GOLD

[G0ldfinger]

A ton of gold? Have to find somewhere to park it first.

You only need to make sure the floor is solid. The space itself is miniscule:

 

Gold is 20 times heavier than water. 1 cubic meter of water weighs a ton, so 1/20 = 0.050 cubic meters = 50 litres gold weighs a ton.

 

50 litres is approx. 13 gallons or approx. a third of a standard bathtub. So, not all that much really.

[G0ldfinger]

So the US's gold c. 8300 tonnes is worth about 8300 x $40m = a snip at $332billion dollars or £200bn odd quid. Or, to put it another way, for less than half the cost of the TARP you could have bought the entire US gold stock..

They account for it at $11 billion, BTW. $42 an oz.

[Wanderer]

Gold - you gotta love those $20 bumps down from time to time. Just don't drink coffee while you check the price....

[Schaublin]

Just had an email from Bullion Vault.

 

We are delighted to welcome the World Gold Council and Augmentum

Capital, which is backed by Rothschild Investment Trust, as minority

investors in BullionVault.

 

Pity, BV was great while it lasted but it was too tempting a fruit to be plucked.

 

I do not have much left at BV but what I have, will be coming out in the near future.

[ologhai]

I do not have much left at BV but what I have, will be coming out in the near future.

 

What's the thinking behind this?

[Schaublin]

What's the thinking behind this?

 

Before I transferred funds to BV some years ago, I did enough research into the company to satisfy myself that it was a sound proposition with honourable people in control. Edit: Now that there is a new element involved, it would require me to do similar time consuming research - I prefer not to do so.

[drbubb]

CONTRASTING VIEWS - from DrB's diary

 

Hi Permabears. The fundamentals for equities are crystal clear and strong for anyone willing to open their eyes and see beyond obscure wave theories etc. The economy is recovering, the US is moving back from the pre-credit crunch model of borrow and spend on cheap chinese imports to a more traditional model of save and produce. Governments all over the world are tackling the deficits. Companies have used the recession to cut costs and improve efficiencies. Labour is cheap and will remain so in the West. Huge amounts of moneyu on the sideline, with most investors having missed the rally since March 09. Cash paying virtually no return which will remain so for the forseeable future. It is a sweet spot for equities.

 

Technically, the US stock market is in a clear upwards trend. You do not have to be a chart whizz t see that. The "extensions" drawn on the charts supposedly showing an impending reversal are pure phantasy. Remember the trend is your friend. Trade against the trend at your peril.

 

Aside from the daily noise of stock markets, which does not interest me in the slightest, I predict the S&P500 will move to new highs (exceeding the April 2010) this year, and to new all time highs in 2011 or 2012 at the latest. I make clear predictions, not wholly statements like "we may get a bounce but later there will be a fall" which can in hindsight be claimed to be correct whatever the market did because they are too vague.

 

Let's see by the end of the year who was right.

 

A perfect expression of the bullish sentiment which has driven stocks to what may be a 2-of-3 top.

Thanks.

 

I wont pick holes in this argument, except to say that the fundamentals for an continuing economic recovery look extremely poor, and the power of the stimulus to hold the economy up, is fading day-by-day. The recognition that the recovery is dying will become more widespread in Q3, and everyone will accept that nothing-has-been-fixed by the hugely expensive stimulus before Q4 is over.

 

The fact that today's rally has given back nearly all of its gains, and may go negative before the day is over, is a sign that the game may be ending soon - probably this week - and even today

 

BTW, Gold is-$21 today, and was up earlier. I have sold down over 80% of my HK paper gold, the last 30% of that today at over $1260. Gold's weakness is a sign that stocks will soon head down too IMHO. So far. it has filled some gaps it left on the way up. A slide below $1230, would be a bad sign. Volume is heavy

[ologhai]

Before I transferred funds to BV some years ago, I did enough research into the company to satisfy myself that it was a sound proposition with honourable people in control. Edit: Now that there is a new element involved, it would require me to do similar time consuming research - I prefer not to do so.

 

Thanks for your thoughts!

