Where Is Gold Going In This Market

[Naam]

I definitely wouldn't be interested in swapping my rice for any of those carpets that Naam bought

all your rice plus you begging me on your knees wouldn't tempt me to swap a single one of my carpets

[churchill]

Gold backed bonds seem to being aired more .....

ECB Doesn’t Rule Out “PIIGS” Gold as Collateral for Gold Backed Eurobonds, Sends Gold Soaring - ( this a month ago )

http://www.zerohedge.com/news/ecb-doesn’t-rule-out-“piigs”-gold-collateral-gold-backed-eurobonds-sends-gold-soaring

Gold inclusion as Tier 1 asset would be huge: LBMA

http://www.marketwatch.com/story/gold-inclusion-as-tier-1-asset-would-be-huge-lbma-2011-09-19

but ...

'After lease rates had dropped and the gold market was attacked, we find out after the fact that the central banks decided to raise dollars by leasing gold. The central banks had not done that for two years. Central banks have been preserving central bank gold and overall the central banks have been net buyers, and then all of the sudden they lease it, thus selling it into the market.

For what it is worth, this gold goes right into an Asian vault and it is gone from the West permanently. This is having the effect of transferring Western solid assets over to the East, in size. This has the appearance of desperation because in the end this is really an attempt to save the too big to fail banks that are on the wrong side of a derivative play yet again. That is the reason this is being done.

Western central banks don’t really want that gold to disappear like that, they don’t want to sell that gold. They had to raise dollars in a hurry to pump liquidity into the system, but in the end, as I said, the gold is gone. In the old days the gold would be floating around the LBMA system, there would be a little bit of erosion, but today that gold is being sucked into the East.

This price action has had the effect of creating bearish sentiment, but meanwhile the physical buyers are just sitting there and constantly accumulating physical gold. There are massive orders for tonnage of gold, incredible amounts between $1,715 and $1,760. This has the effect of putting a physical floor under the price of gold. If they make a push to the $1,715 level that would be suicide in my opinion. There are simply too many massive orders for physical gold down to that level for that to be breached.

During this quarter this leased gold is supposed to be paid back, but how? As the central banks come to grips with the reality that the leased gold is gone, there may be a religious experience to the upside in gold and you will see the gold price break the $2,000 level.'

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/20_London_Trader_-_Massive_Physical_Floor_in_the_Gold_Market.html

[midas]

I definitely wouldn't be interested in swapping my rice for any of those carpets that Naam bought

all your rice plus you begging me on your knees wouldn't tempt me to swap a single one of my carpets

I don't care just don't get indigestion

[midas]

Now then Naam - we know you don't particularly like Yew tube ( and it is more than one hour long ! )

but this guy does a good job of explaining the Ponzi scheme and is forecasting $20,000 per ounce

Edited September 21, 2011 by midas

[Naam]

For what it is worth, this gold goes right into an Asian vault and it is gone from the West permanently.

and from the Asian vault this Gold is secretly shipped to the Gamma quadrant where species 4278 will use it to produce gold-pressed Latinum bars with a core of Tungsten hidden by a layer of Unobtainium.

conclusion: anything leased out is gone permanently from the West.

p.s. Churchill, you made my day again. thank you!

Edited September 21, 2011 by Naam

[Naam]

Now then Naam - we know you don't particularly like Yew tube ( and it is more than one hour long ! )

but this guy does a good job of explaining the Ponzi scheme and is forecasting $20,000 per ounce

that sounds extremely interesting! i will now cancel dinner which is normally served at 19.00hrs and will devote one hour of my time to watch and listen to one of the lobotomised moronic prophets on yewtoob.

:jap:

[midas]

Now then Naam - we know you don't particularly like Yew tube ( and it is more than one hour long ! )

but this guy does a good job of explaining the Ponzi scheme and is forecasting $20,000 per ounce

that sounds extremely interesting! i will now cancel dinner which is normally served at 19.00hrs and will devote one hour of my time to watch and listen to one of the lobotomised moronic prophets on yewtoob.

:jap:

you didn't have to do that but I have always thought the " Rich dad " series of books

were very informative and this guy in the yewtoob video to be fair is not a " lobotomised moronic prophet "

He wrote this book. Plus I've already watched 50% of the video and I think he explained things very well.

Will be interested in your critical analysis of what he says

http://www.amazon.com/Rich-Dads-Advisors-Investing-Financial/dp/0446510998

Edited September 21, 2011 by midas

[12DrinkMore]

you didn't have to do that but I have always thought the " Rich dad " series of books

were very informative and this guy in the yewtoob video to be fair is not a " lobotomised moronic prophet "

He wrote this book. Plus I've already watched 50% of the video and I think he explained things very well.

