GOLD

[Steve Netwriter]

GF why is that 2nd chart now heading down? Taking a breather? Or...

 

Also can you post the link to JS explanation or was it yours or Dominic's explanation of the theory. I'd like to run it with FOFOA's theory. Was JS going on known gold reserves in the US or estimated reserves? Will anyone be able to audit the gold in the US? If so, who?

 

Jake,

I'll answer for GF as I've just been there

 

Jim Sinclair's Model: The Federal External Debt Equilibrium Gold Price

http://gold.approximity.com/gold_price_models_sinclair.html

 

The APPROXIMITY Gold Price Model: The MZM Equilibrium Gold Price

http://gold.approximity.com/gold_price_model.html

 

The quote, as best I can find, is from...actually, here's my explanation: http://neuralnetwriter.cylo42.com/node/2925

 

Humf, gotta go read something else !!!!

 

 

 

[G0ldfinger]

GF why is that 2nd chart now heading down? Taking a breather? Or...

MZM (or M3) is slightly dipping at the moment. That's why. (Note that the other chart was non-log, so the dip looks more dramatic than it is.)

 

http://gold.approximity.com/since1959/US_MZM_LOG.html

 

And thanks Steve!

[Jake]

Jake,

I'll answer for GF as I've just been there

 

Jim Sinclair's Model: The Federal External Debt Equilibrium Gold Price

http://gold.approximity.com/gold_price_models_sinclair.html

 

The APPROXIMITY Gold Price Model: The MZM Equilibrium Gold Price

http://gold.approximity.com/gold_price_model.html

 

The quote, as best I can find, is from...actually, here's my explanation: http://neuralnetwriter.cylo42.com/node/2925

 

Humf, gotta go read something else !!!!

Many thanks...printing off and will READ it at work.

[G0ldfinger]

Many thanks...printing off and will READ it at work.

Keep in mind that neither the Sinclair External Debt Model, nor the Approximity MZM Model take into account the UNFUNDED liabilities of the U.S. If those are taken into the calculation, one can arrive at the truly phantastic numbers mentioned by FOFOA.

 

The question always is: at what price level of gold will the market "think" that the gold base has grown large enough? The numbers from the theoretical models should only be seen as theoretical upper boundaries. HOWEVER, they are prices as of TODAY, which means that further future inflation might push these up considerably.

[lyb]

So, if you are Eurogold investor, where is the expected summer correction?

 

After 5 years of watching this market, I do not remember ever behaving like this?

 

Are we ever going to approach the 200DMA, neat 1110, as we normally do during the summer?

 

Or is this going to be a hot summer?

 

[G0ldfinger]

So, if you are Eurogold investor, where is the expected summer correction?

You would hope there is going to be one soon.

http://gold.approximity.com/since1968/Gold_EUR.html

[Errol]

New all-time Euro high today.

[G0ldfinger]

I have allowed myself to play around with the Fed's balance sheet.

 

Currently, the Fed values $166,715M in Federal agency debt securities and $1,113,614M mortgage-backed securities on their balance sheet at face value. This is in line with their gold reserve of 261.4M oz valued at $42.22/oz.

 

If one accounts for the Fed's gold at current market prices ($1,219/oz) and allows a discount on the agency debt and the MBS, then this discount is currently 24%, i.e. one could argue the market expects the Fed to only recover 76% of this debt.

 

If one assumes a discount of 50% on the named agency and MBS debt, then the implied (by the Fed's balance sheet) gold price would be $2,491/oz.

 

Complete worthlessness would imply $4,940/oz.

 

These numbers have been calculated assuming all other securities at stated book value (often face value), and the Fed not taking on any other assets/liabilities*.

 

 

*Which is a very strong assumption!

[G0ldfinger]

V. interesting

What it means is that the $42.22/oz of the Fed is indeed the correct price according to their balance sheet IF all their assets are worth what they are stating and IF they don't support any other debt like trasuries or MZM/M3.