 

While I'm typing a reply -- if George Osborne announces an increase in the CGT rate (and perhaps a reduction in the allowance), will the PoG plummet tomorrow? Any thoughts, folks?

[Crashman begins]

What amazes me is that they 'fessed up to having 350 odd tonnes... double the previously stated 120 odd. How do they manage to acquire so much gold on the quiet? And then it makes you wonder how much other CBs are quietly accumulating.

 

Commodity exchange

 

[enrieb]

Thanks for your thoughts!

 

While I'm typing a reply -- if George Osborne announces an increase in the CGT rate (and perhaps a reduction in the allowance), will the PoG plummet tomorrow? Any thoughts, folks?

 

 

I don't think changes to the UK's tax policy on CGT will affect the price of gold much in terms of the global market. The big driver of the sterling price will be how the budget cuts impact the price of sterling. If the markets are happy with the budget then the pound could rally, though if the government don't deliver on the cuts that are needed then the pound could fall and that will be reflected in a higher sterling gold price.

[romans holiday]

Just had an email from Bullion Vault.

 

We are delighted to welcome the World Gold Council and Augmentum

Capital, which is backed by Rothschild Investment Trust, as minority

investors in BullionVault.

 

Pity, BV was great while it lasted but it was too tempting a fruit to be plucked.

 

I do not have much left at BV but what I have, will be coming out in the near future.

This investment by the World Gold Council and Augmentum will in due

course enhance the BullionVault service, providing greater depth to

the BullionVault market and a broader choice of trading currencies

and vaulting locations.

 

Kind regards,

 

Paul Tustain

Founder & CEO, BullionVault

[romans holiday]

BTW, Gold is-$21 today, and was up earlier. I have sold down over 80% of my HK paper gold, the last 30% of that today at over $1260. Gold's weakness is a sign that stocks will soon head down too IMHO. So far. it has filled some gaps it left on the way up. A slide below $1230, would be a bad sign. Volume is heavy

Wow, you got the exact top. Gold now at 1237. When will you buy back in? Will you report your buying in "real time".... at the time your decision/ trade is made?

 

I'd be interested in seeing what kind of profit in gold terms you could make. I mean, first you have to time the selling right, which lets face it, is a 50% chance of getting it right... then the buying needs to be timed right again, another 50% chance of getting it right. So all up one chance in four of a successful trade. Odds look stacked against you here... unless you are just taking temporal profits in another currency of course.

[deeper]

One down day for gold doesn't make a trend bubb.

 

Maybe some more backfill before we grind higher.

[drbubb]

Using "Contextual Trading" and GOLD trades to reduce property costs

 

Wow, you got the exact top. Gold now at 1237. When will you buy back in? Will you report your buying in "real time".... at the time your decision/ trade is made?

 

I'd be interested in seeing what kind of profit in gold terms you could make. I mean, first you have to time the selling right, which lets face it, is a 50% chance of getting it right... then the buying needs to be timed right again, another 50% chance of getting it right. So all up one chance in four of a successful trade. Odds look stacked against you here... unless you are just taking temporal profits in another currency of course.

 

I was lucky.

I happened to be in the offices of HSBC in the afternoon (HK time) while Gold was still up. I saw a price that I liked, and I pulled the trigger.

 

The larger story is this: (see below)

[drbubb]

One down day for gold doesn't make a trend bubb.

Maybe some more backfill before we grind higher.

The truth is, I really dont care, since the Gold sale was part of a "contextual trading strategy" which has already served its purpose.

================ (the following was posted on the Strategic Downsizing thread) :

 

Using "Contextual Trading" and GOLD trades to reduce property costs

 

1/

Wow, you got the exact top. Gold now at 1237. When will you buy back in? Will you report your buying in "real time".... at the time your decision/ trade is made?

 

I'd be interested in seeing what kind of profit in gold terms you could make. I mean, first you have to time the selling right, which lets face it, is a 50% chance of getting it right... then the buying needs to be timed right again, another 50% chance of getting it right. So all up one chance in four of a successful trade. Odds look stacked against you here... unless you are just taking temporal profits in another currency of course.