Will be interested in your critical analysis of what he says

http://www.amazon.co...l/dp/0446510998

I got as far as 35 minutes into the presentation where he starts going off about M1, M2 and M3. Which few people really understand, and I'm one of them.

I'm not listening to anymore of it, unless you can give me a time slot when he actually says something.

So far

1. he has inaccurately described the banking system, which is not limited by a fractional (deposit) reserve system but on a capital ratio system as defined by the Basel rules, and is essentially unlimited as the buggers can borrow from the Bernank through his ZIRP to comply with the ratio requirements. I guess he has watched "money as debt" and not gone any further.

2. come up with a misquote from Thomas Jefferson

3. put up a few graphs to presumably 'prove' his conclusions

Maloney is the owner of goldsilver and is trying to pump up sales. I don't think he is the self-professed rescuer of the middle class, but more a sales guy interested in promoting his own company.

Now, I happen to now have around 20% of my assets in Au and Ag and may buy or sell some.The wild claims of USD 20,000 I just don't see happening in my lifetime.

But I am very happy to see him peddle the stuff to the gullible with the promise of immense gains, I hope he is successful, because then I can cash out with a decent profit before the price crashes..... and then I can maybe buy in again. Who knows?

IMO he is just yet another salesman trying to earn a buck off those who cannot afford it.

But maybe I'm wrong? But if we do see USD 20,000 for one ounce, then the world will be a very different place.

[Naam]

Will be interested in your critical analysis of what he says

sorry Midas, i wish i could make time available listening to the various yewtoob clowns learned gurus (for entertainment purpose only). but i need the existing power of my gray cells to handle a fistful of portfolios and prepare them to meet whatever eventualities we might face in the future. virtually an impossible task as is squaring a circle. but i have to try and achieve the [hopefully] best possible result.

nowadays, when i hear "gold $20k", i can't even manage a mischievious grin or a benevolent smile; i just feel like yawning.

[12DrinkMore]

<quote>Bullion Vaults Run Out of Space on Gold Rally</quote>

http://www.bloomberg.com/news/2011-09-21/bullion-vaults-running-out-of-space-as-gold-rally-accelerates-commodities.html

Where is it all coming from?

It's not as though when the price goes up the stuff gets physically bigger.

[gregb]

Now, I happen to now have around 20% of my assets in Au and Ag and may buy or sell some.The wild claims of USD 20,000 I just don't see happening in my lifetime.

Many people believe the same thing. But the keyword here is believe. We have gone through more than a decade so far of people saying that this price or that is impossible, gold is in a bubble, etc. But these are all beliefs. Nobody ever tries to explain how this trend is going to be broken. If we just assume gold stays on the linear trajectory it is on right now, gold will pass $20k in about 14 years. It doesn't even need to go parabolic. But yet everyone assumes something will change. Let's think about that.

To say you don't believe that $20k is possible, means that you think something will intervene to stop the rise. Independent of what you specifically believe, it is clear that the only thing that can stop the current trend of gold's rise is an economic recovery that makes somebody's currency trustworthy. Therefore, by saying you don't believe that $20k gold will happen in your lifetime, you are essentially saying you believe economic growth will return in your lifetime and break the current pattern. That there will be a country with a compelling enough economy that they can produce even more of something despite the overwhelming production capability already existing in the world and thereby make their assets and currency an attractive investment.

So. How exactly do you think economic growth will return? Because from my studies economic growth is impossible in any sustained sense from this point out. There can be and almost certainly will be a short period of relative calm after a precipitous collapse that impoverishes a large number of people, but that is not sustainable. Energy depletion means that every resource has become more difficult to obtain. The world is now resource constrained. There is a fairly unyielding ceiling, and the only arguments people seem to be able to make about why this is not a problem is a religious statement which amounts to "People are smart and adaptable. We'll think of something."

I think people have watched too much TV. If there is an energy source that is going to save us from what is coming, you should be able to point to it as being established decades ago and show a nice, exponential trend that gives huge numbers and quickly. Because the small depletion rate of oil is a percentage of a really huge number. It will take an enormous growth rate of any other energy source to make up the difference. And since everything else we have is less concentrated as an energy source than oil, it means that you need to increase that huge number by an even bigger number to overcome the difference in energy concentration. Solar, wind, biomass, etc. are all minuscule in comparison to the decline in oil. It is nothing more than blind faith which would cause someone to believe that we are going to find an 11th hour solution. And I have no faith. I trust math.

