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Bullion shoots to peak

Emerging economies scramble to buy gold

 

Sunday, November 08, 2009

By Mansoor Ahmad

 

LAHORE: Gold might have lost its appeal to the minds of most of the central banks which now rely on paper money, but its glitter spread after the sophisticated economic models failed recently.

 

As the emerging fast-growing economies look to gold as a safer investment than the US dollar and euro, its increased demand is pushing its prices higher every day. Gold prices are bound to go further up as the dollar weakens and Asian economies having huge dollar reserves scramble to shield themselves by buying gold.

 

The News has found the demand of gold in the global market has always been higher than its supplies. Another interesting fact is that about 75 per cent of the world’s gold is not available to governments and is being held privately in the form jewellery, bullion and coin.

 

 

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Which Will Come Out on Top -- Paper or Gold?

Printing presses have been pumping out dollars and pounds. Little wonder many are seeking a more trusty store of value.

 

By William Rees-Mogg

The Times, London

Monday, November 9, 2009

 

Last week the price of gold rose to $1,100, the highest ever recorded. Gold is still an important measure of the world economy. The theory of the 19th-century gold standard was that gold was "real money" in the same way as landed property was "real estate." All types of paper money are capable of being created by banks or governments, so the supply is potentially unlimited. It was observed that gold holds its purchasing power over centuries, whereas paper money tends to depreciate towards the value of zero.

 

Of course, the rise in the gold price reflects the weakness of the dollar as well the strength of gold. I have been writing about the significance of the gold price since the early 1970s. The latest rise in price reflects the significance of gold as part of the world's monetary reserves.

 

The immediate cause of the rise was a purchase of 200 tonnes of gold bullion by the Reserve Bank of India from the International Monetary Fund. The Indian purchase is quite large in terms of the gold market, but not particularly large in terms of the Indian reserves. India's reserves now amount to $277 billion, of which this new purchase of gold amounts to only $6.7 billion.

 

The significance of the purchase is that it may be the start of a new phase in the struggle between gold and paper. Since 1971, when President Nixon ended the convertibility of the dollar into gold under the Bretton Woods Agreement, the world's central banks have tended to be net sellers of gold and net buyers of dollars. Now the Indians have decided that they have more dollars than they want.

 

Already Sri Lanka has followed the Indian lead, with a purchase of five tonnes of gold. If the new fashion spreads, and particularly if it is joined by China, then Asia would have decided that it is better to have gold which is rising in value than an unlimited supply of dollars which are falling in value…

 

 

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Grandich vs Nadler

Posted: November 09, 2009, 11:17 AM by Jonathan Ratner

 

Peter Grandich wants to battle it out with Jon Nadler on live television. No, not in a boxing match, but in a debate that will surely turn into in a verbal slug match as these two experts discuss gold.

 

In an open letter on his investing blog, Mr. Grandich, who continues to think U.S. equities are in a mini melt-up stage, offered to debate Mr. Nadler of Kitco. The request comes after this interview, where Mr. Nadler said gold is far from being in a bull market situation.

 

He highlighted the supply-demand fundamentals, the lack of a crashing stock market and an absence of inflation as providing little reason to hedge or overweight gold.

 

Mr. Grandich believes this is a stealth secular bull market for gold and “surprises are to be to the upside."

 

“The J__ N_____ of the world continue to be wrong, wrong, wrong and are the best contrarian indicators money can’t buy,” Mr. Grandich said in a blog posting. “Despite one new record nominal high in gold after another, the mood around gold is subdue and the badly beaten up bears continue to be the main voices heard crying wolf to the media.”

 

Gold bugs and bullion non-believers continue to battle it out now that the price of the yellow metal is reaching new heights, but this one will definitely be worth the price of admission.

 

 

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Purchases from India kept premiums for gold bars steady in Singapore at 40 to 60 U.S. cents to spot London levels, while fears about further gains in prices spurred buying from the electronics sector in Hong Kong.

So much for a useless yellow metal. Scrap mobile phones contain a lot more gold per tonne than gold ores.

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In the last minute of the second show Max says "his inside sources are telling him that within the next six months it will transpire that the Chinese have bought at least another 300 tones of gold."

 

Got Gold?

 

From:

 

From:

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Gold is underperforming.

 

It should be much higher, with the Dollar so weak

t24_au_en_usoz_6.gif

 

At a trendline top?

goldlogqd.png

 

Gold-in-Euros may show it more clearly

goldxeu.png

 

Nothing here rules out a breakout. That remains a possibility

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Nothing here rules out a breakout. That remains a possibility

I notice both the US and Euro chart both display the same recent stairway pattern.

 

Comments on Today’s Chart From Trader Dan

 

Back in the old days when charts were kept in caves and we wore animal skins going to Wall Street, aka my time, the type of a formation in gold is exactly like a step ladder known then to us as a Swiss Stair.

 

It was rare and had to have a perfect measure.

 

What it meant then was that the secret Swiss had inside information on something and were accumulating, as only they could, like a finely oiled machine. It only occurred is situations that were going to amazing heights.

 

It was a certain situation when it was a Swiss Stair at new highs. It was a certain situation when it was a Swiss Stair over a few months at the least.

I have seen stocks go from under $10 to over $200 as a result of properly constructed Swiss Stairs.

 

Gold never has inside news. Gold is what it is. Inside might be living with gold for half of a century to know what it means.

This now makes $1650 look much too conservative.

 

What have you been told about gold here by all of us that has not come to fruition?

 

Here is another tidbit. Goldman will make more money long on gold than any other entity.