 

I was lucky.

I happened to be in the offices of HSBC in the afternoon (HK time) while Gold was still up. I saw a price that I liked, and I pulled the trigger.

 

The larger story is this:

 

+ We bought a property for HK$1.86 Million in early 2007 - It was the first one (of 10) that we bought.

+ We bought a total of 10 properties in 2007-8, and over the last year have been selling them off, one-by-one, as prices rise,

+ Each one has been sold off at a profit. Some profits were tiny (only HK$7,000 after cost was the smallest), and some were big,

+ All those sales left us with plenty of cash

+ In February, we had enough cash to pay off the remain loan of HK$1.05 million on property #1,

+ Gold was cheap when I was contemplating this, so instead of paying off, I bought 1,050 MACE of Gold at about HK$1,000-1,100 each,

 

I have now sold off enough MACE to pay off the loan, with the latest sale at over HK$1,160 per MACE, so that's a profit of about 15%. And I have decided to retain the profit as a holding of 200 MACE, and reduce the loan balance by HK$1 million, to only HK$50,000.

 

In effect, we have made an "extra profit" of almost HK$180,000 through this gold maneuver. I can think of it as reducing our cost

the property by about 10%.

 

I like this type of "Context Trading", where my trades are made in relation to a specific asset, and this way I can think of each trade, as part of a program to reduce our cost base, or to upgrade our standard of living. The context, helps me t0 avoid being too greedy, but also to make trades on scale which can be meaningful.

 

As another example:

+ We are thinking about selling the flat we live in, if we can acheive our "high" asking price,

+ We like where we live, so I don't want to do this, unless we can somehow think of it as a step to improve our living arrangement

+ We have found a flat that we like, which is in a different neighborhood, but is a nice modern building with some luxury touches

+ The flat is larger than the one we live in now: over 1,000 sf, versus 750 sf, but the rental value is on par with where we live now

+ If we sell, I would cash a nice fat profit, and my partner and I would then enjoy "upgrading" the larger rental flat

+ Later, if/when the property market falls, we would buy again - this time larger than 750sf, but at a lower price psf than we sold

+ If prices do not fall in HK, we would consider moving somewhere (KL, Singapore, Philippines, NZ, Japan, Spain, the US?) where we can get more for our money, and have a nice "adventure" for a few years

 

 

2/

One down day for gold doesn't make a trend bubb.

Maybe some more backfill before we grind higher.

The truth is, I really dont care, since the Gold sale was part of a "contextual trading strategy" which has already served its purpose.

 

THE OVERALL IDEA here is to always operate from "a position of strength", and only make major moves when they improve your strategic position.

 

I am trying to develop some better Wealth Measurement tools, which will help people to see when they are enhancing their position.

[romans holiday]

I was lucky.

I happened to be in the offices of HSBC in the afternoon (HK time) while Gold was still up. I saw a price that I liked, and I pulled the trigger.

Yes, but at what point are you hoping to buy back in? And are you not concerned at all that that price might be a higher one, at 1260 which would wipe out your profits..... or even higher where you would be buying back in at a loss? I'm also looking at large profits in gold, but do not want to sell as would be concerned about "losing my position". The risk/ reward of the trade just doesn't look worth it.

 

I am trying to develop some better Wealth Measurement tools, which will help people to see when they are enhancing their position

Besides measuring wealth, how do we measure profits? I mean, what currency do you take profits in? Have you "enhanced your position" by swapping gold for a currency. Maybe it would enhance your position to sell gold to pay down debt... but even this is arguable.

 

Due to viewing gold as a strengthening currency, I find it problematic to take profits in other currencies which may be weakening... even the US dollar.

 

Given these concerns about trading gold, I only accumulate it. As for the volatile queen of silver.... I'm not concerned at all about trading her against dollar.

 

 

Could it be that the very measure of wealth you're looking for, is what you've just sold.

