GOLD

[G0ldfinger]

Holy Moly these are some steep drops-can't blame this one on the PPT ppl See you at 666

Is this your personal 'back up the truck' number?

 

I think after this plunge, somewhen later this year or next year, we will see the mother of all rebounds. Maybe when one of the big ones, like UBS or RBS, goes belly-up.

 

Maybe this is the time for me to start getting into mining shares? Although, I wanted to wait on the City/Wall Street crash first. Hmm, decisions... Otherwise, I will continue accumulating physical silver, some gold, and maybe Palladium.

[G0ldfinger]

Stop the whining. Comparison with the 1970s:

 

http://www.jsmineset.com/cwsimages/Miscfil...old_Monthly.pdf

[wrongmove]

May be of interest to some - written by a gold bull, but more balanced article than some, IMHO

 

Who is Really Printing Money?

 

"A popular mantra among many gold bugs is: "the Fed is printing money." Any actions by the Fed to support liquidity in the markets are touted as "money creation" and consequently "monetary inflation" which causes gold appreciation. If gold does not rise, they proclaim that there is "manipulation" and "conspiracy".

 

It is fair to say that we do not see the picture in such black and white colors.

 

The main source of new money in the economy is not the Fed but the commercial banks. It is the private banks that increase money supply through debt (new credit) creation.

 

During a credit crisis which is characterized by a steep slowdown of credit creation, growth of money supply in the financial system slows as well. It is silly to think that the Fed can replace the whole system of commercial banks by creating money itself from thin air. What the Fed can do is influence money supply by adjusting interest rates creating more or less incentive for the fractional-reserve lending by the commercial banks.

 

Lately, the Fed has expanded its sphere of influence but these actions still do not directly cause increases in money supply. The Fed began swapping poor performing assets on the banks’ balance sheets for the high quality treasuries on the Fed’s balance sheet in an effort to improve the financial situation of the banking sector and restore liquidity................."

 

 

He goes on to say gold will hit the moon, but is cautious (to say the least) about timescales:

 

"Today, the biggest fear that the Fed has is the fear of deflation. The monetary policymakers understand that (a) sound banking system is a foundation of US economic prosperity and ( the failure to support the banking system will inevitably cause deflation. We are, therefore, confident that the Fed, headed by Chairman B. Bernanke, will continue to support the banks by creating the best possible environment for the return to a normal cycle of debt/money creation and use everything in its arsenal to prevent deflation.

 

Going forward, gold will likely resume its up-trend due to one of two reasons:

 

1. Another spell of problems in the financial system will cause gold (and the US treasuries) to once again take the place of safe haven investments, as was the case in the second half of 2007.

 

2. Fear of deflation and a further slowdown in the US will spread around the world. As a result, a vicious wave of competitive devaluation will cause not only price shocks (oil, food, etc.) but also spiraling monetary inflation, eventually raising long-term bond yields. This will be the beginning of a real gold bull market when gold outperforms all other major classes of assets including most hard assets.

 

The second outcome, in our opinion, is inevitable but no one knows when it will come and what path it will take.

 

Gold Price Action

 

In the middle of July, gold touched its upper Bollinger Band (see weekly chart below). At that time a large wave of profit-taking and commodity liquidation began, causing gold to plunge by over $100/oz.

 

Gold held its May low of $946, which was critically important for the near term. Most technical analysts now see this support will eventually be breached and gold will touch its 65-week moving average in the low $800s.

 

Unfortunately, this outcome is now quite likely, meaning that the duration of the correction could be extended by an unknown length of time, from a couple of months to as long as a year.

 

One outcome that we feel we have to mention is the worst case scenario. The current commodity correction could extend for a few more months, easily pulling gold to below $800. If gold stabilizes in the $700s, lower $800s would become new resistance levels, causing precious metals to stall for a longer period of time.

 

Although this will in no way cancel the secular gold bull market, it will, however, likely lead to a cyclical bear market. The chart below shows that gold can fall to the lower $600s and still keep the long-run gold bull alive. During the seventies’ bull market gold lost about half of its value in a period of two years, just before embarking on an unprecedented run that took the price to $850/oz.

 

One more point. Gold ended 2007 at $838 per ounce. Is it so outrageous to expect 2008 to be a down year for gold, after seven straight years of gains? We think not.

