Where Is Gold Going In This Market

[churchill]

There you are -- a good buy signal !

Economist Dennis Gartman Said He’s Reducing His Gold Position ~ Bloomberg Wire (he warned would go parabolic on Monday)

did he also mention at which position in a parabola his gold position is?

I don't think he has much of a clue

He has twice issued a sell gold signal within the last month or so only to reverse his view within 24 Hours / He issued this flash when gold was around $1870 ( although he does not trade Gold in $ but in Euro and GBP , he says ) He says he is not a gold bug but long gold - He waffles ... look at his fund - Why does he have a regular slot on CNBC and so many followers ?? I would have thought CNBC would do better to get opinions of fund managers that manage to make at least a positive return for their investors not big losses ...

Horizons AlphaPro Gartman ETF http://www.bloomberg.com/apps/quote?ticker=HAG:CN

Edited August 24, 2011 by churchill

[Naam]

PostNaam, Today, 05:52 , said:

The evidence is strong and I suspect will soon be repeated that gold, over the long-term (once speculation and fear are at normal levels), offers historical returns of 4-6% a year...

i didn't say that but copied and pasted. historically gold did not offer that kind of return ...no matter what fairy tales are spread by gold aficionados.

This is very disingenuous of you Naam. For very long portions of history paper money was on a gold standard. Do you think it is fair to compare stocks to gold when gold was the equivalent of cash? Why should we not start looking at Stocks vs Gold from the point where Nixon closed the gold window?

Let's see, in 1971 gold was $40/oz.... Now it is 1800/oz

And somehow stocks have outperformed?

where and when did i mention something about stocks? let's see gold was 850 in 1980 and 20 years later gold was 270... did those (like me) who invested during that period in other assets not infinitely outperform gold? did gold outperform assets bought fall 2008 / spring 2009 some of which tripled, quadrupled, quintupled (and more) within 6-9 months?

picking specific periods does not answer the question "where's the beef?" but can be countered by picking other periods which conform with an individual claim.

Edited August 24, 2011 by Naam

[farang000999]

u cant see the difference between starting at the point from which the gold window closed and we ended Breton Woods and all became keynesians and cherry picking some other random date? people are always saying stuff about "since 1900 gold has gained x %" which disregards the fact that gold was tied to paper money during these periods. alarm bell!

[Naam]

u cant see the difference between starting at the point from which the gold window closed and we ended Breton Woods and all became keynesians and cherry picking some other random date? people are always saying stuff about "since 1900 gold has gained x %" which disregards the fact that gold was tied to paper money during these periods. alarm bell!

that gold was tied to paper money or vice versa is nothing but a fairy tale. if that was the case a single US-Dollar would not have fetched a 4 billion (american = trillion) Reichsmark in my home country ~75 years ago. only a handfull countries had their currency tied to gold and even these were cheating and never had a full backing for the printed paper in circulation. the "United Kingdom" abandoned the gold standard in 1931 and the exchange rate of the Pound. set by the Bretton Woods agreement nearly two decades later, was nothing but a big joke. even the backing of the US-Dollar was a joke. only when French president Charles de Gaulle asked that France's dollar reserves held in the U.S. be converted into gold Nixon had to admit that "the emperor has no clothes".

nobody knows exactly up to what percentage gold backing really existed for various countries and this gold backing was obviously nothing else than "fiat backing" similar to the nowadays "fiat money". the same applies to the present price of gold which is as "fiat" as anything else called "fiat". only offer and demand determine the price of any precious metal.

that the value of gold was held in high esteem by people for thousands of years is a fact, but it does not prove that the alleged intrinsic value exists. billions of flies like shit since billions of generations and millions of years. for these flies shit possesses intrinsic value as they use it as nourishment.

gold cannot be eaten, is not suitable to make clothes and cannot be used as housing. its value is as much a fiction as it is reality.

