GOLD

[lupercal]

That own c 1000 tonnes of gold - not to be ignored perhaps

 

IMO. The questions are.

 

Will they want a drop in gold price?

 

Do they now owe so much to the Governments that they do what they are told or do they now own the governments.

[ecoface]

All of the growth for the last decade was paid for by borrowed money, as Pluto says, tomorrow's earnings spent yesterday. That could mean almost a decade without growth before we take into account the effects of the recession.

 

 

Yes alot of growth was fuelled by credit.

 

However, alot of growth was created by ingenuity, creativity, inspiration, invention, hard work, tenacity, productivity, IT, globalisation, improved terms of trade and so on.

 

In other words the boom grew on the back of these basic factors which allowed more credit to come through and so on.

 

Let us not assume that with credit contraction all of the basic factors of growth will be eradicated. Value in terms money may be reduced significantly but the gains (health, science, efficiency, IT, invention, inter-dependence etc etc) will not be lost forever.

 

So lets not be too alarmist here. Growth will return but will be measured in different ways perhaps.

 

 

[marceau]

Yes alot of growth was fuelled by credit.

 

However, alot of growth was created by ingenuity, creativity, inspiration, invention, hard work, tenacity, productivity, IT, globalisation, improved terms of trade and so on.

 

In other words the boom grew on the back of these basic factors which allowed more credit to come through and so on.

 

Let us not assume that with credit contraction all of the basic factors of growth will be eradicated. Value in terms money may be reduced significantly but the gains (health, science, efficiency, IT, invention, inter-dependence etc etc) will not be lost forever.

 

So lets not be too alarmist here. Growth will return but will be measured in different ways perhaps.

 

 

Maybe, time will tell. Those sectors which were heavily fuelled by debt growth are toast though, there will be no innovation to save finance or real estate. Perhaps retail has a chance, but it's a slim one for the foreseeable future. The market became so distorted it's hard to tell where genuine productivity ended and credit fuelled fortune began. I have a funny feeling that the debt effect made up a huge percentage of growth compared to sustainable productive output.

 

And then there's the actions being taken by world governments, which will delay the price/profitability discovery process and hinder genuine innovators and producers for years to come. It's grim out there now, but I see absolutely no cause for optimism in the future. Long, slow and painful - words people are going to have to get used to.

[ecoface]

IMO. The questions are.

 

Will they want a drop in gold price?

 

Do they now owe so much to the Governments that they do what they are told or do they now own the governments.

 

 

Many western Govts own more than 1000 tonnes so I am not sure that ETFs are as influential other than when Govts sell they gold it has to be within the parameters of the Central Bank Gold Aggreement and its terms (i.e. not to sell more than 400 tonnes per year and no more thann 2500 tonnes over 5 years). Of course though etfs are not bound by this.

[ecoface]

Maybe, time will tell. Those sectors which were heavily fuelled by debt growth are toast though, there will be no innovation to save finance or real estate. Perhaps retail has a chance, but it's a slim one for the foreseeable future. The market became so distorted it's hard to tell where genuine productivity ended and credit fuelled fortune began. I have a funny feeling that the debt effect made up a huge percentage of growth compared to sustainable productive output.

 

And then there's the actions being taken by world governments, which will delay the price/profitability discovery process and hinder genuine innovators and producers for years to come. It's grim out there now, but I see absolutely no cause for optimism in the future. Long, slow and painful - words people are going to have to get used to.

 

Like you say, time will tell, but then what's 5-8 years of no growth or negative when you look at where we were and just how well off we have been for many years.

 

This disruption will bring sort the wheat from the chaff and IMO is evolutionary anyway. The good will come out of, but as yet, we can't see what it is.

[Pixel8r]

I don't want to disrupt the flow of conversation, but I couldn't help but comment. In this case you're probably right, but I've seen one myself in a field next to the road I was driving on. I never understood how it could be. Maybe it's the LSD plugin?

 

[Pixel8r]

That own c 1000 tonnes of gold - not to be ignored perhaps

 

That is the whole point of his statement, they do not own the gold they own derivatives on gold. Hence the Pluto's statement they are tomorrows CDOs, MBSs and SIVs, and yesterdays MFs.

