GOLD

[Gatesy]

I think I'm losing my faith...

 

I'm in danger of selling up and going back to 5% savings accounts!

 

 

I have the opposite problem; wondering when to go "all in"...

[bitbigt]

Is it all about money supply in the long run? It certainly is for the price of oil...

 

http://www.moneyweek.com/uploaded/images/0410.e.jpg

[bitbigt]

I think I'm losing my faith...

 

Not now please. You've survived the hard part!!!

 

We're now in a period of '2 steps forward and 1.5 steps back', before it transitions to '2 steps forward and another 3 steps forward' later this year (August/September and onwards).

 

But this '2 steps forward and 1.5 steps back' is so much better than the '1 step forward and 3 steps back' we had while we were trending downwards.

[wren]

Outages slam metal prices

 

By Saijel Kishan and Gavin Evans

 

Bloomberg News

 

Chile's worst drought in five decades and power rationing in nations such as South Africa and China mean the price of aluminum, gold, copper and platinum will keep climbing as the lights go out in the world's biggest metals mines.

 

Those governments are being forced to choose whether to reduce power to their 1.4 billion residents or curtail energy supplies to the world's biggest copper, aluminum, platinum and gold factories. The energy used by China's aluminum smelters each week could provide enough power for more than two million people for an entire year.

 

Runaway growth in emerging markets that is squeezing world oil supplies has led to electricity shortages, cutting output of commodities.

http://www.philly.com/inquirer/business/20...tal_prices.html

[wheelybin]

Bullionvault update.... hot off the press of Bullionvault's daily audit: no net increase or decrease to BV bullion holdings. Accounts have been further charged by about $1m since last week. Gold buying is showing signs of abating and account balances don't seem to be ratcheting up quite as quickly as they were. Outlook: Joe Public playing a waiting game?

[marceau]

I think I'm losing my faith...

 

I'm in danger of selling up and going back to 5% savings accounts!

 

 

Don't lose faith, especially not now we are so close to the bottom. Why sell up and move on AFTER gold has taken a battering, that's just what the manipulators want you to do, go back to their paper.

 

For what it's worth I haven't lost faith in gold one bit. Yes, I think it's due another fall or two, but that's only because the markets have taken too much prozac and are living in lala land (yet again). If you start cost averaging in today and give it 6 months I'm sure you'll be more than happy with the results (and have a load of assets which still have much further to rise).

 

I just can't see gold dropping below the 200dma, and that's climbing steadily as I write. Within a few weeks it will have risen to the $850 level, not too far from where we are today. I have my core position already and I'm not even thinking about selling it, I just want to add some more close to the bottom and have some fun trading along the way. I'll admit that this strategy isn't for everybody, so if you don't want risk I'd highly recommend drip feeding purchases over the next few months or building a pile of cash with which to buy. The main thing is not to sell what you already have, if you do, you lose, there's no other way to put it.

 

Keep the faith dude.

[marceau]

Anyway, on gold I didn't like what I saw today yet again. The volume just isn't where it needs to be and I still see a firm downtrend. Even the rally towards the NY close wasn't very convincing, at no stage did I think it was going to break through $873 and guess what, it didn't.

 

The only consolation for me was that the steady uptrend, violent selloff routine appears to be coming back into fashion, more in line with the upmoves in a bull market than the recent downtrend action. I still have a problem with gold relying on oil to drag it up by its bootlaces, that's extremely dangerous thinking in my opinion and if gold really is being saved by oil at the moment it doesn't bode well for it's prospects during the next oil selloff.

 

I'm assuming the ECB won't drop any bombshells this week so all I can see happening for a while is more of the same insane bullishness for stocks and insane bearishness for gold.

[DanF]

Gold actually didnt drop in sterling today (when it dropped in USD). Did USD get stronger or GBP weaker?

