Thread: Gold & PMs - Buying, Selling, Discussion

the pound has already collapsed so the gold I have now is helping me, dont think it's the right time to buy more gold with sterling i have with the state it is now though

Originally Posted by Milkman

Here is a talk about the US money supply and Gold.

Note: it's Kiyosaki, and you know what he mentions at the end.

But many are thinking the same way about this.

Personally, I cant ever see gold reaching $US 15,000 an oz. Gold as a trading currency was dealt the death blow back in 1971 by Nixon when USA didn't have enough gold reserves to pay off its debts. It certainly makes a lot more sense to pay off your debts with paper money that costs only a tiny fraction of one percent of its tradable worth. Creating wealth out of little bits of paper is simply not sustainable. In the end, somebody has to pay with their hard labour producing actual goods and services. USA is in the (?) enviable position of being able to inflate their way out of massive debt simply because of the $US hegemony that Nixon created back 38 years ago. I cant see world trade ever going back to the gold based standard. But I can see it going to a productivity based standard based on a wide mix of currencies. The $US would only have to fall another 25 or 30% against the rest of the worlds currencies to make the country competitive in trade again.

Peter Schiff is making bold statements in his Gold price predictions.

You're name is on the line now, Peter.

Peter Schiff: U S Rally Is Doomed, Gold Will Hit $5000

The worst is not over, according to Euro Pacific Capital's Peter Schiff, who predicts the Dow will fall another 90% from current levels when measured against gold.

Schiff believes gold is currently "climbing a wall of worry" but will eventually become as hot as tech stocks in 1999 and start moving up $100 per day - eventually hitting $5000 per ounce sometime "in the next couple of years,".

Peter predicts the Dow and gold will trade on a one-to-one ratio vs. the current level of around 9.7-to-1. His forecast is based on a view the U.S. dollar will eventually collapse under the weight of our massive deficit and reckless policies of the Obama administration, which he compares to the massive spending programs of the 1960s - which paved the way for gold's ascent in the 1970s.

Link: ECONOMICROT

It can all be a bit confusing since the $US is used as the yardstick to measure the value of not only gold, but other currencies as well. Its all relative as some smart dude once said.

The recent trends seem to indicate that when the worlds investors are in a panic over a financial crisis they run to the $US as a safe haven. This pushes up the value of the $US against gold and other currencies. Then when the economy appears to be recovering, as it has since March 09, the money starts coming out of $USs and back into stocks, other currencies and to some extent, gold.

So the $US is quite obviously seen as the safest refuge for investors in precarious financial times. No doubt the $US status as the worlds reserve currency and the huge size of the US economy gives it some superior status as a buttress to withstand the financial storm.

However, with the current US policy of massive borrowing and simply creating more paper money out of thin air by printing, somewhere down the line that international confidance in the $US as a safe haven has got to start loosing steam eventually. Paper money is not wealth, production is wealth. And USA is certainly not producing enough to justify the flood of paper money they are putting onto the market, let alone pay back the increasing spiral of debt they are accumulating. A 30% reduction in the value of the $US would put USA back in the game as an exporter of quality goods at competitive prices. I believe that is Obamas game plan here. Inflate your way out of debt, while at the same time creating a more competitive export industry and employment.

The really amazing thing has been just how hard it is to scare people away from the $US. When the world finally does loose confidance in the $US, gold is likely to rocket for a while at least. I wouldn't be at all surprised to see gold hit 2 or $US 3,000 when the $US starts to crash against other currencies.

Thanks for the info, Panda.

I hate to ask when, but when, in general, is this possibly going to happen.

Many think it will happen.

But with a loose time line, when will it begin? (decline of the USD?)

Originally Posted by Milkman

Thanks for the info, Panda.

I hate to ask when, but when, in general, is this possibly going to happen.

Many think it will happen.

But with a loose time line, when will it begin? (decline of the USD?)

That could be anyones guess. I personally expected to see a major shift away from the $US by the end of this year. But that looks less likely now.

Looking at a chart of the $US value against a basket of other major currencies since the end of the last recession in 2002, its clear that the $US has been on a definite but relatitively steady decline since then--

US Dollar Index

The interesting thing is that 2002 to 2008 were the boom years and the $US lost around 20% against the other major currencies in that time. Then with the crash of 2008, the $US regained considerable ground against other currencies. That is until the stimulus packages took effect and the stock market bounce occurred at around March this year. At that time the $US again started to slide.

