Steve Netwriter Posted August 6, 2008 Report Share Posted August 6, 2008 Wow! Unusually, I'm not one of those feeling negative (which is probably a catastrophic sign in itself! ). I've just been trying to calmly buy the dips lately, and my timing's been okay. This week, I've added about 10% to what (around here at least) seems to be called my 'core holding', half of that in gold on Monday, and the other half in silver today. Steve should be proud of me for not going to pieces for once... I am Link to comment Share on other sites More sharing options...
Steve Netwriter Posted August 6, 2008 Report Share Posted August 6, 2008 As the debated rages on whether we will get inflation or deflation (must admit I'm still ensure) I can understand that gold is a good investment for inflationary pressures but if all the debt is written off and deflation abounds what would happen to the price of good. I am looking to stick 20k of the STR fund in PM's and just want to be sure. I am convinced that the price is right but still hesitant in the long term. bb My suggestion. Put 10% of your liquid portfolio in right now. Then you have a reasonable amount of insurance, and risk very little loss on your total. IMO more than that requires you to have confidence. Recently I read quite a good article which claimed that deflation is better for gold. I wish I could remember where it is Link to comment Share on other sites More sharing options...
Steve Netwriter Posted August 6, 2008 Report Share Posted August 6, 2008 I don't think it was one of these, but they are interesting: InflationData Gold is a "Crisis Hedge" not an Inflation hedge Updated September 20, 2007 http://inflationdata.com/inflation/Inflati...d_Inflation.asp Inflation Warning!!! How do you protect yourself now? July 18, 2006 http://inflationdata.com/inflation/Inflati...ion_Protect.asp Link to comment Share on other sites More sharing options...
romans holiday Posted August 6, 2008 Report Share Posted August 6, 2008 Agreed. Too much is being made out of this inflation/deflation debate [another false dichotomy which has been covered in previous posts]. It is simplistic to ask which flation we will get and then conclude inflation/good for gold or deflation/bad for gold. In reality, we have both of them playing out in different spheres. The essential point, as Steve mentions, is whether we have a crisis. In a crisis, gold is good no matter the flationary flavour. Link to comment Share on other sites More sharing options...
Dispassion Posted August 6, 2008 Report Share Posted August 6, 2008 Recently I read quite a good article which claimed that deflation is better for gold. I wish I could remember where it is I've read this in a number of places. Interestingly, they all also argued that gold doesn't, historically, perform very well at times of inflation. Which would seem contrary to the most commonly held view that I see on gold forums. I don't want to ignite the whole - what is gold debate, but it seems to me that gold's purchasing power, historically, has varied wildly, if I recall correctly, by two orders of magnitude, so I don't see it as a preserve of wealth, but as a speculative investment with good prospects in the current economic climate. Link to comment Share on other sites More sharing options...
romans holiday Posted August 6, 2008 Report Share Posted August 6, 2008 I've read this in a number of places. Interestingly, they all also argued that gold doesn't, historically, perform very well at times of inflation. Which would seem contrary to the most commonly held view that I see on gold forums. That would be inflation of the "garden variety" then? Link to comment Share on other sites More sharing options...
frizzers Posted August 6, 2008 Report Share Posted August 6, 2008 Norcini's analysis ties in with Frisby's latest LINK Link to comment Share on other sites More sharing options...
cgnao Posted August 6, 2008 Report Share Posted August 6, 2008 Commodity futures exchange rules are being changed to inflict maximum damage on longs. This is just another dirty tactic. As all others, it can only delay the unavoidable hyperinflationary price explosions. http://www.reuters.com/article/governmentF...535661120080805 Big CFTC data revision raises oil traders' eyebrows Tue Aug 5, 2008 4:33pm EDT NEW YORK, Aug 5 (Reuters) - A quiet data revision that has boosted by nearly 25 percent the number of oil futures contracts U.S. regulators think are held by speculators is raising eyebrows in the energy trading community. The revision means that speculators controlled 48 percent of the open interest in NYMEX crude oil futures and options as of July 15, compared with just over 38 percent under the previous classification. "That's huge when you look at the numbers," said Phil Flynn of Alaron Trading in Chicago. "It changes the whole way you look at the recent moves in this market." The U.S. Commodities Futures Trading Commission announced on July 18 that it was reclassifying some trading positions that it had reported as commercial hedging positions as noncommercial speculative positions. .... The reclassification comes amid the collapse of energy trader SemGroup LP, which filed for bankruptcy on July 22 after suffering $3.2 billion in losses on oil futures and derivatives. SemGroup has blamed its collapse on unauthorized speculative oil trading by its co-founder and former chief executive, according to a court filing by a SemGroup lender. The SemGroup collapse coincided with a sharp fall in oil futures from their peak above $147 a barrel in mid-July. However, a person familiar with SemGroup's trading position said Monday the trader's position was not concentrated in any one month and was more focused on intermonth spread positions. "This was no Amaranth or Motherrock," said the person familiar with SemGroup's futures trading book, referring to two energy hedge funds whose multibillion dollar failures roiled futures markets. SemGroup began the process of transferring its NYMEX trading book to Barclays Plc on July 11 after drawing down a $54 million line of credit to place a deposit with the British bank, according to bankruptcy court testimony. SemGroup completed the transfer of its trading book to Barclays on July 16. The transfer of SemGroup's NYMEX trading position was instigated by the exchange itself, according to a source familiar with the NYMEX's activities. Link to comment Share on other sites More sharing options...