 

The markets quite clearly think that this is not the case!

 

Interesting is that even if they don't underwrite any other money (which they clearly do), only a 24% discount on the MBS sends the theoretical gold price to almost $2,500 already. That is the new $42.22, so to speak. In that sense, we can expect MUCH higher prices than just $2,500/oz.

[Jake]

From the interview with Ben Davies of Hinde

 

Gold at $36,000 Not as Ridiculous as It Sounds?

 

CNBC.com | May 26, 2010 | 07:20 AM EDT

 

Gold has reached record highs in recent weeks, but it will continue to rise, Ben Davies, CEO of Hinde Capital told CNBC Wednesday.

 

Gold should be viewed not as a commodity, but as a cash supplement, Davies said.

 

“There’s been such proliferation of currency,” he said. “As a consequence, gold is very undervalued.”

 

“I could be really obtuse and say $36, 000,” he said. “But actually it’s not as ridiculous as it might sound.”

 

If all the reported Fort Knox gold was re-valued at $36,000 per ounce, it would pay off all the debt in the US, he said.

 

On Monday, Dennis Gartman reversed his call for gold investors to rush to the exits, saying the precious metal was no longer overbought, but also warned that it was a technical call and he is "not a gold bug."

 

Davies argued that as the money supply increases, gold will see an increase in use as currency, boosting demand. Emerging markets will also buy gold to increase reserves, he added.

 

Great dynasties in history have come out of crises with large amounts of gold to use in the markets to buy cheap assets, Davies said.

 

 

 

[sash777]

Who do you guys buy your coins from? Looking to sink some of my none-GM cash into any Sovereigns or Brittania's I can get my hands on.

[sash777]

To be a bit more specific, I'm thinking of using http://www.taxfreegold.co.uk/index.html - all feedback appreciated.

 

Sash777

[Errol]

Take a look at coininvestdirect.com.

[pjohnp]

... I'm thinking of using http://www.taxfreegold.co.uk/index.html - all feedback appreciated.

That's the outfit that I usually use, and I'm very pleased with them.

 

[warpig]

What do people think about where we're going from here?

 

As has been discussed for many years now, we've escalated from a banking crisis to a sovereign debt crisis and there simply isn't a planetary bank of last resort, most developed countries appear, to me at least, to be in the same dire situation.

 

Personally I feel like this is a small consolidation period and then we'll see the next leg up. I don't fear deleveraging, I think the game's changed and to forecast another 2008 is a little 2D for my liking. History doesn't repeat itself, at best it sometimes rhymes...

 

Isn't this the moment we've all been preparing for?

[signofthetimes]

That's the outfit that I usually use, and I'm very pleased with them.

 

They are very good, also dealt with them recently but I know they have a long waiting list for British coins whereas if you order from CID (also excellent) you will have your coins this week

[signofthetimes]

What do people think about where we're going from here?

 

no-one really knows if they're honest, all we can do is follow our convictions. Having at least some physical gold (and silver) helps me sleep at night.

[50sQuiff]

Isn't this the moment we've all been preparing for?

 

I fear it is. Paraphrasing the immortal words of cgnao, "preparations to protect financial holdings of any kind.. are being rushed to completion as soon as possible".

 

 

[50sQuiff]

I've been wondering if there was more to the 2008 liquidity driven sell-off than "margin call-induced hedge fund selling as stocks crashed", or some variation thereof. With the US banking system on the brink, and a possible run on money market funds causing wholesale liquidation of assets, it seems likely to me that the funds were following, rather than leading the dash out of gold and in to dollars.

 

Let's call this the 'Rollover' scenario, without the 70s attitude to gold. Note the mind-boggling interview with Rep. Paul Kanjorski:

 

From:

 

My point is, what if it had nothing to do with the equity markets? And why did gold spike during the Flash Crash? If the collapse of 2010 materialises, the trigger will be Europe. Therefore there will be no US bank panic (the Fed/Treasury backstop is a given now), no run on money markets and no need for commercial banks to liquidate assets. This time, the equity markets might crash because they're over-owned and overvalued based on fantasy future earnings and Enron-style balance sheets. Commodities might crash because they're not pricing in a Chinese recession and Great Depression 2.0 in the West.