:jap:

p.s. we should not discuss any "starting points" because starting points are relative and therefore irrelevant. a good example is 1971 (Nixon, end of Bretton Woods). the year 1971 is for most of us irrelevant because even us older ones had no money then to invest because some of us (like me) just left university and started to earn some money which we did not invest but used it up to furnish apartments and buy cars.

[churchill]

Asia gold buyers rush in on price dip; eco fears linger

http://www.moneycontrol.com/news/commodities/asia-gold-buyers-rushon-price-dip-eco-fears-linger_579528.html

[churchill]

Vietnam's gold surge fans worriesGold fever hits Vietnam, with a gap between retail and world prices sparking a rush that's also leading to concerns over speculative buying.

http://video.heraldsun.com.au/2104140187/Vietnams-gold-surge-fans-worries

[churchill]

Following it's neighbour

Kazakhstan's central bank to buy up domestic bullion output

In the latest economy to look to gold over the currency reserves, the Kazakh central bank says it plans to augment its gold reserves by exercising its right to buy the country's entire bullion output

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=134088&sn=Detail

[churchill]

Vietnam's gold surge fans worriesGold fever hits Vietnam, with a gap between retail and world prices sparking a rush that's also leading to concerns over speculative buying.

http://video.heraldsun.com.au/2104140187/Vietnams-gold-surge-fans-worries

Vietnam Central Bank Plans 200-Ton Gold Reserve, Lao Dong Says ~ Bloomberg Wire

[Naam]

and because of the demand from Kazakhstan and Viet Nam the price of gold nosedived

[lannarebirth]

I can't remember the name of that vapid "super" model that refused to accept payment in anything but Euros, but i think it was pretty near a swing top (if not THE top). This news kinda reminded me of that:

http://www.smh.com.au/world/chavez-nationalises-gold-20110824-1jabn.html

[flying]

Someone whose opinion I respect has said numerous times there would be a flash crash this first week of August

Seems he is again right. He also states golds new low about the 3rd week of August.

Which means just a new low from its highs. He has also said late August may be the last time to get gold in coin form

at a reasonable premium.

Well seems his call on the flash & now this new low was time wise quite good....

although I posted it on 8/5 in response to the flash..He had stated it well before.

Now here we are in the 3rd week of August

Edited August 24, 2011 by flying

[flying]

Read Harvey's daily report for 8/23/11

Then look at today's 8/24/11 action

http://harveyorgan.blogspot.com/

Edited August 24, 2011 by flying

[Naam]

Flying,

what did i tell you yesterday in an e-mail about the convenience of a stop-loss and that i get suspicious when the anals of my bank are enthusiastic about an asset?

[flying]

Yup for paper traders the stop loss is a nice feature.

Also as we thought possible the CME has raised the margin 27% more

Paper gold is an interesting game for those involved.

Rigged like most markets these days but still interesting to watch.

CME raises gold margin requirements again

CME raises gold margin requirements again

August 24, 2011, 5:17 PM

For the second time this month, the CME Group Inc., the parent company of the main metals and energy exchanges in the U.S., announced late Wednesday an increase in margin requirements to trade gold. It raised the amount of money needed to trade gold contracts by 27% to $9,450 per 100-ounce contract.

The move comes on the heels of a $104-an-ounce drop in gold futures prices, which some analysts had blamed partly on speculation that the CME would raise margin requirement again.

Gold’s approach to $2,000 an ounce “invited excess speculation and therefore margin concerns for exchanges,” said Richard Hastings, a macro strategist at Global Hunter Securities. “The quasi-exponential price behavior was dangerous and the exchanges today view this with significant concern — and act quickly.”

Brien Lundin, editor of Gold Newsletter, said “raising margin requirements after a major decline doesn’t affect the speculative bulls as much as the bears.”

“We may see this move help foster a rebound by forcing shorts to cover,” he said.

