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BigT, I was thinking re your gold sale: did you consider buying an in the money put option in GBP (if such a thing exists?)

 

The only reason I ask is to possibly educate myself. It seems like the perfect case for an option but not the obligation to sell at a price.

You'd have limited the GBP loss whilst still being able to benefit from any upside.

 

Probably wouldn't have cost you too much if it was in the money?

Not a crazy idea - but probably one that would make most sense when someone plans to withdraw in ~12 months (as I would need to for house purchase) whilst believing there is a very, very high chance of significant further price increase in that time frame and yet fearing a short term dip in price. My current view, however, is that the further major upside may be several years away, whilst a plateau or even a leg down could last for perhaps 10-20 months.

 

Of course, for all you goldbugs, I hope I'm wrong, and the inevitable upside does come much sooner.

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Banks were January net buyers of 1.1 million oz of gold: CPM

 

New York (Platts)--10Mar2009

 

Central banks, which have been net sellers of gold in recent years,

were net buyers of an estimated 1.1 million oz in January, according to the

latest Market Alert by the CPM Group, the New York-based metals

consultancy. The world's central banks were both buyers and sellers, but

the quantity bought outstripped what was sold.

 

Ecuador is estimated to have purchased 920,000 oz of gold in January,

Venezuela bought 240,000 oz and Russia purchased 130,000 oz, after having

bought 310,000 oz in December.

 

"Ecuador's government has run into severe political and economic

problems, and has a dollarized economy, using the US dollar as its currency

and thus not having many monetary tools, such as being able to issue money

that other central banks possess," CPM noted.

 

http://www.platts.com/Metals/News/7719694....d&undefined

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Not a crazy idea - but probably one that would make most sense when someone plans to withdraw in ~12 months (as I would need to for house purchase) whilst believing there is a very, very chance of significant further price increase in that time frame and yet fearing a short term dip in price. My current view, however, is that the further major upside may be several years away, whilst a plateau or even a leg down could last for at 10-20 months.

 

Of course, for all you goldbugs, I hope I'm wrong, and the inevitable upside does come much sooner.

I'd like to clarify that bit in bold...

- up to spring 2008, the several year price increase in gold was due to inflation becoming an increasingly tanglible problem

- but gold then fell significantly for 7 months from March 2008 onwards, due to a growing realisation that inflation was not going to be high over next year or two, and deflation may even kick in (e.g., illustrated by oil falling precipitously)

- gold then turned up again, as soon as the stock market crashed terribly last October, i.e., as the severity of the credit crunch became apparent ...so this buying was driven purely by fear and due to the fact that all other asset prices were dropping rapidly

 

Looking at the next 12 months (my time frame for needing to withdraw) I suspect

- high inflation will not return to the USA (though it will over next several years!), and its only there that matters (as we've had our currency collapse in GBP)

- bail out funds and QE money will start to kick in (e.g., yields have dropped on bonds by >1% these last few days)

- so, confidence will return to many other asset classes, and stock market will start to rise

- so, the current fear-based support for golds price may weaken

 

 

 

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nah, the fun's just getting started, witness yesterday's gilt auction.

 

It's not even started yet and it's not going to be fun at all, you fool.

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THIS BREAKOUT in stocks,

will pull down Gold and gold shares IMHO.

 

I see it going on for MANY more days, and may take SPX up to 1,000 potentiallly.

We nailed the timing on the recent GEI conference call. Pity more here were not involved.

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THIS BREAKOUT in stocks,

will pull down Gold and gold shares IMHO.

 

I see it going on for MANY more days, and may take SPX up to 1,000 potentiallly.

We nailed the timing on the recent GEI conference call. Pity more here were not involved.

 

Dr.B - where do you see oil over the next few weeks?

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THIS BREAKOUT in stocks,

will pull down Gold and gold shares IMHO.

 

I see it going on for MANY more days, and may take SPX up to 1,000 potentiallly.

We nailed the timing on the recent GEI conference call. Pity more here were not involved.

Yes, I just noticed the Dow has gone back through 7000.

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Indeed. Is this the rush to hard assets?

 

I do think so.

 

Articles like this obviously help:

 

http://www.moneyweek.com/investments/stock...tory-14668.aspx

 

"The conventional wisdom is that shares always outperform other investments over the long-term", says the Guardian's Rupert Jones. Over ten years, all the data suggested he'd be "in the money" by salting away money in an equity Isa, he says. But in fact, "nothing could be further from the truth. My £50-a-month stock market Isa has plummeted in value by 22% in just six months, and worse, is now worth less than I've paid into it, even though I've held it for almost ten years. I'd have been better off putting the money under the mattress". :o

 

Better to buy some physical gold and put that under the matress though! :P

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I thought it was worth posting this GIM post here. Excellent answer and something for us all to think about.

 

It was posted by well respected GIM poster Sparky, in answer to the question So why is gold still under 1k ????????

 

People seem to have trouble understanding how market prices work.

 

Why is gold still under $1K? Because there aren't enough buyers at that price. Think of it: GIM is a gold bug haven, and yet when the price approached $1000, there was plentiful caution about not buying at that price. If gold nuts aren't supporting a $1k price, then who will?!? TraderKen, if you think that gold under $1000 is ridiculous, then why aren't you selling everything you have and buying gold under $1K? Because you're not so sure. You might have some gold, and you are waiting for someone else to bid up the price! Well guess what, there are a LOT of people doing the same thing! The market needs new buyers to push the price higher. It takes a long time for enough new buyers to get into the market.

 

Your comment regarding printing trillions: is this news? Some people were forward-looking enough to anticipate this in 1995, and they bought gold at $400, only to see it drop to $250. Fundamentals are one thing, but timing and market sentiment and mentality is another. It ain't so easy.

 

People forget that markets are made up of people trying to take money from other people. A good portion of the market bought gold at $300 and $400 and $500, and are very happy to sell it at $700 and $800 and $900, and that puts downward pressure on the price. And then some people go ahead and buy it at $1000 only to see it drop to $700. Do you think they'll be a little cautious about buying at $1000 again? You betcha. The making of market prices can be very complicated, but you have to learn the lesson that the market is always right. You have to get your head around what that means.

 

http://goldismoney.info/forums/showthread....d=1#post1621501

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Gold may well go down but it's also your only insurance policy. You might want to shop around for a cheaper quote on your house insurance but perhaps not necessarily when the kitchen is on fire.

 

I guess what most people are bothered about on here is when to trade around or increase a core holding. Firstly though - get at least some kind of insurance policy regardless of price.

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I think gold is in a clear up trend again now, as it bounced off the channel yesterday. Take a look at this 8 hour chart, looking at 4 or 8 hour charts gets rid of the noise.

 

8HourChart.jpg

 

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If that happens (which it might not) then will be a great time to convert from GBP into Gold in my view.

 

After that is the pound toast? I think so...

 

Does anyone know how reliable Jamie Saettele's predictions have been in the past?

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Now or Never. Face The Gold Cliff & Buy - http://www.321gold.com/editorials/thomson_...n_s_031109.html

 

1. The million dollar question on everyone's mind in the gold community is: has the correction to the $900 area in gold run its course? Or at least running its course. Or is any rally now going to be followed by another hit?...

 

...47. It's time to face the mirror. Buy this weakness and keep buying if gold falls further. Or never buy again. Do it in small stages, smaller than you think is rational.

 

Worth a read.

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