 

Gold, increasingly monetized, may not be liquidated this time.

[romans holiday]

Gold, increasingly monetized, may not be liquidated this time.

Prechter recognises gold as money, but I think his dollar vortex thesis rides a bit rough-shod over how gold is actually behaving here. Gold is becoming a de facto currency, and as such is considered by the market less a commodity to be caught up in a deleveraging vortex, and more a safe haven form of liquidity.

 

imo gold is showing itself to be the achilles heel of market fundamentalism where currencies are supposed to float freely in the market. As the free market currency system becomes increasingly unstable, money will go into into gold and away from economies. This process if unchecked would obviously be fatal to economies. The only way to check the process, and stabilize both currencies and economies would be for governments to renounce market fundamentalism and go back onto a gold standard thereby formalizing and stabilizing a process which the free market itself precipitated.

 

The fatal flaw in market fundamentalism is its inability to provide a sound and balanced monetary system.... both domestically and internationally. First we saw money piling into assets, and now we'll see money fleeing assets for liquidity. The same applies in the international arena where money will flee peripheral currencies back to the central funding ones. The role of a renewed gold standard will be to once again provide "ballast" to money where money is considered valuable and worth saving, with no necessity to speculate. Sound money should also lead to sound investment and growth, with no necessity to hoard.

 

Any interpretation of gold purely through the prism of market fundamentalism will be limited.

 

Edit

[Schaublin]

Prechter recognises gold as money, but I think his dollar vortex thesis over-rides a more pragamtic view on gold's behaviour here. Gold is becoming a de facto currency, and as such is becoming less a commodity to be caught up in a deleveraging vortex. imo this involves a paradox or fatal flaw within market fundamentalism where currencies are supposed to float freely in the market; as the free market system in currencies becomes increasingly unstable, money will go into into gold and away from economies. This process if unchecked would obviously be fatal to economies. The only way to check the process, and stabilize both currencies and economies would be for governments to renounce market fundamentalism and go back onto a gold standard thereby formalizing and stabiliizng a process which the free market precipitated.

 

Or do a little more 'intervention' (cough) in the paper-gold markets - or is that looking a bit risky now?

[romans holiday]

Or do a little more 'intervention' (cough) in the paper-gold markets - or is that looking a bit risky now?

If markets start imploding, fiddling around the edges isn't going to achieve anything.

[Steve Netwriter]

"When is the liklihood of houses being 1-5oz's?" - my guess, not reliable, is less than 10 years.'' Well that answers my question of whether to continue or not...even in the face of gold fallling/manipulated/sold off in another round of deleveraging, temporarily-it would seem stupid not to continue buying whenever possible.

 

Jake,

Much to my surprise, as a result of my conversation with FOFOA, I got two charts, one for GoldHouses and one for GoldOil, giving FOFOA's probability for a range of rates.

 

I think that's a pretty sensible way to present it. It's here:

http://www.neuralnetwriter.cylo42.com/node...=1#comment-4056

 

This avoids the problem of predicting in US$ terms, since one cannot know the true value of the US$ at that time.

 

As you can see, the predictions I tend to quote are at the bottom of the bell curve, so plausible according to FOFOA, but unlikely, because they are too low.

 

You may also wish to consider my catastrophe theory point. As is often the case, I don't think one can reliably predict when.

 

A Warning About my Gold Predictions and Catastrophe Theory by Steve Netwriter

http://www.neuralnetwriter.cylo42.com/node/2956

 

[warpig]

http://edition.cnn.com/video/#/video/offbe....gold.to.go.cnn

[littledavesab]

 

http://market-ticker.denninger.net/archive...e-Your-Ass.html