cgnao Posted August 6, 2008 Report Share Posted August 6, 2008 Regardless of what we think on GEI, the rest of the market simply doesn't see gold as currency - yet ! That's what the spinmeisters out there are trying to make you believe. You couldn't be more wrong. The smoke and mirrors game will only last until they can feed the physical market with as much as required to keep the illusion up. Link to comment Share on other sites More sharing options...
kernull Posted August 6, 2008 Report Share Posted August 6, 2008 + Crude oil will fall to about $100 (target: $80-$110), and then ok, when you buy it, let us know Link to comment Share on other sites More sharing options...
G0ldfinger Posted August 6, 2008 Author Report Share Posted August 6, 2008 Norcini's analysis ties in with Frisby's latest LINK Yes! Very good. Edited to add: Very entertaining article indeed. I also heard the Nebukadnezar (German spelling) bread story on FSN. Pretty impressive. And regarding silver, has anyone seen Sammy recently? Link to comment Share on other sites More sharing options...
warpig Posted August 6, 2008 Report Share Posted August 6, 2008 It looks as if we are going to test $850, any thoughts? Any predictions lower than this? Link to comment Share on other sites More sharing options...
G0ldfinger Posted August 6, 2008 Author Report Share Posted August 6, 2008 http://goldismoney.info/forums/showpost.ph...postcount=15689 Bill, We are only $20 above the 1980 high of $860/oz. What in the world can you buy for its price 28 years ago? What is ludicrous is that about the only items you can buy at the price they were 28 years ago are the world’s inflation barometers PRECIOUS METALS! If anyone thinks that is a coincidence they should not go out on the street alone. In 1980 the total above ground stocks of gold were 70,000 tons; the total supply of dollars according to M3 was 1.8T$. Today the total above ground stock of gold is 130,000 tons and the total M3 is close to 15T$. On a simple volumetric basis gold should be at least $3,873. Even if we take the annual low price of gold in 1980 which was $480 gold should be $2,160. If someone offered a new house or a new car at 1980 prices ($76,000 and $7,200 respectively) I am sure buyers would be flocking to scoop up the bargains …when gold and silver are offered at those prices investors run for the exits!! What a bargain the Cartel is offering for those who can think straight! Cheers Adrian Link to comment Share on other sites More sharing options...
Magpie Posted August 6, 2008 Report Share Posted August 6, 2008 Bill, We are only $20 above the 1980 high of $860/oz. What in the world can you buy for its price 28 years ago? What is ludicrous is that about the only items you can buy at the price they were 28 years ago are the world’s inflation barometers PRECIOUS METALS! If anyone thinks that is a coincidence they should not go out on the street alone. In 1980 the total above ground stocks of gold were 70,000 tons; the total supply of dollars according to M3 was 1.8T$. Today the total above ground stock of gold is 130,000 tons and the total M3 is close to 15T$. On a simple volumetric basis gold should be at least $3,873. Even if we take the annual low price of gold in 1980 which was $480 gold should be $2,160. If someone offered a new house or a new car at 1980 prices ($76,000 and $7,200 respectively) I am sure buyers would be flocking to scoop up the bargains …when gold and silver are offered at those prices investors run for the exits!! What a bargain the Cartel is offering for those who can think straight! I'm agnostic on what happens next, but there seems to be a whiff of denial about this kind of reasoning. 1) On the money supply calculation, prices in general across the economy should be up by over 800%. They're not, which suggests this bit of the equation is rationalisation. 2) Why compare the price now to the price at the peak of a very short-lived bubble in 1980. Why not look at the average price in the 1979-82 period which was, what, $300-350? At which level the current price looks about right, if there isn't another spike. None of that is to say that a spike (or the kind of economic chaos that could cause it) won't happen. But I'm not persuaded by his numbers otherwise. Link to comment Share on other sites More sharing options...
Magpie Posted August 6, 2008 Report Share Posted August 6, 2008 Or to put it another way, a loaf of bread cost about £0.40, a pint of beer about £1.20 in 1980. I expect to pay about £1-1.20 and about £3 for the same now. If someone told me that they were now selling bread at £3.50 a loaf and beer at £10 a pint because of the money supply, I'd think they were nutso. Of course we might only have to wait a year or two for those prices to arrive... Link to comment Share on other sites More sharing options...