I appreciate that nobody likes the thought of a world where $20k gold is a reality. But everyone is simply ignoring physics when they blindly assume that we'll adapt to the current problems. Civilizations throughout history have all collapsed when they exceeded their resource base. We are at the beginning stages of collapse right now. The conclusion is inescapable. That is the result of our bad policy choices. It will take a few centuries for an economy the size of ours to reach the bottom, but there is nothing on the horizon that will prevent it.

I can't accept a religion that says gold must go down in the future simply because I don't like the consequences of what it means if it doesn't. I need a credible, definable, physically plausible reason why something will cause the trend of energy depletion, and by extension economic decline which is highly correlated to energy, and by further extension the relentlessly increasing price of gold, to reverse.

There is nothing on the horizon that will cause that. Nothing. This is a new, permanent condition. The industrial economy is now post growth. I feel very confident when I state that the only reason we won't see $20k gold is if the US dollar ceases to exist before that happens.

[farang000999]

when people throw out 20-40k figures they are doing so under the premise of a gold standard, that the US gov or some other nation decides to prevent hyperinflation of their currency by matching it with gold. if it did the purchasing power of the 20-40k would be substantially less.

[Naam]

global markets experience another bloodbath, gold does not move.

let me guess... rumour that the Bilderbergs contaminated all gold with the swine flu virus?

[Naam]

prophets and dreamers forecast what will happen years or decades ahead. snake oil charmers claim their product will cure athlete's foot, infertility and lung cancer.

realists admit that they have no freaking idea what the future will present tomorrow. they are well aware that forecasts, especially those referring to the future, are quite difficult.

[Naam]

gold soon $ 20,000/ounce; only 18,253 dollars to go

[midas]

global markets experience another bloodbath, gold does not move.

let me guess... rumour that the Bilderbergs contaminated all gold with the swine flu virus?

here is another theory unrelated to those particular conspiracy theories

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/22_James_Turk_-_Theres_a_Raging_Battle_in_Gold_Below_%241%2C800.html

[farang000999]

I am long gold/short SPY.

[cloudhopper]

If we just assume gold stays on the linear trajectory it is on right now, gold will pass $20k in about 14 years.

Should that in fact happen do you think that $20k will buy more goods and services then than $1750 does today?

[farang000999]

using his model, yes.

[gregb]

If we just assume gold stays on the linear trajectory it is on right now, gold will pass $20k in about 14 years.

Should that in fact happen do you think that $20k will buy more goods and services then than $1750 does today?

Yes. It will. Up to a point. Essentially all industrial items are currently suffering from overproduction. There is simply too much stuff. The prices of everything may continue to rise in nominal terms of fiat currency, because this is what will allow economies and banks to continue to function in a post growth environment, but nothing can replace the physical reality that there are now too many goods for too few buyers.

If you examine the price in a currency that is not being debased however, like XAU for example, you will necessarily expect to see the results of that overproduction reflected in lower acquisition costs of nearly everything. That is what we have been seeing so far, and nobody has yet presented me with a realistic scenario where that is not the expected future.

At some point in the far future of course, the industrial economy will have collapsed to the point that nearly all the overproduction has been resolved. I would estimate that point will come when the global economy should be around 10 to 20 times smaller than it is today, but that is really nothing more than a WAG on my part. I certainly wouldn't bet on it. But whenever that comes, that will be the time to consider trading in gold for what few items remain in the industrial economy. But I doubt I will be alive when that point comes around. I think it will be a decision left for my children or grandchildren.

[farang000999]

If we just assume gold stays on the linear trajectory it is on right now, gold will pass $20k in about 14 years.

Should that in fact happen do you think that $20k will buy more goods and services then than $1750 does today?

Yes. It will. Up to a point. Essentially all industrial items are currently suffering from overproduction. There is simply too much stuff. The prices of everything may continue to rise in nominal terms of fiat currency, because this is what will allow economies and banks to continue to function in a post growth environment, but nothing can replace the physical reality that there are now too many goods for too few buyers.

This obviously is not true. There is just a disparity between goods produced by "wealthy" nations vs developing nations. Obviously everyone in the world does not have everything they want materially, they just have nothing to barter with.

unfortunately for the USA, the poorest women in our country are not attractive at all, they are downright scary and thus can't attract some rich Chinese sugar daddies!

Edited September 23, 2011 by farang000999

[cloudhopper]

but nothing can replace the physical reality that there are now too many goods for too few buyers.

If you examine the price in a currency that is not being debased however, like XAU for example, you will necessarily expect to see the results of that overproduction reflected in lower acquisition costs of nearly everything. That is what we have been seeing so far, and nobody has yet presented me with a realistic scenario where that is not the expected future.