 

If all the ETFs own that much gold where are they getting it from?

 

http://jsmineset.com/index.php/2009/02/12/...r-bullion-from/

 

 

[wren]

I don't want to disrupt the flow of conversation, but I couldn't help but comment. In this case you're probably right, but I've seen one myself in a field next to the road I was driving on. I never understood how it could be. Maybe it's the LSD plugin?

I have no expertise to judge this but the article says:

Several readers have said in the Comments section that they think this image was PhotoShopped. Nick: But it appears that this image is genuine. I have now had it reviewed by 7 people — 3 veteran photographers, a top-notch graphic designer who specializes in PhotoShop,m and 3 meteorologists at the National Weather Service. We also uploaded the image to Flickr and checked the lat/long of the image, which was taken with an iPhone. The info box says the photo was taken where the reader said it was taken. And the info text says the photo was not manipulated.

The photo was reviewed by: photographers Jebb Harris, Michele Cardon and Nick Koon, graphic artist Rick Ho, and meteorologists Mark Moede, Stefanie Sullivan and Brandt Maxwell. I’m stating these names for transparency.

As somebody said in the comments, as there's no pot of gold, rather than the end of the rainbow it must be the beginning.

[Pluto]

Yes alot of growth was fuelled by credit.

 

However, alot of growth was created by ingenuity, creativity, inspiration, invention, hard work, tenacity, productivity, IT, globalisation, improved terms of trade and so on.

 

In other words the boom grew on the back of these basic factors which allowed more credit to come through and so on.

 

Let us not assume that with credit contraction all of the basic factors of growth will be eradicated. Value in terms money may be reduced significantly but the gains (health, science, efficiency, IT, invention, inter-dependence etc etc) will not be lost forever.

 

So lets not be too alarmist here. Growth will return but will be measured in different ways perhaps.

 

I think some people are missing the point. I am not stating that gold ETFs are frauds and do not contain the amount of gold they claim to. What I am saying is that you cannot assume the government will not go to extreme lengths to protect its script. As I said earlier, in Volcker's memoirs, he stated that the government during the expansion of the money supply in the 70s did not have a good plan to contain the POG which therefore required him to increase interest rates to over 20%. He did not say money supply expansion was a problem; he said not containing the POG was. Bernanke in his 2003 speech stated that to cap the price of gold all that was need was a rumor of alchemy being perfected, the impact would cause the POG to decrease. More recently, central banks have been using rumors to depress the price of gold before their sale. Also during the great depression it was rumors of Gold confiscation that caused bank runs and their collapse - this was mentioned in Hoover's memoirs.

 

So with all this history it is naive to think that the central banks and government do not have a plan in place. So guess what appears on the scene about the same time as the start of this credit expansion: Gold, Silver, Wheat, Oil, etc etc etc ETFs. These ETFs are mopping up cash from investors who think they are hedging from an expansion in credit. You have already seen what can happen with oil and that is what they have in plan for goldbugs.

 

They have control of the lolly in the ETFs via their creators - wall street - do not forget this.

 

I am amazed that the masses continue to hand over their hard earned lolly to the crooks on wall street so they invest on their behalf in derivatives. Once ETFs are exposed they will be something else in place. Remember Mutual Funds? whatever happened to those sure fire money earners. What about endowment mortgages? Lots of suckers around.

 

This article makes me nervous. They are herding the masses into their pen. Remember what I said: "owning gold is not the same as having possesion".

 

 

http://www.reuters.com/article/reutersEdge...E51C3T020090213

 

"More and more generalist money managers are looking at gold. A lot of money mangers find comfort with the idea of owning gold via GLD. It's quite convenient to own the GLD, versus having to pay warehouse costs on your own," said Brian Hicks, co-manager of the $500 million Global Resources Fund at Texas-based U.S. Global Investors.

 

Gold ETFs are listed on stock exchanges and offer investors exposure in bullion without taking physical delivery. Sponsors of the funds buy a matching amount of physical gold and keep it in bank vaults.

