much bigger than subprime.....

 

Nick

 

[mattyboy]

http://blogs.telegraph.co.uk/ambrose_evans..._just_beginning

 

Stage two of the gold bull market is just beginning

Tuesday, August 12, 2008, 01:28 PM GMT [General]

 

A war breaks out in the Caucasus, pitting Russia against a close ally of the United States. Inflation reaches a new peak in the euro-zone. The CPI reaches the highest in Britain since Bank of England independence. Rampant inflation sweeps the developing world.

 

 

All that glitters is not reliable in these uncertain times

 

Yet gold crashes. It has failed to deliver on its core promises as a safe-haven and inflation hedge, at least for now. Why?

 

Four possible answers:

 

1) Nobody seriously believes that Russia will over-play its hand. The world could not care less about Georgia anyway. Ergo, this is a bogus geopolitical crisis.

 

2) The inflation story is vastly exaggerated in the OECD core of countries that still make up 60pc of the global economy. The price of gold is already looking beyond the oil and food spike of early to mid 2008 (a lagging indicator of loose money two to three years ago) to the much more serious matter of debt-deflation that lies ahead.

 

3) The seven-year slide of the dollar is over as investors at last wake up to the reality that the global economy is falling off a cliff. Indeed, the US is the only G7 country that is not yet in or on the cusp recession. (It soon will be, but by then others will be prostrate). As an anti-dollar play, gold is finished for this cycle.

 

4) The entire commodity boom has hit the buffers. Looming world recession (growth below 3pc on the IMF definition) trumps the supercycle for the time being.

 

Gold has fallen from $1030 an ounce in February to $807 today in London trading. It has collapsed through key layers of technical support, triggering automatic stop-loss sales. The Goldman Sachs short-position that I have been observing with some curiosity has paid off.

 

For gold bugs, the unthinkable has now happened. The metal has fallen through its 50-week moving average, the key support line that has held solid through the seven-year bull market. This week is not over yet, of course. If gold recovers enough in coming days, it could still close above the line.

 

Courtesy of my old colleague Peter Brimelow - whose columns on gold are a must-read - note that Australia's Privateer point and figure chart has also broken its upward line for the first time since 2002. This is serious technical damage.

 

So have we reached the moment when gold bugs must start questioning their deepest assumptions. Have they bought too deeply into the "dollar-collapse/M3 monetary bubble" tale, ignoring all the other moving parts in the complex global system? Nobody wants to be left holding the bag all the way down to the bottom of the slide, long after the hedge funds have sold out.

 

Well, my own view is that gold bugs should start looking very closely at something else: the implosion of Europe. (Japan is in recession too)

 

Germany's economy shrank by 1pc in Q2. Italy shrank by 0.3pc. Spain is sliding into a crisis that looks all too like the early stages of Argentina's debacle in 2001. The head of the Spanish banking federation today pleaded with the European Central Bank for rescue measures to end the credit crisis.

 

The slow-burn damage of the over-valued euro is becoming apparent in every corner of the eurozone. The ECB misjudged the severity of the downturn, as executive board member Lorenzo Bini-Smaghi admitted today in the Italian press. By raising interest rates into the teeth of the storm last month, Frankfurt has made it that much more likely that parts of Europe's credit system will seize up as defaults snowball next year.

 

As readers know, I do not believe the eurozone is a fully workable currency union over the long run. There was a momentary "convergence" when the currencies were fixed in perpetuity, mostly in 1995. They have diverged ever since. The rift between North and South was not enough to fracture the system in the first post-EMU downturn, the dotcom bust. We have moved a long way since then. The Club Med bloc is now massively dependent on capital inflows from North Europe to plug their current account gaps: Spain (10pc), Portugal (10pc), Greece (14pc). UBS warned that these flows are no longer forthcoming.

 

The central banks of Asia, the Mid-East, and Russia have been parking a chunk of their $6 trillion reserves in European bonds on the assumption that the euro can serve as a twin pillar of the global monetary system alongside the dollar. But the euro is nothing like the dollar. It has no European government, tax, or social security system to back it up. Each member country is sovereign, each fiercely proud, answering to its own ancient rythms.