While I happen to agree with your general thesis, why should the price of gold be exempt from the price of everything else in this deflationary scenario? What if the government can't (or more likely won't for several excellent reasons) inject enough new fiat into the economy to extinguish a debt 25X its current size, and what currency is going around is being used to extinguish debt or being hoarded in the face of mass unemployment as the economy declines for reasons you have already stated?

[midas]

While I happen to agree with your general thesis, why should the price of gold be exempt from the price of everything else in this deflationary scenario? What if the government can't (or more likely won't for several excellent reasons) inject enough new fiat into the economy to extinguish a debt 25X its current size, and what currency is going around is being used to extinguish debt or being hoarded in the face of mass unemployment as the economy declines for reasons you have already stated?

what is your view regarding the possibility of deflation first followed by hyperinflation as central banks

panic and furiously start printing more money?

Edited September 23, 2011 by midas

[cloudhopper]

what is your view regarding the possibility of deflation first followed by hyperinflation as central banks

panic and furiously start printing more money?

TPTB know that if there is ever a global hyper inflation it's game over. They want to get back on the stealth credit-driven expansion the world has been on since '71 but they can't force more debt onto an already unserviceable amount. There's no way IMO that increasing the money supply by 25X could be accomplished without a financial collapse (hyperinflationary or not) that would be far more catastrophic than letting many banks collapse. So I think the most likely scenario is what has been happening in Japan but much faster and more severe, and the nominal prices of all assets will go down, including gold, until spending = real production. Gold is a good store of surplus capital in just about any scenario but only capital invested in productive assets will have a sustainable increase in real value IMO.

edit - and all those assets based on un-repayable debt will evaporate in value. This includes the assets of most pension plans which is one reason the government is so desperate to avoid a deflationary burst. They just won't be able to in the end IMO...

Edited September 23, 2011 by cloudhopper

[midas]

Gold is a good store of surplus capital in just about any scenario but only capital invested in productive assets will have a sustainable increase in real value IMO.

but surely for millions of ordinary Indians and Chinese it is also a form of saving?

[cloudhopper]

Gold is a good store of surplus capital in just about any scenario but only capital invested in productive assets will have a sustainable increase in real value IMO.

but surely for millions of ordinary Indians and Chinese it is also a form of saving?

Yes it's a form used by my ordinary self too, but I don't think it is an investment.

[midas]

Gold is a good store of surplus capital in just about any scenario but only capital invested in productive assets will have a sustainable increase in real value IMO.

but surely for millions of ordinary Indians and Chinese it is also a form of saving?

Yes it's a form used by my ordinary self too, but I don't think it is an investment.

I don't regard it as an investment either. in fact I regard it almost like the lesser of two evils.

I asked myself which carries the risk of plunging in value the most given the current state of affairs

around the world - the metal or the US dollar or any other paper currency for that matter?

I don't think any paper currency has sustainable value either so where else do you " park " it ?

[Naam]

Gold is a good store of surplus capital in just about any scenario but only capital invested in productive assets will have a sustainable increase in real value IMO.

and all those assets based on un-repayable debt will evaporate in value. This includes the assets of most pension plans which is one reason the government is so desperate to avoid a deflationary burst.

= words of wisdom and logic!

[midas]

interesting comments from MEP Nigel Farage

" If on the other hand she says, ‘Look, we’ve had enough of this, we’re sick of this and we want Germany to take back the Deutsche mark,’ she’ll be seen to be a bad European. So there is paralysis and we are on the very edge, possibly, of this whole thing just getting so hopelessly and completely out of control that there could be some sort of disaster."

and about the precious metal

When asked about the action in gold Farage stated, “Yeah, we’ve had a setback, a little bit of a settling of the gold price after what was a meteoric rise. I think the worst in the financial system is yet to come, a possible cataclysm and if that happens the gold price could go (higher) to a number that we simply cannot, at this moment, even imagine. Gold is in an uptrend and professional traders should be buying the dips.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/23_Nigel_Farage_-_Financial_Cataclysm_%26_Gold_Unimaginably_Higher.html

[lannarebirth]

Gold is a good store of surplus capital in just about any scenario but only capital invested in productive assets will have a sustainable increase in real value IMO.

and all those assets based on un-repayable debt will evaporate in value. This includes the assets of most pension plans which is one reason the government is so desperate to avoid a deflationary burst.

= words of wisdom and logic!

I agree. IMO Gold and Silver are rather unimportant metals. Anyone watching the price of Copper?