 

While this bearish outcome for gold is not unreasonable, how would gold stocks react in this scenario?"

 

 

 

[marmite]

I feel like a frightened rabbit at the moment, frozen with fear

 

My target price of £450 a bought ounce has been reached, but the brutality of the drop and taken my breath away. On one hand I should be using some of my dry powder but on the other I just dont know where the bottom could be.

 

What the hell is going on in this market, war breaks out and gold crashes

 

Support level after support level are just wiped out. Fundementals have not changed, so why the crash, I wonder ????

 

I feel this is time to sit back and watch.

 

If this is the lull before the almighty storm, why the hell are people selling ???

 

This really brings the deflation arguement back or is this what they want us to think ???

 

 

[wrongmove]

Fundementals have not changed, so why the crash, I wonder ????

 

The perception of fundamentals seems to have changed. The market seems to be to be betting on a somewhat resurgent US (first into trouble, first out again type theory) and the slowdown in Asia and Europe, plus the credit crunch in the West, seems to have switched fears from inflation to deflation.

 

Markets price for 6-24 months ahead. Everyone knows what the situation is now, i.e. expanding money, rising inflation etc. and to some extent this was priced into $1000 gold. Now the market is seeing a different future (for now) (IMHO)

[G0ldfinger]

If you cut a turd into two pieces, you get ... TWO TURDS!!

 

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

UBS to Split Investment Bank From Wealth Management After Loss

...

Aug. 12 (Bloomberg) -- UBS AG, Switzerland's biggest bank, announced plans to separate its investment banking and wealth management units after a fourth straight quarterly loss caused by subphttp://www.greenenergyinvestors.com/index.php?showtopic=3910&st=620entry53248

Gold Investment & Trading - #6 : Aug. 2008 - Green Energy Investorsrime-related writedowns.

[PricedOutNative]

Sorry about bringing to the price of gold crashing down, while on holiday last week I bought some gold coins, I suspected getting into gold would cause the price to plummet, I managed to do the same when I got into Telco shares weeks before the dot com bust!

[marmite]

The perception of fundamentals seems to have changed. The market seems to be to be betting on a somewhat resurgent US (first into trouble, first out again type theory) and the slowdown in Asia and Europe, plus the credit crunch in the West, seems to have switched fears from inflation to deflation.

 

Markets price for 6-24 months ahead. Everyone knows what the situation is now, i.e. expanding money, rising inflation etc. and to some extent this was priced into $1000 gold. Now the market is seeing a different future (for now) (IMHO)

 

Some very good points wrongmove. I see what you mean " First into trouble, first out again theory "

 

If perception of fundamentals have really changed then this correction will last for a longer period of time, giving the market time to look at the changes.

 

If this is only down to market manipulation the price will catapult to the moon in very short time.

 

I suppose gold is the very investment that you dont want to profit from

At least whilist gold is going down, the rest of the market is improving.

[electroweak]

I feel like a frightened rabbit at the moment, frozen with fear

 

My target price of £450 a bought ounce has been reached, but the brutality of the drop and taken my breath away. On one hand I should be using some of my dry powder but on the other I just dont know where the bottom could be.

 

What the hell is going on in this market, war breaks out and gold crashes

 

Support level after support level are just wiped out. Fundementals have not changed, so why the crash, I wonder ????

 

I feel this is time to sit back and watch.

 

If this is the lull before the almighty storm, why the hell are people selling ???

 

This really brings the deflation arguement back or is this what they want us to think ???

I think this sentiment is ruling right now; After a big drop, all the weak hands and over-levereged should be wiped out. Time for new buyers and a solid floor. Trouble is, where is the floor. I'd say this is it, but then I hate 'bottom pickers' !!!

[marmite]

'bottom pickers' !!!

 

 

[ConvertedGoldBug]

Who thinks that this big drop in PM's and oil over the last few days (and the continual increase in the dollar) was engineered specifically because of the conflicts in Georgia?

 

I mean, had there not been any intervention, the prices could have shot upwards on the threat of war, and that would have given the impression of further weakness in the US economy and caused more pain.

 

Maybe they had no choice but to throw everything available to prevent this happening...

[lifechooser]

I've spent enough time in casinos to have learnt that you've never made money until you cash out, and you've never lost money while there are still small round things to play with.