There is some opinion among the so called financial experts that stock market bounce of the past 6 months is artificial and unsustainable being supported only by massive paper money printing and even more debt. Likened to simply digging the hole even deeper for when the big correction finally comes. But based the movement of money in recent years, if a major world economic collapse was to occur, more money would simply go back into $USs. You try to figure that one out, I certainly cant. I do believe however that there must come a time when USAs print and borrow strategy of dealing with external debt will cause investors to turn away from $US in hard times. No country can continue to survive on such a strategy without some major trading devaluation of their currency eventually.

Moving on to gold. Gold has actually been a pretty good investment since the end of the last recession in 2002. Its tripled in value in terms of $USs and more than doubled in value in terms of Euros. The difference of course is due to the Euro making steady gains against the $US in that time.



One of the problems in getting a true perspective of how things are going is that gold and other currencies performance are universally measured in $USs.
I would much prefer to see the value of gold measured against a basket of currencies to get a truer picture of its movements rather than the $US alone.
However, gold does seem to be moving in unison with the worlds major currencies against the $US. Only difference being that while the other major currencies gained about 20% on the $US in the last 7 years, gold made around 300%.

It does appear that while the $US still is seen as the safest haven of last resort in times of economic trouble, more and more investors have been hedging their bets by investing in gold, even through the good times of the past few years.

With USA pushing the envelope of inflation and devaluation by their print and borrow policy, gold is still looking pretty good.

A disscusion on Gold and dumping the US dollar, by Ron Paul.

And no, the gold standard will never return.

The gold standard can never return now because virtually every countries government (except for USA) has already dumped their reserves of gold onto the private market and replaced it with $USs. The problem now is what to replace the worlds current $US reserve measure of wealth with.
Having said that, it wouldn't surprise me to see gold rocket to above $US 3,000 during the interim period when the world starts wrestling with the problem of how to deal with the flood of $US paper money on the world market.

And indeed, some have proposed that gold and other precious metals should be part of a bundle of tangible assets which include productivity based valuations of major currencies to replace the $US as the worlds measure of wealth and default trading currency.

Peter Schiff Oct. 7, 2009:

Gold, world currencies, Bernanke and Fed.

Schiff says since gold is "still near a thousand" it's still a good time to get in." We'll see....

I have been buying gold coins for most of my adult life,they have always made a better return than any bank savings account and far more negotiable than shares.

As me grandpappy said 'Out'a debt Out'a danger.

technically when the gold broke the 1040 mark it signals a possible rise to about 1400 , maybe within a year but dips will occur. Some belive the price will go parabolic?correct word? and go much futher, but we ll see.
But if youre going to stay long in gold and your reference currency is not us$ you should take this into consideration

Some repetition, but worthy of a listen. Gold, silver, fiat currency, Goldman Sachs, and the Federal reserve.

It looks like Kiyosaki is on the "Schiff, Roubini, Rogers, Celente" bandwagon.

Hedging and speculation. Talk about inflation.

Paulson invests all his money into bullion, then uses this bullion (as opposed to FRN's) to invest in his own fund. He also allows his employees to do this...When bigshots do I take notice. Doesn't mean they are right, and people disagree, but they know a lot more than I do.

Link:
Gold - World's richest & most successful speculator warns of great inflation

World's richest & most successful speculator warns of great inflation
Monday, October 26, 2009

By Porter Stansberry in the S&A Digest:

This is it. This is your last wake-up call... At a recent breakfast, John Paulson, the most successful speculator of the last 20 years, explained exactly how the great inflation will come to pass. Says Paulson: The banks will resume regular lending – thereby releasing all of the excess money supply into the system – within six to 24 months. Two or three years after that, we will see 12% annual inflation.

Paulson is recommending investing in gold. He's already placed more than $4 billion of his firm's assets in the metal. Why is Paulson building his position so early if he doesn't expect inflation to kick in for four years? Scarcity. Paulson notes, of the $200 trillion of investable assets in the world, only $800 billion is gold. You won't be able to get much of that $200 trillion into gold at any reasonable price. But that won't stop people from trying.

Here's the part that sent a chill down my spine. At this breakfast, Paulson also gave a rare insight into what he's doing with his personal money. Apparently, his fund offers a special option whereby you can invest using gold. According to someone at the breakfast table, you convert your cash into gold and buy into the fund using bullion. When you cash out, you are paid in gold at the value it is worth that day. Paulson is 100% invested in this style.

When the world's most successful speculator would rather be invested in his own fund via bullion instead of dollars... you gotta wonder why you're still carrying greenbacks in your wallet.

The price of gold dropped dramatically by almost $20 US today NY time as the $US made gains against other currencies. All in just a few hours, but now the trend is reversing with gold up to $1042 US and the $US losing value against other currencies.

The general trend over the past several years has been for gold to gain value as the $US declines in value. Long term it would certainly make more sense to be in gold rather than $USs.