[azazel]

Anyway, on gold I didn't like what I saw today yet again. The volume just isn't where it needs to be and I still see a firm downtrend. Even the rally towards the NY close wasn't very convincing, at no stage did I think it was going to break through $873 and guess what, it didn't.

 

The only consolation for me was that the steady uptrend, violent selloff routine appears to be coming back into fashion, more in line with the upmoves in a bull market than the recent downtrend action. I still have a problem with gold relying on oil to drag it up by its bootlaces, that's extremely dangerous thinking in my opinion and if gold really is being saved by oil at the moment it doesn't bode well for it's prospects during the next oil selloff.

 

I'm assuming the ECB won't drop any bombshells this week so all I can see happening for a while is more of the same insane bullishness for stocks and insane bearishness for gold.

 

I appreciate your comments on gold. When we next have a decent up leg, I would be keen to hear your thoughts for profit taking prior to a correction.

 

Jim thinks that we have seen the low for gold (first week of May). Am i right in thinking that you do not agree?

[wheelybin]

Gold actually didnt drop in sterling today (when it dropped in USD). Did USD get stronger or GBP weaker?

 

Sterling got weaker (as did Euro on back of weak German export figures IIRC)

 

The pound tumbled to a 10-week low against the dollar on Wednesday amid signs of continuing deterioration in the UK economy.

 

Expectations heightened that the Bank of England would deliver its first back-to-back interest rate cut in seven years after its policy meeting today.

 

Nationwide bank’s measure of UK consumer confidence collapsed from 77 in March to 70 in April, a fresh record low. Meanwhile, data showed UK industrial output fell 0.5 per cent in March, confounding expectations for a slight rise.

 

http://www.ft.com/cms/s/0/3dccf6f8-1c1f-11...0077b07658.html

 

[G0ldfinger]

Sterling got weaker (as did Euro on back of weak German export figures IIRC)

...

[G0ldfinger]

Jim Sinclair's formula at work. I wonder how the bond insurers will like that.

Vallejo, California, Plans to File for Bankruptcy (Update3)

...

May 7 (Bloomberg) -- Vallejo, California, officials voted to file for bankruptcy because the San Francisco suburb isn't able pay its bills after costs for police and firefighters soared and the housing market's slide cut into tax revenue.

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

[drbubb]

"I think I'm losing my faith...

I'm in danger of selling up and going back to 5% savings accounts!"

 

That's exactly what these corrections do - they make you feel that way.

 

The lesson: Invest less earlier, and wait for others to convey this feeling.

[Steve Netwriter]

I think I'm losing my faith...

 

I'm in danger of selling up and going back to 5% savings accounts!

 

The others are far too polite.

 

Don't be a bl**dy fool !!!!

 

:lol:

 

IMO we are getting very very close to all the indicators showing a full house.

Jim refuses to explain the "first week in May" prediction, but IMO it's pretty obvious by checking all the indicators and extrapolating.

IMO if there is an effort to knock the price now it will be met with a massive buying force which will knock the price right back up.

 

By the way, the NZ employment figures came out today and were much worse than expected.

That's why the NZ$ is down.

 

 

[GTG]

By the way, the NZ employment figures came out today and were much worse than expected.

That's why the NZ$ is down.

 

Yep, NZD dropped about 50 pips against the USD shortly after the news announcement. Managed to nick a few quid trading the pair.

 

Back to Gold.... "The consensus of public opinions is at bullish level"

 

http://trendsman.com/wp-content/uploads/20...rdsentiment.png

 

This was just one of the charts which I received today in the excellent trendsman newsletter. The charts are reproduced on trendsman.com but unfortunatley the commentary in the newsletter is not. Basically the compelling argument presented is that both gold and commodities are primed for a move upward.

