GOLD

[bitbigt]

Fellow UK residents... we really should start watching the charts in GBP and not USD, they're a lot prettier

 

Gold is actually only 15% away from its all time peak of mid-March in sterling (vs ~25% for USD). That's nothing!

 

In fact, linng up the two charts makes me suspect that golds price in an 'average currency' is just following a normal and healthy bull trajectory, with occasional corrections. It's just the big drop in the dollar and its recent manipulated rise back up, that makes everything looks so mannicky pannicky

[G0ldfinger]

This is ugly, ugly, ugly. My sympathies to anyone who has silver on margin. Virtually every intermediate support level has gone. If we do not hold here, I believe we will see 730 very quickly. If it wasn't August I would be declaring the bull market over.

If silver goes single digit, I will consider this. Calls might be the safer choice, though.

 

I see a possibility that I will be buying silver at $12.XY tomorrow. Good night for now.

Well, maybe it's going to be $11.XY then.

 

Today I will buy some coins. I would only not do it if the downward momentum becomes really amazing.

[Bobsta]

Why would anyone have silver (or gold) on margin? You'd have to be insane.

 

OK, a little example of why you might do this.

 

Say you have £10k you want to invest in silver. You could go out and buy physical, pay 7% VAT (or whatever it is), a 1% dealing charge and then find somewhere to keep it safe.

 

Or, you could put £5k in a trading account, leave £5k in an RPI-beating savings account, and go long on Silver futures to the tune of £7/pt - at $14.28/oz this would give you 1428x7 = £10,000 "exposure" (OK, I'm ignoring USD/GBP currency fluctuations here, but hopefully you get the point).

 

Silver falls to $12.28, you're £1400 down. But you would be if you held physical too.

Silver rises to $16.28, you're £1400 up. And you would be if you held physical too.

 

Only you've eliminated the 7% VAT, you also have £5k earning interest, and you've also provided a very fast way to get out of (and back in to) the market if you want. You don't have to, but you have the option.

 

The key is to NOT over-leverage and be able to cope with the falls.

 

When physical and paper prices diverge then yes, physical is clearly playing its trump card. But for me the "dealing charges" of physical silver (VAT, mark-up, etc.) have made it too prohibitive for me to get into. I just hate giving money away for nothing.

[G0ldfinger]

...

Goldfinger - how does this play to your gold/silver ratio upspike before the downspike? Is 63 too high?

I would say no, because the coiling pattern was so extreme too. But then, what do I know, really? My take is:

 

(1) The fundamentals are better than ever.

 

(2) I can buy silver at a less than 2/3 from the most recent top.

 

(3) Is it worth to wait and see whether I can buy it 50% off the top? Maybe not!

[romans holiday]

Dollar's on steroids at the moment. I reckon that until gold, psychologically speaking, decouples from commodities and becomes money, we will continue to see extreme volatility in POG.

[G0ldfinger]

OK, this looks like $750 and below today (just touched $775). The bullion banks ('Cartel') smell the blood now. Could become ugly.

 

If anything, it's a time to buy, that's for sure.

 

The question is, WHEN exactly? :lol:

[Errol]

I'd be happy for it to drop near the very bottom of the bull trend line (around $600 or so).

 

Christmas really would come early!

[G0ldfinger]

Isn't it funny that GIM AND USAGold are dead since yesterday night/this morning?

[romans holiday]

I'd be happy for it to drop near the very bottom of the bull trend line (around $600 or so).

 

Christmas really would come early!

 

But not too quickly.... my funds are not available until Wednesday.

[bitbigt]

I suspect we're at the level where gold's price fluctuations are triggering as many (if not more) buy rather than sell orders. At least that's how it looked when it tried to go below 780

...a good sign?

[dom]

Looks like Bob Hoye was bang on the money.

[romans holiday]

Looks like Bob Hoye was bang on the money.

 

Always like listening to this guy.... I liked his podcast last week. He is a good historian of markets.

http://howestreet.com/audiovideo/index.php...mediaplayer/920

 

Sees a signaling of the start of a gold bull market.

[electroweak]

Always like listening to this guy.... I liked his podcast last week. He is a good historian of markets.

http://howestreet.com/audiovideo/index.php...mediaplayer/920

 

Sees a signaling of the start of a gold bull market.

I sure hope so. Even though I have no margin and am not 100% PM, it's starting to hurt (on paper! )

 

EDIT I have some bonds which would incur a penalty (0 interest for the year so far) and am seriously considering jacking them in to buy silver primarily, then gold.

 

EDIT2: this drop is f*ing insane. The risk couldn't be higher, IMO.

[enrieb]

That's the spirit! I only buy physical and I'll bet that, come morning in New York, I will not be able to buy at these levels.

 

 

Great forum, think I will settle in here quite nicely!