Gold Declines on Concern Rising Dollar May Erode Metal Demand - Bloomberg.com
"Gold Declines on Concern Rising Dollar May Erode Metal Demand

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By Pham-Duy Nguyen and Nicholas Larkin
Oct. 27 (Bloomberg) -- Gold fell for a fourth straight session, the longest slide since August, amid concern that the dollar will extend a rally, curbing demand for the precious metal as an alternative asset.
The dollar rose against a basket of six major currencies, adding to three consecutive advances since Oct. 21, when it touched a 14-month low. Gold, which often moves inversely to the greenback, has dropped 2.7 percent in the past four sessions.
“Gold doesn’t have that much buying interest,” said Matt Zeman, a LaSalle Futures Group Inc. metals trader in Chicago. “The dollar could undergo a wicked short-covering rally, and the gold market needs to look out below.”
Gold futures for December delivery fell $7.40, or 0.7 percent, to $1,035.40 an ounce on the Comex division of the New York Mercantile Exchange. The slump was the longest since Aug. 10. The metal has climbed 17 percent this year, reaching a record $1,072 on Oct. 14.
A rise in bets on a drop in futures is a “signal that an increasing proportion of market players view the current gold price as unsustainable,” Eugen Weinberg, a Commerzbank AG analyst in Frankfurt, said yesterday in a report. “Should this sentiment spread further, gold could come under considerable pressure.”
Hedge funds and other large speculators trimmed their net- long position in gold futures by 2 percent as of Oct. 20, from a record in the previous week, and miners, producers and commercial users increased their net-short position, Commodity Futures Trading Commission data show. A net-long position benefits when prices rise, while net-shorts gain from a decline.
ETF Holdings Fall
Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 1.22 metric tons to 1,106.87 tons as of yesterday. The holding reached a record of 1,134 tons as of June 1.
“You’re getting a lot of anxiety on whether gold can sustain a rally above the $1,000 level,” Zeman said.
Silver futures for December delivery fell 55.5 cents, or 3.2 percent, to $16.54 an ounce in New York.
Platinum futures for January delivery dropped $26.80, or 2 percent, to $1,319 an ounce on the Nymex. Palladium December futures slipped $2.70, or 0.8 percent, to $330.55 an ounce.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1[at]bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen[at]bloomberg.net.
Last Updated: October 27, 2009 14:28 EDT "

The $US is gaining against both gold and other major currencies while at the same time the stock market confidence is slipping a little. All these things have their ups and downs in the short term, but could this sudden flight into $US be a sign that investors have lost confidence in the stimulus led recovery?

This thread ought to be in the main Issues section.

India has made a purchase of gold from the IMF.

Right now, gold is at $1,082. Yes, gold prices fluctuate, going up and down, but it's very high right now.

Gold strikes record on Reserve Bank of India's bullion buy from the IMF





Allen Sykora | November 04, 2009

Article from: Dow Jones Newswires
GOLD has stormed to record highs following news that India's central bank bought 200 tonnes of the metal from the IMF last month.
This alleviated past worries among traders on how the IMF might carry out its planned sales of 403.3 tonnes, meant to fund lending programs for poor countries, without adversely affecting gold prices, analysts said.

"Number one, that takes a lot of potential supply off the market," said Peter Schiff, president of Euro Pacific Capital.
"India is not buying that gold to sell it. It's buying that gold to own it and keep it.

"In addition, it shows there is tremendous demand on the part of central banks to increase their gold reserves.
“As India steps up to the plate, more central banks are going to want to own gold."

Link & Entire: Gold strikes record on Reserve Bank of India's bullion buy from the IMF | The Australian

Gold has made steady gains over the past several years. And not just gains against the $US (which has been in steady decline over the same period), but real gains against the other major currencies. While gold has doubled in value against the a basket of other major currencies in the past 7 years, it has tripled in value against the $US.

When other countries were selling off their reserves of gold to buy $USs after 1971 whe Nixon abandoned the gold standard, the USA held onto what they had left. Today USA as an individual country holds the largest FX reserves of gold. USA holds about 8,000 tons of gold in foreign exchange reserves worth about US$300 billion in todays money. USA holds nearly 80% of its foreign exchange reserves in gold. Several Euro countries, including France (72%) and Germany (71%) hold the majority of their foreign exchange reserves in gold. It seems not every country has put their total faith in the enduring value of the $US as a foreign exchange reserve.
China, at only 1% of FX reserves in gold and India at 6% have now become 2 of the worlds biggest buyers of gold. But as the big two world emerging economies they still have a very long way to go to convert the bulk of their $US FX reserves into gold. The signals are out there for everyone to see that gold is on the rise while the $US is on the decline,-- or perhaps put more appropriately, BECAUSE the $US is on the decline and there is no other viable alternative world trading medium at the moment. The rising price of gold as demand for it increases is just a temporary hedge until the world puts together a better trading currency. Gold would have to rise to more than 30 times its current value in $USs for the USA to pay off its international debt in gold, and thats just not going to happen. But of course thats not going to worry USA since they can pay off their debt with inflated $USs of which they can print as much as they need. Still, thats not going to help countries holding their majority of reserves in $USs. In fact its going to cause them a very big loss.