[lupercal]

I think some people are missing the point. I am not stating that gold ETFs are frauds and do not contain the amount of gold they claim to. What I am saying is that you cannot assume the government will not go to extreme lengths to protect its script. As I said earlier, in Volcker's memoirs, he stated that the government during the expansion of the money supply in the 70s did not have a good plan to contain the POG which therefore required him to increase interest rates to over 20%. He did not say money supply expansion was a problem; he said not containing the POG was. Bernanke in his 2003 speech stated that to cap the price of gold all that was need was a rumor of alchemy being perfected, the impact would cause the POG to decrease. More recently, central banks have been using rumors to depress the price of gold before their sale. Also during the great depression it was rumors of Gold confiscation that caused bank runs and their collapse - this was mentioned in Hoover's memoirs.

 

So with all this history it is naive to think that the central banks and government do not have a plan in place. So guess what appears on the scene about the same time as the start of this credit expansion: Gold, Silver, Wheat, Oil, etc etc etc ETFs. These ETFs are mopping up cash from investors who think they are hedging from an expansion in credit. You have already seen what can happen with oil and that is what they have in plan for goldbugs.

 

They have control of the lolly in the ETFs via their creators - wall street - do not forget this.

 

I am amazed that the masses continue to hand over their hard earned lolly to the crooks on wall street so they invest on their behalf in derivatives. Once ETFs are exposed they will be something else in place. Remember Mutual Funds? whatever happened to those sure fire money earners. What about endowment mortgages? Lots of suckers around.

 

I agree with whats written but how can the ordinary person with a few thousand to spare invest wheat and oil without exposure to wall street?

 

[Pluto]

I agree with whats written but how can the ordinary person with a few thousand to spare invest wheat and oil without exposure to wall street?

 

There is no practical way for the individual investor to store those commodities, that is why gold and silver are the perfect vehicles for storing wealth.

 

Gold ETFs are what banks were when they first started. Banks held your Gold and handed you a receipt for it. This receipt traded and become money.

 

This time the paper receipt (money) has been replaced by pixels on the screen.

 

We have learnt nothing.

[ecoface]

I think some people are missing the point.

 

This article makes me nervous. They are herding the masses into their pen. Remember what I said: "owning gold is not the same as having possesion".

 

 

http://www.reuters.com/article/reutersEdge...E51C3T020090213

 

 

Its interesting how people see different things.

 

The bit that scares me most in the article is:

 

"It's a little worrisome that so many people are piling in," Gartman said.

 

 

The herd is gathering. A big correction will come perhas after a re-test of 1000-1030, but it will demolish all that dumb money that has flooded in Dec / Jan.

 

 

[Pluto]

Its interesting how people see different things.

 

The bit that scares me most in the article is:

 

"It's a little worrisome that so many people are piling in," Gartman said.

 

 

The herd is gathering. A big correction will come perhas after a re-test of 1000-1030, but it will demolish all that dumb money that has flooded in Dec / Jan.

 

During the correction of gold from 1030 to 690 gold bullion/coins was very hard to obtain. When silver corrected from 20 to 9 it was even harder to find. The only freely available at any quantity gold and silver was via the ETFs. The numpties piling out of these abortions is what is will crash the paper price of gold.

 

People piling into ETFs will be the first to sell, that is what the government is banking on and why they are being herded into ETFs.

[ecoface]

During the correction of gold from 1030 to 690 gold bullion/coins was very hard to obtain. When silver corrected from 20 to 9 it was even harder to find. The only freely available at any quantity gold and silver was via the ETFs. The numpties piling out of these abortions is what is will crash the paper price of gold.

 

People piling into ETFs will be the first to sell, that is what the government is banking on and why they are being herded into ETFs.

 

I agree.

 

I also think that alot of those who have bought physical will sell in the correction.

 

[Pluto]

I agree.

 

I also think that alot of those who have bought physical will sell in the correction.

 

 

If you're correct the spreads on coins should narrow. It is my humble observations that during the last correction the opposite happened, that infact folk used the correction as a chance to purchase more bullion/coins.