In electronic trading on Globex, December gold GC1Z was trading $3.70 higher, after closing at $1,757.30 on the Comex division of the New York Mercantile Exchange.

-Myra Saefong

Edited August 24, 2011 by flying

[Naam]

Flying said: Yup for paper traders the stop loss is a nice feature.

it does not apply only to traders but also to investors who hold any liquid asset. the negative effect of a triggered stop-loss is that the investor is faced with the question "when do i get in again?", id est does one trust Churchill's trumpet blow and drum rolls "the central bank of Vanuatu announced its intention to increase its reserves by another 3½ ounces of gold" and "if each of the 2.5 billion Chinese and Injuns buy 1/12 dozen ounces of gold then..." or does one follow the advice of the "gold=bubble prophets"?

life is a difficunt!

[churchill]

I think most were expecting a correction but this seemed very sharp .. but remember ... In 10 days prices went from $1,700 to $1,900.On Aug. 5, December gold settled at $1,651.80 ..

Support at $1750 and $1725 hopefully that is it !

[farang000999]

Nam you are correct that almost every gold standard of modern history has been a make believe gold standard since as soon as the mob lined up outside decides that they want their gold in exchange for those pieces of paper they find out that the gold window has now closed, haha. as in, the gold standard only works if only a small % of the population attempts to take possession of their gold. that said, the perception to the average individual was that gold = cash and thus it is not really surprising to me to see that gold's gains are unimpressive historically when viewed during these periods of make believe gold standards.

Whether gold turns out to be a bubble or not it appears super bullish how the only way it goes down is if margins are increased. i will be adding more. i sold half of my gold when it hit 1840 (on the way up) thinking lol here comes a margin increase and i don't know why i didn't short it at 1925 that was stupid it was practically free $$, just looking at the last 2 years you know a margin increase was on the horizon.

[farang000999]

currently in the USA and have to laugh at these gold coins being sold at only $80 above spot when in thailand the difference between buy and sell prices is a mere 100-200baht/baht

[Naam]

I think most were expecting a correction but this seemed very sharp .. but remember ... In 10 days prices went from $1,700 to $1,900.On Aug. 5, December gold settled at $1,651.80 ..

Support at $1750 and $1725 hopefully that is it !

a sharp fall indeed! i put a stop-loss @ 1,805 but it was executed @ 1,789 - today i won't have dinner to compensate for lost profit

[Naam]

currently in the USA and have to laugh at these gold coins being sold at only $80 above spot when in thailand the difference between buy and sell prices is a mere 100-200baht/baht

this does not only apply to the U.S. and is not limited to coins. in Europe too the surcharge for coins and small bars (10-50 grams) is quite high.

[flying]

currently in the USA and have to laugh at these gold coins being sold at only $80 above spot when in thailand the difference between buy and sell prices is a mere 100-200baht/baht

I think you are confusing the jewelry/craftsman charge with a premium as in the States/rest of the world.

If you take the daily per baht price of gold in Thailand & convert it to a Troy ounce you will see there is indeed also a premium on 99.9% gold same as anywhere else in the world.

Thailand just does not show it as an additional charge.

Edited August 25, 2011 by flying

[gregb]

currently in the USA and have to laugh at these gold coins being sold at only $80 above spot when in thailand the difference between buy and sell prices is a mere 100-200baht/baht

I think you are confusing the jewelry/craftsman charge with a premium as in the States/rest of the world.

If you take the daily per baht price of gold in Thailand & convert it to a Troy ounce you will see there is indeed also a premium on 99.9% gold same as anywhere else in the world.

Thailand just does not show it as an additional charge.

This is a little bit misleading flying.

We buy and sell 999 10 baht bars through Ausiris all the time. The buy/sell spread is 100 baht/baht weight, just as on the 965 gold. Prices as of today on their website:

Buy: 25,875

Sell: 25,975

So the spread is less than $6.50 USD per oz. I don't think you are going to find anywhere in the rest of the world that charges you an $80 premium to buy a coin and offers you a $74 premium when you sell it back.