 

 

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So much for a useless yellow metal. Scrap mobile phones contain a lot more gold per tonne than gold ores.

 

Wren

 

For sure my body contains more gold per tonne than gold ores also.

 

But if gold is useful then the mined amounts of gold seem sufficient for where it is useful and the mined cost of gold is probably half the price. So gold is in a bubble on that basis. Dr Bubbs says gold is underperforming, suggesting not only is it not in a bubble but that it is underpriced as i read that comment. Perhaps he means underperforming relative to expectations? Or does he mean relative to useful materials such as copper?

 

Goldfinger says that gold is a monetary asset. As far as i know central bank settlements do have some relationship to transfer of gold but how that works exactly i dont know in a world without obvious gold connections between currencies.

 

By the way can you find the Finland is 'great economicly' or 'is a model of excellence' thread?? I think it needs an update. I cant find it. Finlands september exports fell 36% for the same period last year and imports were down 30% for the period

 

http://newsroom.finland.fi/stt/showarticle...;group=Business

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The fact that the latest (red) dots are far to the right is telling me that gold is actually outperforming - at least on a EUR basis.

 

http://gold.approximity.com/gold-silver_watch.html

Gold-EUR_Scatter_LOG_GUESS.png

 

Interesting chart but Europe will be broken surely by such a weak exchange rate and the US will be exporting like crazy so it is hard to see that happening

 

The US is a major manufacturer. It is the worlds largest manufacturing economy

 

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The US is a major manufacturer. It is the worlds largest manufacturing economy

In summer I took three whole weeks to check any item that came to my attention in any store I entered in the U.S. They were ALL made in China. It is outright scary, even as a non-U.S. citizen.

 

Good luck with betting on the U.S short to mid term. :ph34r:

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In summer I took three whole weeks to check any item that came to my attention in any store I entered in the U.S. They were ALL made in China. It is outright scary, even as a non-U.S. citizen.

 

Good luck with betting on the U.S short to mid term. :ph34r:

 

Seems we are on similar wavelengths.

 

Dont forget though other parts of the world are in a similar situation although one thing that surprises me here in Finland is that you can buy a plastic bucket made in Finland and many hand tools made in Finland. But things here are horribly expensive and you get the impression there is some kind of command economy reasons for why you cant get a cheaper bucket. For some reason chicken is on special all of november at only 1.19 per kg and was only 2.25 before that. Otherwise i think some people might be starving to death. Plenty of surveys testify to the cost of living in Finland but many highlight the quality of life - i am not so convinced that many people do live so well. Compared to living in NZ it is much harder to live here. People seem to live in pretty small flats for example. And yet there is no shortage of land.

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That really shows how dumbed down the public is, bet he would get a different response in India or China.

I don't think it showed much, other than people are wary of being scammed and ridiculed. I doubt the response would have been much different if he'd been offering anything else worth $1000 for $50. I would be deeply suspicious if someone came up to me offering a deal like that.

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I don't think it showed much, other than people are wary of being scammed and ridiculed. I doubt the response would have been much different if he'd been offering anything else worth $1000 for $50. I would be deeply suspicious if someone came up to me offering a deal like that.

 

I would ask him to come with me to the nearest coin shop, ask him to wait outside and have it checked. If he does not want to go through that, you tell him you'll give him $100 instead of $50 if the coin turns out to be genuine. Seems like a no brainer to me :unsure:

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I would ask him to come with me to the nearest coin shop, ask him to wait outside and have it checked. If he does not want to go through that, you tell him you'll give him $100 instead of $50 if the coin turns out to be genuine. Seems like a no brainer to me :unsure:

Obviously coin shops are liberally scattered around where you are, the nearest to me is Harrods now i suppose, at about 25 miles it would only be a 6 or 7 hour walk each way. As for regular jewellers, it's a possibility but even then, I don't know if I'd place much credence in the opinions of the shopgirl in H Samuel or Elizabeth Duke.

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I would ask him to come with me to the nearest coin shop, ask him to wait outside and have it checked. If he does not want to go through that, you tell him you'll give him $100 instead of $50 if the coin turns out to be genuine. Seems like a no brainer to me :unsure:

 

So you think somebody would give you 1100 dollars of gold while they wait outside and you go inside a shop?

 

Or if somebody was near a coin shop trying to sell coins for much less than the apparent value they would not be working in cahoots with the coin shop owner for sure so it would require no brains to know that was the case?

 

You seem to think people will trust you and you seem to trust others

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I would ask him to come with me to the nearest coin shop, ask him to wait outside and have it checked. If he does not want to go through that, you tell him you'll give him $100 instead of $50 if the coin turns out to be genuine. Seems like a no brainer to me :unsure:

The video goes to show that the average local knows nothing about gold. All it would take, for someone who knew just a little, would be to look at it, feel the weight of it, and ping it to know it was the real McCoy. I wonder if he would really have accepted $50 though. I think he was relying on the fact that most are ignorant of gold and instinctively wary of strangers trying to sell something.

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The video goes to show that the average local knows nothing about gold. All it would take, for someone who knew just a little, would be to look at it, feel the weight of it, and ping it to know it was the real McCoy. I wonder if he would really have accepted $50 though. I think he was relying on the fact that most are ignorant of gold and instinctively wary of strangers trying to sell something.

 

 

You could only assume it was real even if you were an expert. And an expert dealer can always pass it onto another person.

 

A determined person with knowledge could produce a less valueable coin that would be next to impossible to seperate from the real thing without analysis or damage to the coin, which is why you need the paperwork when you sell the coins

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