[ecoface]

If you're correct the spreads on coins should narrow. It is my humble observations that during the last correction the opposite happened, that infact folk used the correction as a chance to purchase more bullion/coins.

 

That's because the mid cycle correction that will occur in the next year will be much greater than that correction IMHO.

[Pluto]

That's because the mid cycle correction that will occur in the next year will be much greater than that correction IMHO.

 

I will look forward to that in anticipation.

 

Gold coins at spot price I haven't seen for a few years.

[ecoface]

I will look forward to that in anticipation.

 

Gold coins at spot price I haven't seen for a few years.

 

So do I. I sold all my PMs recently anticipating a very large correction. I can't see this lasting much longer and may go above 1000-1030, but thereafter it will be carnage, and time to re-invest again.

[G0ldfinger]

So do I. I sold all my PMs recently anticipating a very large correction. I can't see this lasting much longer and may go above 1000-1030, but thereafter it will be carnage, and time to re-invest again.

You should team up with Ker. $200 just around the corner.

 

Yes, in the mother of all financial crises, let's sell all our gold because it could be cheaper in a couple of months. Sound advice.

[Pluto]

You should team up with Ker. $200 just around the corner.

 

Yes, in the mother of all financial crises, let's sell all our gold because it could be cheaper in a couple of months. Sound advice.

 

That is another reason why I prefer bullion and coins. It requires more effort to sell, so you are less inclined to so when the spooks come out to scare you back into their numpty bits of paper.

[ecoface]

You should team up with Ker. $200 just around the corner.

 

Yes, in the mother of all financial crises, let's sell all our gold because it could be cheaper in a couple of months. Sound advice.

 

 

I'm not advising anyone.

 

I don't think 200. I've been through what I think - all based on parallels to the 1970s in REAL terms.

 

You think this is THE move to over 1200 and beyond.

 

I don't. But we will get another correction first before the big move. So we think the same but I am more patient.

 

GTG

[qwertyuiop]

I'm not advising anyone.

 

I don't think 200. I've been through what I think - all based on parallels to the 1970s in REAL terms.

 

You think this is THE move to over 1200 and beyond.

 

I don't. But we will get another correction first before the big move. So we think the same but I am more patient.

 

GTG

Was the whole banking system insolvent inthe 1970's BEFORE any downturn in the economy.

 

This is going to be carnage.

[headmelter]

Pluto and ecoface, that's an interesting discusion. You say there will be carnage and anticipate a physical sell off later in the year.

 

Would you gamble yor physical stash (if you still have one) on this happening? ie sell prior to the correction with the intention of buying in later.

Just out of curiosity what do you see as 'carnage'?

[Pluto]

Pluto and ecoface, that's an interesting discusion. You say there will be carnage and anticipate a physical sell off later in the year.

 

Would you gamble yor physical stash (if you still have one) on this happening? ie sell prior to the correction with the intention of buying in later.

Just out of curiosity what do you see as 'carnage'?

 

The physical stash could be almost impossible to replace unlike the ETFs with their unlimited supply from .... who knows where.

 

Sell physical at your own peril.

[Pluto]

Let me end my rant on ETFs with the following: Charles Ponzi's scheme was selling international postage reply coupons, he was successful until some bright spark realized that he was selling more coupons than existed. Forget the price of gold, if the holdings increase at the rate they are going where is all this gold going to come from? All the gold mined only increases at circa 2% per year.

 

http://en.wikipedia.org/wiki/Ponzi_scheme

 

By this time Ponzi was seeking another deal to get him out of the golden trap he had built for himself, but time was running out. On July 26 the Boston Post started a series of articles that asked hard questions about the operation of Ponzi's money machine. The Post contacted Clarence Barron, the financial analyst who published the Barron's financial paper, to examine Ponzi's scheme. Barron observed that though Ponzi was offering fantastic returns on investments, Ponzi himself wasn't investing with his own company. Barron then noted that to cover the investments made with the Securities Exchange Company, 160,000,000 postal reply coupons would have to be in circulation. However, only about 27,000 coupons were actually circulating.