Thailand is still a much better deal than using dealers in the West.

Edit: Updated to reflect the morning's pricing.

Edited August 25, 2011 by gregb

[flying]

This is a little bit misleading flying.

We buy and sell 999 10 baht bars through Ausiris all the time. The buy/sell spread is 100 baht/baht weight, just as on the 965 gold. Prices as of today on their website:

Buy: 27,150

Sell: 27,250

So the spread is less than $6.50 USD per oz. I don't think you are going to find anywhere in the rest of the world that charges you an $80 premium to buy a coin and offers you a $74 premium when you sell it back.

Thailand is still a much better deal than using dealers in the West.

Well lets look at it.....

2.07 baht = 1 troy ounce

1 baht sell 99.9% = 27,250 THB

27,250THB x 2.07 = 56407.5 THB

56407.5 THB = $1883.69 USD

Gold spot is currently at $1761.90

Edit: I see your describing the difference between buy & sell not actual price.

My bad........

But by the same token it does depend on how & to who you are selling in the USA.

Many here do not sell through the big dealers.

In my case the dealer I do deal with pays back the premium almost entirely.

This is due to lack of supply in my case.

But by the same token you can see the Thailand prices are actually higher initially premium wise.

Edited August 25, 2011 by flying

[gregb]

This is a little bit misleading flying.

We buy and sell 999 10 baht bars through Ausiris all the time. The buy/sell spread is 100 baht/baht weight, just as on the 965 gold. Prices as of today on their website:

Buy: 27,150

Sell: 27,250

So the spread is less than $6.50 USD per oz. I don't think you are going to find anywhere in the rest of the world that charges you an $80 premium to buy a coin and offers you a $74 premium when you sell it back.

Thailand is still a much better deal than using dealers in the West.

Well lets look at it.....

2.07 baht = 1 troy ounce

1 baht sell 99.9% = 27,250 THB

27,250THB x 2.07 = 56407.5 THB

56407.5 THB = $1883.69 USD

Gold spot is currently at $1761.90

So is Thai 99.9% gold still 100-200 THB above spot?

One good thing about gold is like for like it is stable worldwide.

If Thailand was offering such a savings everyone would flock there & buy tonnes

Sorry flying. That was yesterday's pricing. They just posted the new figures. Buy/sell is 25875/25975

Or about $1760. It does track the international spot price quite closely. If it wasn't the case, they would be killed with arbitrage.

Edit: BTW, Ausiris doesn't have a monopoly on this. All the major gold trading houses charge the same prices. The rates are set by the Thailand Gold Traders Association and are updated as necessary throughout the day to reflect the actual spot price of gold. Any gold trader in Thailand will have exactly the same prices.

Edited August 25, 2011 by gregb

[flying]

Sorry flying. That was yesterday's pricing. They just posted the new figures. Buy/sell is 25875/25975

Or about $1760. It does track the international spot price quite closely. If it wasn't the case, they would be killed with arbitrage.

Ok closer but still about $40 over spot

because 25975 THB x 2.07 = $1794.63

Yes I understand all shops in Thailand track spot.

But my intention was their 99.9% has a premium on top same as most

But it may be easier to retrieve the premium there at sale time

as I think the original poster said & I misunderstood as something else.

Edited August 25, 2011 by flying

[gregb]

Sorry flying. That was yesterday's pricing. They just posted the new figures. Buy/sell is 25875/25975

Or about $1760. It does track the international spot price quite closely. If it wasn't the case, they would be killed with arbitrage.

Ok closer but still about $40 over spot

because 25975 THB x 2.07 = $1794.63

Yes I understand all shops in Thailand track spot.

But my intention was their 99.9% has a premium on top same as most

1 troy oz. = 31.103 grams

1 baht = 15.244 grams

Therefore, 1 troy oz. = 2.04 baht

2.04 x 25,975 = 52,989 / 30 = $1766.3

Or, as I said, around $6.50 per oz.