No country in the world can afford to see a panic sell off of $USs and into gold. And so I expect the worlds more affluent governments will band together to try and regulate the transition. And of course the only way they can do that is to release gold onto the market gradually to meet demand in an attempt to contain the rise in the gold price while they put together a more sustainable and fair world trading currency. Its going to take a while, probably years. So expect to see gold going up for a while yet.

Right now its like the ship has hit an iceberg and has sprung a leak. The passengers are starting to panic while the crew tries to keep order to prevent a disaster.

India has just confirmed this advice.

It's not just rumours any more, it's from all over the world, they are sneaking away from the US dollar, it seems like it has gathered momentum the last few weeks with a rumour here a rumour there and actions here and there to, question is if the more sensible/vulnerable to a loss, can contain it or it suddenly will be a stampede, then gold might go up a lot.

Lets hope it doesn't turn into a stampede to get out of the $US. Panic selling could cause a lot of instability in world trade, at least in the short term. But I am sure common sense will prevail as the $US does have a real value backed by the production of tradable goods and services, -- just that it is somewhere below where it is right now. Probably about 25% less is my guess.

Still, if all that money goes out of $USs, -- where is it going to go?
A lot of people are calling the stock market resurgence a stimulus induced bubble at the moment, so I doubt much of the money will be going there.
The Euro is the second biggest trading currency in the world after the $US hegemony. But if the money goes into Euros it will kill EU exports and put them in the same sort of fix as USA is now. So I doubt the money will go there either.

In the absence of some form of viable and stable trading currency I believe a lot of money will go into gold simply as a temporary hedge while the world sorts out the problem. Gold isn't going to replace the $US or the Euro as the worlds trading currency simply because there isn't enough of the stuff to go around at todays prices. If gold were to become the worlds trading currency its value would have to rise to somewhere around $US 25,000 an oz to fill the void. And thats not going to happen because it would throw the world distribution of reserve wealth into chaos.

My prediction for the future, (and its only a guess which everyone on these kinds of forums is entitled to), is that the $US will continue its slide of the past several years, all be it in a more accelerated fashion, while gold will continue its "real" rise in value against world currencies until the $US stabilizes at about 25 to 30% below where it is now. Its taken 7 years for the $US to drop 20% against a basket of international currencies as shown in the "FX US Dollar Index"
US Dollar Index
But, due to the US governments spend, borrow and print policy, it may take only another year or two for it to drop another 30%.

Time is running out for the $US hegemony and the Euro is no alternative. Money is going into gold as a hedge only as gold is no alternative either.
It wouldn't surprise me to see gold go to $US 2,000 or even $US 3,000 in the transitional period before the world gets its act together and formulates a more sustainable world productivity based trading currency. And its very likely that gold, because of its scarcity will be part of that new world currency, as will the $US.

If I was a big time investor I would be putting my money into gold right now and getting out of $USs. But as soon as it looked like there was some agreement on a new world trading currency and the $US has dropped 20%, I would be cashing my gold in for US paper money again.

I am sure gold will peak somewhere and probably suffer rapid decline when a more stable world trading currency is decided upon. But as a finite precious metal and a traditional store of wealth, I am also sure gold will be incorporated into a new world trading currency and therefore always be a more stable investment than paper money of just one country. Hell, gold as a trading currency and a store of wealth has been around for thousands of years, the $US hegemony has only been going for 38 years and its already falling apart.

The first 3 1/2 minutes is decent for current takes.

Inflation occurring now apparently, dollar will decoine and Mr. Schiff see gold at $5,000 in the future.

Interesting times.....

Originally Posted by Milkman

Inflation occurring now apparently, dollar will decoine and Mr. Schiff see gold at $5,000 in the future.

Personally, economic analysis about inflation aside, I think the guy's selling gold.

Originally Posted by MrG

Originally Posted by Milkman

Inflation occurring now apparently, dollar will decoine and Mr. Schiff see gold at $5,000 in the future.

Personally, economic analysis about inflation aside, I think the guy's selling gold.

No, he's not selling gold.

He's been advocating the buying of gold since the early 2000s.

I am not a gold bug. He is. He's been talking about the significant decline of the US dollars since 2001.

We'll see if he right, or partially right, in the future.