 

http://trendsman.com/

[Steve Netwriter]

Interesting website

 

Oversold indicator: http://trendsman.com/wp-content/uploads/20...may7goldbpi.gif

 

 

 

Another one for OJ:

 

Six Ways to Play Money Morning’s Prediction That Gold is Headed for $1,500 an Ounce

http://www.moneymorning.com/2008/04/09/six...-1500-an-ounce/

 

Even if $2,000 seems to be a somewhat aggressive price target for gold (because rising inflation is likely to cause the Fed to reverse policy before it gets there), understand that a target price of $1,500 certainly is not. And it seems very probable that with speculative demand tending to increase, gold could reach that latter level before the end of 2008.

 

The bottom line: Until the Fed reverses monetary policy and increases interest rates, gold is one of the best investment bets in an uncertain world.

[Steve Netwriter]

2008-2009: Rising Inflation Expectations Amidst An Inflationary Storm

by Jordan Roy-Byrne

September 26. 2007

http://www.trendsman.com/v1/members/archiv...nsEditorial.pdf

 

The average person isn’t concerned yet about inflation. They have witnessed and

experienced rising costs in food, energy, healthcare and tuition while the government and

media consistently proclaim inflation to be low and well contained.

 

Do these people have an ounce of decency? The roots of their corrupt and deceitful behavior can be traced back to a fiat monetary system that operates on debt and inflation, which is a form of

counterfeiting. Joe Sixpack knows all this isn’t right.

 

But he doesn’t know the true cause of rising prices in everyday living expenses, nor does he believe things are unmanageable. At least not yet. To date the Fed has succeeded in obfuscating inflation to

the public. They have kept inflation expectations low enough. Though once the public

wises up, their confidence game is lost.

.

.

.

Conclusion

The Federal Reserve's ½ point rate cut triggered a 27 year high in the price of gold, and

all time highs in Oil and Wheat, to name a few other things. Amazingly expectations of

inflation are foolishly absent. The dollar just hit an all time low. Foreign currencies are

hitting all time highs. Monetary inflation is at a multi decade high. Commodity prices are

at multi decade highs. Inflation? Anyone? Bueller?

 

The lack of inflation expectations should tell you that the commodity bull market and

specifically the bull market in gold, has barely scratched the surface. It is my belief that

the Fed's recent cut is the wake up call that will finally stimulate rising inflation

expectations.

 

Moreover, the public awakening towards inflation is coming at a time when

monetary inflation, commodity inflation, currency inflation and wage inflation, already at

significant highs, are set to rise even further. The key levels to watch are $1,020/oz on

gold and 72 on the US Dollar. While the inflation trend has begun to accelerate, it will

turn violent if, and when those levels are broken. Good luck and protect yourself!

 

[ologhai]

Thanks for the words of comfort (and sage advice).

 

I've been caught out by circumstance really. I wanted to buy gold last summer, but I didn't have a particular large amount of cash from which to invest. I foolishly (as it turned out) waited until I had sold my house before beginning to put money into gold and silver -- which began a couple of months ago.

 

In other words, I'm currently in negative territory. Of course, if I'd bought last summer as I'd originally wanted to, I'd still now be comfortably positive and not so concerned.

 

I actually put a bit more money into PMs on Tuesday (for the first time in about a month or so), then immediately felt silly for doing so -- as in, "I'm already in negative territory, why on earth did I buy some more?! Stupid, stupid, stupid."

 

Under the circumstances, I think my faith has held pretty well -- up until yesterday anyway...

[Steve Netwriter]

It's the perennial problem. Timing. IMO if you believe in the long-term trend, then you just accept the dips.

 

But I must disagree with you about you being in negative territory.

You bought and still own a gold class insurance policy. That's not something to be sniffed at in my books. Imagine how you'd have felt if you'd not bought any gold and the whole system had gone up in smoke ! Totally uninsured, and broke.

 

 

Anyway, another good one for you

 

 

The Fed Continues to Bamboozle Consumers Into Thinking They Are Richer Than They Really Are

By Bill Bonner • May 8th, 2008

http://www.dailyreckoning.com.au/bamboozle...ers/2008/05/08/

 

And now, dear reader, we find that all these marvelous deceits are having an effect; they're bamboozling almost everyone into thinking things are getting better.