It can not vary significantly from the international spot price. They would be destroyed with arbitrage if they didn't track it very closely.

Edit: BTW, prices just dropped again. Now down to 25750/25850. This is going to be an interesting day.

Edited August 25, 2011 by gregb

[farang000999]

1. gold is not significantly more expensive in thailand it follows the international spot

2. even if it were, it would not matter because if it were more expensive it would mean when you sold it back you got the same advantage. the only thing that matters is the price difference between buy/sell.

here are some nice coins from the biggest online american seller.

only $100 over spot per ounce and they will buy them back for $60 under spot...

http://www.apmex.com...ican_Eagle.aspx

oh yeah don't u love the 28% collectible tax rate?

so now we have thai gold in an american safety deposit box!

Edited August 25, 2011 by farang000999

[Naam]

Yes I understand all shops in Thailand track spot.

But my intention was their 99.9% has a premium on top same as most

But it may be easier to retrieve the premium there at sale time

as I think the original poster said & I misunderstood as something else.

that is correct Flying bid/ask difference for a 999.9 Crédit Suissse 100gram bar in Bangkok (a couple of months ago)

THB 3,150 Baht = ~1,050 Baht (~$35) /ounce = ~525 Baht per Baht weight. i assume that the premium for an ounce bar is most probably higher.

[fletchsmile]

I've always looked at gold as a bubble that will one day burst. At the end of the day it's just a piece of yellow metal. Not much use for much apart from "looking nice" which is always subjective, and jewellery which again is to look nice. One day it will go out of fashion - maybe my life time maybe not, and be more or less worthless. The comparisons to the Emperors new clothes, or swimming naked until the tide goes out spring to mind.

Meanwhile, yes I do hold some exposure, mainly as it often rises when my stocks fall, and gains on gold have been a nice offset recently . In addition while everyone is sold on the idea, it doesn't matter what reality would be anyway...

On the other hand I see that bubble getting even bigger now, When housewives wuch as gregb's missus would like to pile into gold futures, that's one sign that there's a nasty shock down the line. Not unlike the Yen related carry trades, where the time to get out is when all the Tokyo housewives are rushing in...

Be careful...

[gregb]

I've always looked at gold as a bubble that will one day burst. At the end of the day it's just a piece of yellow metal. Not much use for much apart from "looking nice" which is always subjective, and jewellery which again is to look nice. One day it will go out of fashion - maybe my life time maybe not, and be more or less worthless. The comparisons to the Emperors new clothes, or swimming naked until the tide goes out spring to mind.

Meanwhile, yes I do hold some exposure, mainly as it often rises when my stocks fall, and gains on gold have been a nice offset recently . In addition while everyone is sold on the idea, it doesn't matter what reality would be anyway...

On the other hand I see that bubble getting even bigger now, When housewives wuch as gregb's missus would like to pile into gold futures, that's one sign that there's a nasty shock down the line. Not unlike the Yen related carry trades, where the time to get out is when all the Tokyo housewives are rushing in...

Be careful...

Thank you.

I was starting to wonder if everyone on this forum had died.

$100 down day and not a single person yelling "bubble" was really getting me worried. Of course, the reality is the last couple of weeks gold truly has been in a bubble. But now that it is returning to more realistic valuations the bubble is nearly deflated. After all, US debt is still increasing. Europe is still in trouble. And there is absolutely no solution to looming energy crisis. Gold will continue to be a good long term investment as long as nobody finds a few spare Earths lurking around in a conveniently accessible location. Until then, I'll continue to put my faith in Albert Bartlett's thesis that humans as a group are incapable of understanding the exponential function.

Long term gold is going nowhere but up relative to currency based on debt and that derives its value from a failing global industrial economy. Short term however, bubbles can and will form, and as today has just proven, can burst rather dramatically.