 

Welcome to the forum

[drminky]

IF Elliot Wave counts are to be believed, we are now witnessing the final wave 5 of this downmove. If that indeed proves to be correct, we are very near the bottom and by Monday we should be expecting to see a start of a recovery. That means NOW is the time to be picking up the bloodied and broken Mining stocks..

 

And for those who are doubting the integrity of the bull market in gold (not that I am), I have one piece of advice for you. SHORT the stockmarket and financials with everything you got! Because if the move in gold and commodities is valid, that is signalling deflation, and the stockmarket is setting itself up for the SPILL OF THE CENTURY. You gotta ask yourself, if the euro is suddenly so weak on the back of crumbling european economic prospects, why the hell are their stockmarkets rallying?

 

 

 

[Magpie]

OK, this looks like $750 and below today (just touched $775). The bullion banks ('Cartel') smell the blood now. Could become ugly.

 

If anything, it's a time to buy, that's for sure.

 

This is going to be interesting to watch.

 

If this really is the end of the bull, this thread could be a study in cognitive dissonance as denial as people downgrade their previous lowest expectations and keep predicting an upswing.

 

However as a relatively dispassionate observer, my observation would be this. What we are seeing is a reminder of how shockingly turbulent gold can be (maybe because of interventions, but more likely because of the size of the market and the degree to which sentiment swings it). I've seen a graph here where an upswing in gold through the autumn is extremely common. And I believe there is going to be plenty more scary financial and international news this autumn. So an upswing still feels more likely to me than not.

 

My worry would be the degree to which deflationary forces are starting to drag money available for all investment down. Gold may turn out to be some kind of insurance simply because its value doesn't collapse to quite the same degree as other popular options such as shares and property. People are going to lose a lot of money from bad property investments and companies are going to collapse*. Gold might just bumble along in this region, not doing quite what you'd hoped but still protecting your wealth better than some alternatives.

 

Good luck to those of you holding anyhow. Must be a slightly unnerving period, but hopefully you like rollercoasters, and the next uphill stretch might be close.

 

* FWIW - I don't have huge amounts of money and most of mine is in my property - right now that isn't working out so great either as I haven't been able to remortgage and that is making life a little tough, so I hope I won't be showing any schadenfraude if gold has its own problems.

[G0ldfinger]

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

Merrill Books Losses Through U.K., Can Offset Taxes (Update1)

...

Aug. 15 (Bloomberg) -- Merrill Lynch & Co. booked $29 billion of losses from U.S. subprime mortgages and collateralized debt obligations through its U.K. unit, reducing the likelihood the firm will pay British taxes for years to come.

...

Merrill's U.K. tax losses may cut its future tax bills by as much as $8 billion, based on a corporate tax rate of 28 percent, said the Financial Times newspaper, which first reported the firm's tax disclosure on its Web site. Merrill's U.K. subsidiary may not have to pay taxes for as long as 60 years, the paper said.

...

Financial companies worldwide have reported writedowns and credit losses of more than $500 billion since the start of 2007. Some Wall Street firms may pay little or no New York City or state taxes for years, Mayor Michael Bloomberg said this week.

This will let UK and US budget deficits explode.

 

The USD and GBP are now terminally ill.

[Wanderer]

I have to fess up. I'm not a happy bunny about all this, not least because with precious hindsight, I've messed up big time. I started buying Gold when it was $450 something and have been steadily adding increasingly large amounts as (a) I got wealthier and ( gold rose. I bought my latest largest sum at $960. Ouch.

 

The paper losses are now hurting, though it looks slightly less scary in sterling. However these are real losses and will affect my ability to do what I want with my savings if they don't come good.

 

Similar story with Silver.

 

My instinct tells me to hang in there - I don't need the cash for 2 years or more. But a little part of me is saying 'jump out' before we go into meltdown. What scares me about hanging in:

 

- I've more fear of being poor than desire to be very rich;

- gold is a market where manipulation can clearly play at least some role;

- Mrs W is going to be mad;

- my own incompetence!

 

What reassures me about hanging in:

 

- I was right (in the end) about UK house prices and sterling;

- the 80's peak was c.$850 and that is before 20 years of inflation. The ride up to $850 was choppy.

- Plenty of sensible people on here present plenty of sensible arguments (although a few folk are less sensible and have less convincing arguments) for higher gold prices;

- I'm sure if you were wise and had waited when gold was at 960 and got in now you'd do well.

- I do believe in the case for gold and can imagine me selling now and buying in later when it was higher...., so better just to hang in .

 

The biggest concern I have is that I've seen people on this site argue (a) deflation will push up gold prices and ( inflation will push up gold prices.

 

Wanderer

[Magpie]

And for those who are doubting the integrity of the bull market in gold (not that I am), I have one piece of advice for you. SHORT the stockmarket and financials with everything you got! Because if the move in gold and commodities is valid, that is signalling deflation, and the stockmarket is setting itself up for the SPILL OF THE CENTURY. You gotta ask yourself, if the euro is suddenly so weak on the back of crumbling european economic prospects, why the hell are their stockmarkets rallying?