 

There's also a hidden flimflam...an even more important one. Since '95, reports Martin Hutchinson, the U.S. money supply, as measured by 'money of zero maturity,' has gone up at about 8.8% per year. The average fellow, seeing that he has 8.8% more cash - and with no knowledge of the volume theory of money - might reasonably conclude that he is richer. But when money increases faster than the goods and services it's destined to pay for, the result is rising prices. At 8.8%, U.S. money supply was increasing about 50% faster than the GDP. You'd expect prices to rise and the dollar to fall - which is exactly what has happened.

 

But recently, the feds have put their fabulous money machine into high gear. MZM has been going up at a 28% annual rate over the last three months.

 

Here at The Daily Reckoning, our theory is that the feds' inflation will goose up prices of commodities, gold, U.S. money supply and oil - but not the real economy. So far, that seems to be what is happening. The CRB commodities index is up 24% since last September. Oil has gone up 25% this year. Natural gas has risen 49%. Gold, meanwhile, has only gone up 4.8% in 2008...but this is after a correction; remember, it was over $1,000 just a few weeks ago.

 

As for consumer prices...the latest numbers show consumer prices rising at an 11% rate in March. This number would have been a shocker - if it had ever seen the light of day. Instead, the boys down in the basement of the Labor Department went to work on it with hammers and baseball bats; when they were finished, the number had been 'seasonally adjusted' down to only 3.6%.

 

[azazel]

Thanks for the words of comfort (and sage advice).

 

I've been caught out by circumstance really. I wanted to buy gold last summer, but I didn't have a particular large amount of cash from which to invest. I foolishly (as it turned out) waited until I had sold my house before beginning to put money into gold and silver -- which began a couple of months ago.

 

In other words, I'm currently in negative territory. Of course, if I'd bought last summer as I'd originally wanted to, I'd still now be comfortably positive and not so concerned.

 

I actually put a bit more money into PMs on Tuesday (for the first time in about a month or so), then immediately felt silly for doing so -- as in, "I'm already in negative territory, why on earth did I buy some more?! Stupid, stupid, stupid."

 

Under the circumstances, I think my faith has held pretty well -- up until yesterday anyway...

 

 

If its any consolation, I sold my house and put the money into PM. Had I bought in august I would be £150K up now but I did it in January at around $900. I do not regret buying gold n silver but in hindsight, the timing could have been better. I could have earned more interest in the bank and bought cheaper at $850. Its obvious that gold will go up at some point. When it does I will be up more than the interest I would have in the bank. Plus there is the hope that my £300,000 will increase to £600,000 or more if I am prepared to wait, which I am. And the house prices are falling so everything is pretty much going to plan. So you not alone mate. What have you done Bullion Vault or physical?

[chazza]

Sell gold, by Treasuries:

 

"...Price increases are simply more noticeable — more salient, as psychologists would say — than price decreases. Part of this comes from the notion of loss aversion: human beings dislike a loss more than they like a gain of equivalent size. If you have to sell your house for less than you bought it for, you’re really unhappy. You hate that ground chuck now costs $2.83 a pound, but you didn’t notice that oranges are 31 percent cheaper than they were a year ago.

 

There is also something particular to inflation that aggravates loss aversion. Price increases are obvious. But price declines are often hidden. The cost of an item stays about the same for years, while everything else gets more expensive and nominal incomes rise.

...

The final piece of the puzzle — and the focus of the Harper’s article — is the way that the Bureau of Labor Statistics has changed the price index recently. Back in the mid-1990s, a committee of academic economists concluded that the Consumer Price Index overstated inflation. To take just one example, years would often pass before the index included new products — like cellphones — and therefore it missed the enormous price declines that occurred shortly after those products entered the mainstream.

 

...“It’s about as accurate as anybody is going to get it,” Mr. Cecchetti said.