G0ldfinger Posted August 6, 2008 Author Report Share Posted August 6, 2008 ... Of course we might only have to wait a year or two for those prices to arrive... 100% guaranteed. Apart from this, yes, the argument is too simplistic. Talking about 'at least' when the price in question was taken right at the top seems wrong. Also, it might make more sense to do this calculation using Fed (or central bank) gold holdings rather than above ground stock. While the first of my arguments would reduce the outlook, the second one would improve it (I think). Link to comment Share on other sites More sharing options...
wrongmove Posted August 6, 2008 Report Share Posted August 6, 2008 Bill, We are only $20 above the 1980 high of $860/oz. What in the world can you buy for its price 28 years ago? What is ludicrous is that about the only items you can buy at the price they were 28 years ago are the world’s inflation barometers PRECIOUS METALS! If anyone thinks that is a coincidence they should not go out on the street alone. In 1980 the total above ground stocks of gold were 70,000 tons; the total supply of dollars according to M3 was 1.8T$. Today the total above ground stock of gold is 130,000 tons and the total M3 is close to 15T$. On a simple volumetric basis gold should be at least $3,873. Even if we take the annual low price of gold in 1980 which was $480 gold should be $2,160. If someone offered a new house or a new car at 1980 prices ($76,000 and $7,200 respectively) I am sure buyers would be flocking to scoop up the bargains …when gold and silver are offered at those prices investors run for the exits!! What a bargain the Cartel is offering for those who can think straight! Cheers Adrian Anyone know exactly what do they mean by "above ground stocks"? Surely half the world's gold hasn't been mined in the last 30 years? Link to comment Share on other sites More sharing options...
hotairmail Posted August 6, 2008 Report Share Posted August 6, 2008 I don't think it is as straightforward to look at the ratio of fiat to gold either. Gold has to compete with all sorts of other goods and services for that fiat and they may have changed price and/or volume over time. I know you know but it's worth remembering that the fiat merely facilitates all those transactions...it doesn't actually reside in the goods or services themselves. Link to comment Share on other sites More sharing options...
G0ldfinger Posted August 6, 2008 Author Report Share Posted August 6, 2008 Anyone know exactly what do they mean by "above ground stocks"? Surely half the world's gold hasn't been mined in the last 30 years? In fact, I think it has. At least the number is much higher than one would think. Link to comment Share on other sites More sharing options...
wrongmove Posted August 6, 2008 Report Share Posted August 6, 2008 In fact, I think it has. At least the number is much higher than one would think. Isn't that a little ....... er, inflationary? How hard and fast would they be digging at say $2,000 oz? Link to comment Share on other sites More sharing options...
electroweak Posted August 6, 2008 Report Share Posted August 6, 2008 Isn't that a little ....... er, inflationary? er... don't understand.. what do you mean? How hard and fast would they be digging at say $2,000 oz? I think that depends on the price of oil at that time! Link to comment Share on other sites More sharing options...
G0ldfinger Posted August 6, 2008 Author Report Share Posted August 6, 2008 Isn't that a little ....... er, inflationary? ... M3 went 10-fold!! And just look at the population and/or poductivity. Link to comment Share on other sites More sharing options...
G0ldfinger Posted August 6, 2008 Author Report Share Posted August 6, 2008 Gold:oil is now at 7.5:1, up from a low of 6.5:1. Still a long way to go. Link to comment Share on other sites More sharing options...
wrongmove Posted August 6, 2008 Report Share Posted August 6, 2008 er... don't understand.. what do you mean? The point of gold as money is that it cannot be inflated by governments, so long as you also outlaw fractional reserve banking (the ability of a bank to lend out a fraction of its deposits). If we can double our stocks in 30 years at current rates of production, just think what it would be like if gold was many $1,000s of dollars an ounce. Output would crank up massively. Current production levels are aimed at a price of much less than spot, as many miners are hedged. So a handful of countries, those with significant reserves, would replace the central banks. I.e. they would control the money supply, and could inflate it if they wish. Who would be running these countries? I dread to think. Has the "gold is money" argument really factored in the difference between a pick and an open fire and a 21st century earth mover and a large scale refinery? Or is simply that the original assumption wrong, i.e. that half the world's gold has been mined in the last 30 years? Link to comment Share on other sites More sharing options...
electroweak Posted August 6, 2008 Report Share Posted August 6, 2008 more mine trouble ?? : http://news.bbc.co.uk/1/hi/world/africa/7544359.stm S Africa unions stage mass strike Cosatu members marching in Durban, 9 July 2008 The union movement has significant political influence in South Africa South African trade unions are holding a one-day strike, which has caused widespread disruption and brought much of the economy to a standstill. The Congress of South African Trade Unions (Cosatu) is mobilising its two million members to protest against the high cost of living. The public transport network has been severely disrupted, with a knock-on effect on schools, mines and carmakers. Some of the country's biggest mining companies say they have been badly hit. Unionists are mobilising in all of South Africa's nine provinces. Link to comment Share on other sites More sharing options...
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