[drbubb]

Yes, but at what point are you hoping to buy back in? And are you not concerned at all that that price might be a higher one, at 1260 which would wipe out your profits..... or even higher where you would be buying back in at a loss? I'm also looking at large profits in gold, but do not want to sell as would be concerned about "losing my position". The risk/ reward of the trade just doesn't look worth it.

We have no need "to buy back in" !

The trade has already served its purpose - reducing my loan balance - & I have captured that result by repaying the loan.

I am very happy having reduced the effective loan balance by 15%, or original cost by 10%.

If Gold prices drop, then I will re-enter at some advantageous level. Otherwise I will "store my wealth" elsewhere.

Wealth stored in the property has grown from HK$1.86 million - $180,000 gain on Gold, to maybe HK$2.75 million.

We are presently offering the property at HK$2.88 Million, and it is rented generating about 4.5% on our cost.

 

Besides measuring wealth, how do we measure profits? I mean, what currency do you take profits in? Have you "enhanced your position" by swapping gold for a currency. Maybe it would enhance your position to sell gold to pay down debt... but even this is arguable.

Due to viewing gold as a strengthening currency, I find it problematic to take profits in other currencies which may be weakening... even the US dollar.

Given these

That particular investment represents "wealth stored in property", and I am comfortable with that now.

That property is rented and generates an income, and also represents a sort of "bolt hole", if we need it.

 

At the moment, it is very hard to find suitable places to invest, and so my capital is piling up in Cash, as

I research alternatives. I consider Gold as part of my cash, but I am gradually reducing Gold holdings

because of the high price, the lack of yield, and the fact that we are headed into a seasonally weak time

for Gold. If this was now late August, then I might not be selling down.

 

For Cash, I like: HK$, C$, US$, some Sfr... and I am seeking more ideas for that.

[surfdude]

Using "Contextual Trading" and GOLD trades to reduce property costs

 

Thanks for sharing. So you used your property profits to buy gold and then in turn used your gold profits to (almost) pay off your existing mortgage. I see this as an arbitrage play where you now have 200 mace of free gold and have paid off/down future debt. Nice play.

[drbubb]

Thanks for sharing. So you used your property profits to buy gold and then in turn used your gold profits to (almost) pay off your existing mortgage. I see this as an arbitrage play where you now have 200 mace of free gold and have paid off/down future debt. Nice play.

Exactly.

 

With gold overbought, and its record highs unconfirmed by Silver, and Gold stocks,

I decided it was a great time to "take the money and run", banking my profits in Gold MACE.

 

What next?

I am meeting someone tomorrow to talk about Property in Japan.

I am looking forward to it !

 

I am also researching working with a Houston-based firm that invests in distressed US properties.

I think it is 1-2 years early, but they have a good concept, which looks "defensive" in what may be

a tough few years ahead. I am still studying it, but it looks very interesting.

[romans holiday]

We have no need "to buy back in" !

The trade has already served its purpose - reducing my loan balance - & I have captured that result by repaying the loan.

I am very happy having reduced the effective loan balance by 15%, or original cost by 10%.

If Gold prices drop, then I will re-enter at some advantageous level. Otherwise I will "store my wealth" elsewhere.

Wealth stored in the property has grown from HK$1.86 million - $180,000 gain on Gold, to maybe HK$2.75 million.

We are presently offering the property at HK$2.88 Million, and it is rented generating about 4.5% on our cost.

 

That particular investment represents "wealth stored in property", and I am comfortable with that now.

That property is rented and generates an income, and also represents a sort of "bolt hole", if we need it.

 

At the moment, it is very hard to find suitable places to invest, and so my capital is piling up in Cash, as

I research alternatives. I consider Gold as part of my cash, but I am gradually reducing Gold holdings

because of the high price, the lack of yield, and the fact that we are headed into a seasonally weak time

for Gold. If this was now late August, then I might not be selling down.

 

For Cash, I like: HK$, C$, US$, some Sfr... and I am seeking more ideas for that.

It sure makes sense to put everything in context, and it sounds like this trade in gold has suited your purpose well in payig down debt. That has to be one of the highest priorites.