 

It lacks the mechanism of "fiscal transfers" to switch money to depressed regions. The Babel of languages keeps workers pinned down in their own country. The escape valve of labour mobility is half-blocked. We are about to find out whether EMU really has the levels of political solidarity of a nation, the kind that holds America's currency union together through storms.

 

My guess is that political protest will mark the next phase of this drama. Almost half a million people have lost their jobs in Spain alone over the last year. At some point, the feeling of national impotence in the face of monetary rule from Frankfurt will erupt into popular fury. The ECB will swallow its pride and opt for a weak euro policy, or face its own destruction.

 

What we are about to see is a race to the bottom by the world's major currencies as each tries to devalue against others in a beggar-thy-neighbour policy to shore up exports, or indeed simply because they have to cut rates frantically to stave off the consequences of debt-deleveraging and the risk of an outright Slump.

 

When that happens - if it is not already happening - it will become clear that the both pillars of the global monetary system are unstable, infested with the dry rot of excess debt.

 

The Fed has already invoked Article 13 (3) - the "unusual and exigent circumstances" clause last used in the Great Depression - to rescue Bear Stearns. The US Treasury has since had to shore up Fannie and Freddie, the world's two biggest financial institutions.

 

Europe's turn will come next. We will discover that Europe cannot conduct such rescues. There is no lender of last resort in the system. The ECB is prohibited by the Maastricht Treaty from carrying out direct bail-outs. There is no EU treasury. So the answer will be drift and paralysis.

 

When EU Single Market Commissioner Charlie McCreevy was asked at a dinner what Brussels would have done if the eurozone faced a crisis like Bear Stearns, he rolled his eyes and thanked the Heavens that so such crisis had yet happened.

 

It will.

 

Gold bugs, you ain't seen nothing yet. Gold at $800 looks like a bargain in the new world currency disorder.

 

hang in there guys!

[Steve Netwriter]

This is a quality read. Very good.

 

Opinion: A terrible year

Neville Bennett

"Neville Bennett is a long-time Senior Lecturer in History at the University of Canterbury, where he has taught since 1971. His focus is economic history and markets. He is also a columnist for the NBR where a version of this item first appeared."

 

http://www.interest.co.nz/ratesblog/index....-terrible-year/

 

I have been re-reading the great Arnold Toynbee who wrote graphically about 1931: the “annus terribilis“ or terrible year. It seems appropriate this week: the anniversary of the great credit crunch.

 

1931 saw a record number of untoward weather events, the tragic Napier earthquake, a Japanese attack upon China, and the closure of more than a thousand American banks. Great Britain was driven off the Gold Standard. Its government collapsed and was replaced by the first national (coalition) government in peacetime. The Royal Navy mutinied over pay cuts. Banks crashed in Austria, starting a contagion.

 

2008 is not as bad as 1931. Nevertheless, The Bank of International Settlements (BIS) says it’s the worst year since 1945.

.

.

.

Counties like Australia, New Zealand, the USA and UK have been living in a fool’s paradise of rapidly rising indebtedness. But it is not just English speakers: Iceland, Turkey, the Balkans and Baltic have massive current account deficits too. Household debt in Australia has reached 177% of GDP, almost a world record (it is 98% in the USA, and 160% of nominal income in NZ).

.

.

.

The risks are enormous because the world economy is poised between deflationary financial and house price collapses in some high income countries, and an inflationary commodity boom. There are chronic uncertainties. Is the commodity boom a bubble? Will households curb consumption? How much bad debt is still to emerge? Will share markets recover? BIS believes no one knows what lies ahead. The situation is scary.

 

 

[Steve Netwriter]

It was me, sorry boys!

 

BTW - Where do these graphs come from if you don't mind me asking?

 

There are a few options:

 

http://www.marketwatch.com/tools/quotes/in...amp;x=0&y=0

 

What DrBubb uses:

 

http://bigcharts.marketwatch.com/advchart/...me=8&freq=1

 

Play around in the left panel

 

[warpig]

Thanks Steve.