 

That said, there is one way in which the official numbers were clearly understating inflation. To track housing costs, the Consumer Price Index analyzes rents, not home prices. (Why? Long story.) And rents didn’t go up anywhere near as much as house prices during the real estate boom. So the index missed the huge run-up in home values that made life harder on anyone trying to buy a first home.

 

Since 2006, of course, home prices have been falling. But rents have kept rising slowly, which means that, as far as the Consumer Price Index is concerned, housing has somehow gotten more expensive during the real estate crash.

 

So when the new inflation numbers come out next week, they will indeed be misleading. They will be artificially high."

 

 

 

http://www.nytimes.com/2008/05/07/business...amp;oref=slogin

 

 

 

[G0ldfinger]

Jim Sinclair's formula, now at work in Germany. The treasury expects €2bn less tax income. I think that's possibly conservative.

In German: http://www.spiegel.de/wirtschaft/0,1518,552210,00.html

[Bobsta]

So when the new inflation numbers come out next week, they will indeed be misleading. They will be artificially high.

 

http://www.nytimes.com/2008/05/07/business...amp;oref=slogin

Yet more media "everything'll be OK" spin. Oil is $122/bl and has risen 25% this year alone. This impacts real people in real ways - direct transport, freight and shipping costs for food and other items, heating and power, plastics, manufacturing, etc, etc. With the dollar devaluing imports prices are up. And try telling homeowners seeing prices fall around their ears that their housing costs are going down. OK, Bernanke's slashed rates so they can refinance at lower rates but somehow I don't expect them to see life as rosy right now.

 

There isn't much gold to go round so I'm happy for those who want to believe such articles to stick to their "safe" Treasuries.

 

BTW, speaking of oil, who else is having a dabble in the stuff? I must admit I've been too lazy to have much of a look but is there a specific thread on crude? I'm currently flat having been long crude from $112 to $118 and again $116 to $120. I got out at $120 and am considering diving back in.

[ologhai]

If its any consolation, I sold my house and put the money into PM. Had I bought in august I would be £150K up now but I did it in January at around $900. I do not regret buying gold n silver but in hindsight, the timing could have been better. I could have earned more interest in the bank and bought cheaper at $850. Its obvious that gold will go up at some point. When it does I will be up more than the interest I would have in the bank. Plus there is the hope that my £300,000 will increase to £600,000 or more if I am prepared to wait, which I am. And the house prices are falling so everything is pretty much going to plan. So you not alone mate. What have you done Bullion Vault or physical?

 

In many ways, I wish I was as brave as you -- brave enough to go 'all in' with the money from the sale of my house. (And, no doubt, if G&S do as well as many expect them to, I'll wish I had! )

 

I've bought gold using Bullion Vault and silver using GoldMoney. The ratio between gold and silver is about 50:50 (in terms of money invested).

 

Thanks again, folks, for the support -- most unexpected. And, for now at least, my pessimism has waned somewhat... Some nice bullish activity from (as Frisby might put it) The Sisters would help my pessimism even more!

[HPCSucks]

Thanks for the words of comfort (and sage advice).

 

I've been caught out by circumstance really. I wanted to buy gold last summer, but I didn't have a particular large amount of cash from which to invest. I foolishly (as it turned out) waited until I had sold my house before beginning to put money into gold and silver -- which began a couple of months ago.

 

In other words, I'm currently in negative territory. Of course, if I'd bought last summer as I'd originally wanted to, I'd still now be comfortably positive and not so concerned.

 

I actually put a bit more money into PMs on Tuesday (for the first time in about a month or so), then immediately felt silly for doing so -- as in, "I'm already in negative territory, why on earth did I buy some more?! Stupid, stupid, stupid."

 

Under the circumstances, I think my faith has held pretty well -- up until yesterday anyway...

If you are having these thoughts, perhaps this is because you don't really understand what you are getting into ? So from that point of view are you doing anything other than gambling ?