 

I bought my gold 2 weeks ago for prices ranging from $955 to $910 retail. When I got back from the US, I showed a coin or two to some trusted and interested collegues, who are now pointing and laughing as the price drops towards $800.

 

The thing is. I don't care. I bought gold expecting volitility. 80% of my savings are counting against a 10 year fixed rate offset mortgage. 10% are going into banking shares, and 10% is in gold, both as interesting and risky investments to counter the boring predictability of saving against the mortgage.

 

I won't have stops on either investment. I will sell them both when house prices have bottomed, as I will need the money to move up the property ladder (hopefully the rungs will be spaced more closely). If gold or the shares are worth a pittance by then, then I will hold them until they are worth something, possibly decades later.

 

I am interested in why gold is moving so much. Who is selling and why? It seems odd for the market to drop so much with so little reason.

 

Another gambling tip - gamble only what you can afford to lose. I don't want to lose 20% of my savings, but if I do, then it won't really affect my life.

 

My final gambling tip. Professional gamblers lose a lot of the time, but slightly less often than they win. To profit, they need to know more than the bookmakers, and be able to better predict the future by doing lots of research. That tiny edge is how they make their money. If you <s>think</s> know you know better about an investment than everyone else, then go for it. A lot of the time you will lose, just make sure it's less often than you win, and don't listen to everyone else (remember that bookies just follow what the other punters do) and you should make money in the end.

 

My prediction? High but not hyper inflation. Gold to $1500. Peak in 2011.

 

Richard

[wrongmove]

I suppose gold is the very investment that you dont want to profit from

At least whilist gold is going down, the rest of the market is improving.

 

Indeed - the old saying goes "put 10% into gold and hope it does badly". That, IMHO, is using gold as an insurance policy.

 

If you are 100% gold, and hoping it will do well, apart from the cognitive dissonance caused by actually hoping for war and disaster, you have nothing left to insure.

[G0ldfinger]

...

If you are 100% gold, and hoping it will do well, apart from the cognitive dissonance caused by actually hoping for war and disaster, you have nothing left to insure.

Depends. I am 100% in gold and silver. But these savings are in theory small compared with my discounted lifetime income. Problem is, the discounted lifetime income is in SterTurdling.

[wrongmove]

Depends. I am 100% in gold and silver. But these savings are in theory small compared with my discounted lifetime income. Problem is, the discounted lifetime income is in SterTurdling.

 

But you are "going for the moon", not using gold as an insurance policy?

 

Good luck, but to me, that is not the same thing. That is pure speculation, and as generation after generation never seems to learn, getting rich is the easy way is rarely easy.

 

 

 

[G0ldfinger]

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

U.K. Inflation Reaches 4.4%, More Than Double Target

(Oh, and sell ALL your gold and silver. :lol: )

[marmite]

This 10% question always confuses me

 

How do you work out 10% ???

 

Is 10% of what you own now ????

 

A house, Savings, Pension contributions, Monthly salary, Shares, Other investments : Add then all at todays value and make sure you have 10% of that in gold

 

But in which case should we be selling some gold now as it drops

 

Do you measure the gold in Fiat or by weight ??????

 

If its by weight, how do you work out what 10% is of a £50k share portfollio is for instance

 

I did read somewhere that the average rich person ( what ever that means ) will accumilate 50oz of gold in their lifetime. No idea if this a true measure.

[G0ldfinger]

But you are "going for the moon", not using gold as an insurance policy?

 

Good luck, but to me, that is not the same thing. That is pure speculation, and as generation after generation never seems to learn, getting rich is the easy way is rarely easy.

Why should I hold Turdling, EUR or USD when they all give me less interest than inflation??? No, I just decided to be 100% in cash (REAL cash, that is).

[G0ldfinger]

...

I did read somewhere that the average rich person ( what ever that means ) will accumilate 50oz of gold in their lifetime. No idea if this a true measure.

Interesting thoughts. DO you have a link for the last statement? Cheers!

[wrongmove]

Why should I hold Turdling, EUR or USD when they all give me less interest than inflation??? No, I just decided to be 100% in cash (REAL cash, that is).

 

Of course that is your shout. I'm not going to argue with you. But the last few days price action should give you a hint.

 

How can an asset this volitile preserve anything? Some people have lost 10% (nominal) in just a few days? Hardly a "safe haven" at the moment.