 

There are a few options:

 

http://www.marketwatch.com/tools/quotes/in...amp;x=0&y=0

 

What DrBubb uses:

 

http://bigcharts.marketwatch.com/advchart/...me=8&freq=1

 

Play around in the left panel

 

[sylvester]

There are a few options:

 

http://www.marketwatch.com/tools/quotes/in...amp;x=0&y=0

 

What DrBubb uses:

 

http://bigcharts.marketwatch.com/advchart/...me=8&freq=1

 

Play around in the left panel

 

Steve, do you use anything for live gold / $NZ charts?

[drbubb]

It was me, sorry boys!

BTW - Where do these graphs come from if you don't mind me asking?

 

I have a secret source. These are realtime, and meant to be private.

But I will share a link with you, which is similar, and has a 15 minute delay.

 

GLD: 10d-Intraday : 3yrs-Daily // Gold : 1yr-Daily : 5yr- Weekly

 

yesterday's chart:

 

BTW, that's a big buy: 2.7 million GLD shares = 270,000 ounces at $800/oz, that's : $21.6 million

 

Buying like that can turn the market around. Let's see if there are more BUY orders like that.

[Steve Netwriter]

Steve, do you use anything for live gold / $NZ charts?

 

I don't know of any. You know about stockcharts. Not live

For just the price I use GoldMoney, because you can select a lot of currencies.

 

I don't think we warrant something so sophisticated

[qwerty]

Dr.Bubb what is your opinion of the HUI index do you think it is bottoming out?

 

also XGD.TO Canadian listed iShare is this a suitable proxy for the Canadian juniors have not seen it mentioned .Thanks.

 

 

http://finance.yahoo.com/q?s=xgd.to

[marmite]

I've copied this from a new post on the guide thread.

How much gold/silver should I buy as Insurance ?

 

I think we are talking about your liquid portfolio. You don't expect to lose your house. It's cash in the bank, shares etc, things that have counter-party risk, that need insurance against loss.

 

I don't think you can work this out accurately. For that you'd need to know the eventual price of them.

 

So lets use the physicists approach:

 

Options:

 

1. 0% - Hmmm, somehow I don't think that's going to work

 

2. 1% - Worst case you could lose 99%, so the price of gold/silver would have to go up by 100x to compensate you. Maybe possible, but unlikely.

 

3. 10% - Worst case you could lose 90%, so the price of gold/silver would have to go up by 10x to compensate you. Is such an increase likely? I think so, in which case this level of insurance is reasonable.

 

4. 100% - You don't have anything to insure !

 

So on the physicists scale, 10% seems about right.

 

The one danger you face is that of non-uniformity. ie only the bank you have your money is goes bust and leaves you with nothing. In such a situation, the price of gold/silver would not have to rise dramatically, and so a 10% insurance would be insufficient.

The implication is that the less gold/silver you have as insurance, the more diversified you need to be with your other holdings.

 

Thanks Steve.

I think the thing that has been bugging me is, do you calculate your gold holdings by weight or monetary value ???

 

ie..... If your liquid assets where $100,000 in 2000, you would have needed $10,000 insurance. This would have been equal to lets say 40 oz of gold ( spot @ $250 )

 

If your liquid assets where $100,000 in Feb / Mar 2008, you would have needed $10,000 insurance. This would have been equal to lets say 10oz of gold ( spot @ $1000 )

 

If gold insurance is calculated on monetary value, you would in theory need to sell some gold. Lets say you sold 25oz @ $1000 making your liquid assets now $125,000. You now need $12,500 insurance or about 13oz of gold ( spot @ $1000 ).

 

Who would want to sell gold bought @ $250 into a bull market. It doesn't make sense, but then you are over weight insurance and your portfolio is unbalanced

 

You can see where I am going with the above by calculating gold by FIAT value. You need to constantely adjust your gold holdings as the price moves

 

What if you calculated gold by weight ???? How would you calculate gold by weight ????

I have $100,000 liquid assets, what is that in gold oz's ???????

 

Is gold just something that you acumulate throughout life, little by little. Just ignoring that the price will flucuate and hoping that you will not have to use it ????

[G0ldfinger]

Re title of thread: what is CDNX, by the way?