 

I guess my point is [and here I go again] is that building a solid core position in gold has to be another priority for investors. Gold bugs tend to have 100% in gold [or silver]... with one foot in the gold bug camp [and the other in deflation] I have 50% of my worth in gold. I get the impression that the percentage you have in gold is quite a bit lower, even though you've been quite focussed on gold and desirous to buy. Perhaps I'm mistaken.

 

Do you have any target on what that core percentage, at this stage of the game, should ideally be?. Or would you agree with the money managers that 5% is fine? Or is it more a case of waiting for a possible deleveraging in gold where you would pile in with most of your reserves? Or has a more deflationary outlook put you off gold?

 

With gold overbought, and its record highs unconfirmed by Silver, and Gold stocks,

 

What seems an "anomaly" with non-confirmation in commodities and stocks, could actually be confirming gold's status as a currency. This has been discussed in other gold threads.

[surfdude]

What next?

I am meeting someone tomorrow to talk about Property in Japan.

I am looking forward to it !

 

The community of Oseto-Cho, about an hour drive outside of Nagasaki on the coast, was one of the better communities that I lived in. People worked together and shared their knowledge and learning. The area was sustainable with most families having fields to plant rice and many households had Mikan (orange) trees in their yard. It was some of the best fruit and vegetables I have ever eaten (watermellon, strawberries, oranges, pears, apples).

 

We were lucky in that some key members in the community had worked overseas for NGO's and were happy to include us gaijin in the community - this may not be the case everywhere in Japan. Still, I think Japan could be a great place to live if you find the right place.

 

Edit: the gold thread may not be the best place for my two cents on Japan. Hope I didn't bore anyone.

[Manual labourer]

The truth is, I really dont care, since the Gold sale was part of a "contextual trading strategy" which has already served its purpose.

================ (the following was posted on the Strategic Downsizing thread) :

 

Using "Contextual Trading" and GOLD trades to reduce property costs

2/

The truth is, I really dont care, since the Gold sale was part of a "contextual trading strategy" which has already served its purpose.

 

THE OVERALL IDEA here is to always operate from "a position of strength", and only make major moves when they improve your strategic position.

 

I am trying to develop some better Wealth Measurement tools, which will help people to see when they are enhancing their position.

 

 

Thanks Doc, that was very enlightening, I can now see what motivates you the desire to be liquid, uncluttered and in a constantly increasing strong position of varying assets.

 

It is good of you to be so open about your trades, and how you see gold as just another tool for generating a better standard of living.

 

Rather than some of us on here who see gold as a safe place to store our current wealth at this present time and climate,

 

perhaps this is a result of your formidable history in constantly trading all your assets?

 

It is great to have many views,this is a great platform for people to share them, IMHO, it doesn’t matter who is wrong or right, now or in the future as long as each individual is comfortable with

 

their own position and prepared to accept other people may find comfort somewhere else and more profit.

 

For people like me who are a little slow to exchange their assets from A to B to C etc, it is good to see real examples of other people dong this, and provides plenty of food for thought.

 

Thanks again.

 

Regards

 

ML

[wolf]

I don't think new minority investors in BV would want to kill a golden goose (excuse the slight pun).............

[drbubb]

Edit: the gold thread may not be the best place for my two cents on Japan. Hope I didn't bore anyone.

I'm going to copy this to: the Japan property thread

[drbubb]

Thanks Doc, that was very enlightening, I can now see what motivates you the desire to be liquid, uncluttered and in a constantly increasing strong position of varying assets.

 

It is good of you to be so open about your trades, and how you see gold as just another tool for generating a better standard of living.

 

Rather than some of us on here who see gold as a safe place to store our current wealth at this present time and climate,

 

perhaps this is a result of your formidable history in constantly trading all your assets?

 

It is great to have many views,this is a great platform for people to share them, IMHO, it doesn’t matter who is wrong or right, now or in the future as long as each individual is comfortable with

I worry, that Gold's long recent record of being a good store of wealth

may soon take another "hit" like it did in 2008.

The times we live in are not friendly to Buy & Hold, and maybe not even in the Gold sector