 

 

 

[marmite]

Interesting thoughts. DO you have a link for the last statement? Cheers!

 

Sorry Goldfinger, its one of those things I remember reading on a late night gold education trawl on the web, when I was asking myself the questions of " how much gold to own and how do you measure it ".

 

If I come accross it again, i will deffinately post it for u

 

[romans holiday]

I really do think the best policy towards baiters is to just ignore them, rather than encourage their drivel by responding.

[marmite]

Incase anyone missed it. The Silver Sammy index is screaming

 

http://goldismoney.info/forums/showthread.php?t=290831

[njpurser]

Depends. I am 100% in gold and silver. But these savings are in theory small compared with my discounted lifetime income. Problem is, the discounted lifetime income is in SterTurdling.

Me too.

 

These are unprecedented times, save for the 1920s 1930s.

 

Pratting around, jumping in and out of various investments at the moment is a mug's game.

 

There is no way things will look better in one or even two years time. The option ARM are now coming to reset time, with 40-50% rates of income declaration fraud and this is much bigger than subprime. The banking crisis will get worse, and guess what, we'll probably find a huge wave of fruadulent prime mortgages due for resets..... then around the whole cycle again....only surviving subprimers will then be sitting on 50% losses compared to their purchase price.... just the type of people to pay it back anyway. Not.

 

Then back to surviving option ARM resets... and so on.... and endless cyclical windown.

 

This will not go away and will be devastating, as it takes down the general economy and bancruptcies then corporate debt defaults follow, the stock market, banks and the price of oil will drop.

 

Consumer spending has collapsed in the UK, we are in freefall.

 

Gold looks the only sensible bet .

 

Nick

[bitbigt]

May be of interest to some - written by a gold bull, but more balanced article than some, IMHO...

 

Good find!

 

He seems to be very balanced and objective, and overall he predicts a major bull for gold

 

I'd like to react to a few of his more important points;

 

"The main source of new money in the economy is not the Fed but the commercial banks....The Fed began swapping poor performing assets on the banks' balance sheets for the high quality treasuries on the Fed's balance sheet in an effort to improve the financial situation of the banking sector and restore liquidity"

...M3 growth represents the sum of gains (new money) minus losses (asset depreciation). Fed actions to salvage bad bank debts are dramatically reducing the losses, thereby increasing M3.

...despite all the theorising, money supply growth is still at 15% in the US, and even higher elsewhere.

...The inflation issue is a global phenomenon, and this is not being taken into account by this writer.

 

"Today, the biggest fear that the Fed has is the fear of deflation. The monetary policymakers...[will]...use everything in its arsenal to prevent deflation."

...This is the most important thing to note: and it means there will be no deflation. It will not be allowed to happen, regardless of consequences to money supply and inflation

 

"Going forward, gold will likely resume its up-trend due to...a vicious wave of competitive devaluation...[which]...will cause not only price shocks (oil, food, etc.) but also spiraling monetary inflation. [This] outcome, in our opinion, is inevitable but no one knows when it will come and what path it will take."

...I agree, but think this will come about by gradual base rate easing and not via some sudden 'wave of devaluation', as growth slows (even though inflation will not have fallen to target)

 

"gold will touch its 65-week moving average in the low $800s. Unfortunately, this outcome is now quite likely, meaning that the duration of the correction could be extended by an unknown length of time, from a couple of months to as long as a year."

...this reflects back on the point made by Wrongmove: the perception of reality rather than reality itself has changed. And this was suggested by Marmite to imply quite some delay until the perception changed to one which is more gold bullish. My view would be that perception changes can be very sudden (as happened just last week) and they come out of the blue. Also, the more remote the perception is from the truth, then its more likely to correct sooner rather than later

 

"During the seventies' bull market gold lost about half of its value in a period of two years, just before embarking on an unprecedented run that took the price to $850/oz."

...we must be careful with this. The 43% fall happened because oil had been painfully high and constant for several years, people started to 'get use to it' - meaning their fear was waning. Then oil started to fall, giving great reassurance and making people sell gold. Only then did OPEC try to squeeze the oil market, so pushing the price of oil up to unimaginably higher prices in a short time frame - which caused massive fear and gold's massive reactionary peak.

...so its all about fear and oil. It was then, and it will be again - but you can't expect the price moves to necessarily match between the 70's and now percentage for percentage.