 

I agree with this - the downswing in gold is actually rather alarming as it may indicate the degree to which deflation is biting, and that could feed through into some shocking results in stocks and financials. There will certainly be more bad news through the autumn.

 

I have to say that while cgnao was bang on about the problems, I still don't believe in his hyperinflationary outcome - for sure the CBs are trying to keep money flowing, and there will be inflation in living costs as that money shifts around. But so much wealth is getting destroyed by the deflationary effects of the credit crunh, I find it hard to see how hyperinflation could get a foothold.

 

I may be wrong - cgnao has got far more right than wrong, so maybe he has the endgame right too, who knows.

 

[G0ldfinger]

...

My worry would be the degree to which deflationary forces are starting to drag money available for all investment down.

...

I am very worried about deflation too. Unfortunately, I have not so much time to spend on it, since I am busy working more so that I can keep up with the price increase by 35% from British Gas and the increased food prices, lunch has gotten 15-20% more expensive too recently. But yes, other than that, extremely worried about deflation.

[Wanderer]

I am very worried about deflation too. Unfortunately, I have not so much time to spend on it, since I am busy working more so that I can keep up with the price increase by 35% from British Gas and the increased food prices, lunch has gotten 15-20% more expensive too recently. But yes, other than that, extremely worried about deflation.

 

Goldfinger. Thank you for this. You are worried about deflation. I am interested by your perspective on what might happen to the price of gold if deflation did take hold. How would you see this affecting PMs?

 

(I'm not asking how likely you think deflation is, but how you anticipate deflation affecting PMs should it materialise)

 

Wanderer

[drminky]

I am very worried about deflation too. Unfortunately, I have not so much time to spend on it, since I am busy working more so that I can keep up with the price increase by 35% from British Gas and the increased food prices, lunch has gotten 15-20% more expensive too recently. But yes, other than that, extremely worried about deflation.

 

Of course, one must also factor in the fact that the Central Banks are going to use this massive correction in Commodities and PMs as a sign they've 'won' against inflation and inflation expectations, and a sign they can go on throwing ever vaster sums of printed money at every problem that comes their way with no consequences.. until the next inflation wave hits, that is..

 

 

 

[Steve Netwriter]

Silver Shortage? What, Me Worry?

 

By: David Bond

http://news.silverseek.com/SilverSeek/1218779880.php

 

Here were the same folks, only this time, they were saying there was a silver shortage because the price was too high! Said Metals Week:

 

 

 

“Silver buyers overwhelmed retailers during the third week of March, when silver was trading above $20/oz. (Retailers) stopped taking orders over the Internet, limiting business to telephone orders of no more than $5,000 -- if buyers could get through. 'Demand is incredible; it seems like there are 5 to 10 times as many people wanting to buy [silver] as opposed to selling,'” said one dealer.

 

 

 

Said another: “'We're running out of metals, and silver in small quantities is extremely difficult to find right now. The largest demand is for silver rounds and for small (100 oz or less) silver bars." The early-year price run from $17/oz to $22/oz sucked outfits like APMEX, Northwest Territorial and others dry.

 

 

 

We find this quite curious. It seems that when the price of silver is low, there is a shortage of silver, because people can't get enough of the white metal. When the price of silver is high, there is a shortage of silver, because folks can't get enough of it. Would it be too much of a reach to surmise that there's just a plain shortage of silver?

 

------------------

 

Based on that and an article from a while back about a reduced supply of silver (in the US), I still think there is a shortage of silver.

 

[cazlane]

Goldfinger. Thank you for this. You are worried about deflation. I am interested by your perspective on what might happen to the price of gold if deflation did take hold. How would you see this affecting PMs?

 

(I'm not asking how likely you think deflation is, but how you anticipate deflation affecting PMs should it materialise)

 

Wanderer

 

I think he was trying to be sarcastic. Goldfinger it amazes me that you still totally fail to understand what I have repeatedly hinted that you need to look at to determine where the trend is going NOT where it is now-future expectations (or in this case not a la Merv's latest revelation) are for no growth whatsoever in the coming 12 months. I think he's being way too optimistic. Deflation it most definitely is and yes I do think PMs are screaming the message loud and clear-ignore them at your peril. FWIW I may soon be thinking of buying in again on an average in basis-first purchase was the dip on wed but that's it now until we see more falls. When the price of silver has reached what I consider to be deflation adjusted lows then Im in. May the force be with you

[G0ldfinger]

I think he was trying to be sarcastic. ...

STC, old friend, at least one person here knows me. So, yes, sorry, I will worry very much about deflation as soon as I will have been able to cope with inflation (ooops, I said the word, INflation, INdeed). 35% here, 20% there, it seems to add up.