Where Is Gold Going In This Market

[vedantafx]

Well thanks alot for the vote of confidence Flying...and you are totally right that we know its right for us which is the most important thing. The bottom line in the bank account is what takes priority over any theory at the end of the day.

I m glad someone else can see that some of these arguments put forward are just non-sensical...Just one more rebuttal, and for our own knowledge regarding that "gold not suitable for a currency as it can decline by 80% etc etc"...

Prices of course will never be exactly stable, but against as far as price goes it it much more stable than any other currency which many don't seem to understand...

The price of oil has ranged over the last 70 years between 1 to 4 grams of gold, with the average around 2 grams.

On the otherhand...

The price of oil in USD in that time has went from 1.20USD to 147 USD...now how anyone can say that gold is unstable due to volatilty is postualting without actaully looking at the facts. If the USD was a more stable currency, then this range should have stayed in the 1 to 4 USD range...the fact that it has lost 96% of its value since 1913 and gold is flat speaks volumes...

All, I want is someone to statistically show me when they make claims such as...

A key prerequisite for a currency is that its underlying value is inherently stable - if it can go up 10 fold in 10 years it can also depreciate 90% in real terms. Who the hel_l wants a currency with those fundamentals apart from Zimbabwe?

Show me a currency that is statisically more stable than gold then? A spreadsheet would be suitable...If someone can provide that and show me the standard deviation from a longterm mean is stable, volaltility is lower, and that it has maintained purchasing power then I m very interested. I have not found one, which in the case of this statement would mean it has came of the top of the head without any evidence. I dont want to invest on blind faith.

Golds price seems highly volatile, far too volatile to create a semblance of credibility that it is actually suitable as a currency.

Again show me the statistics...Its very easy to throw statements about, but actually again prove how the price of oil being in a range of 1gram to 4 grams is less volatile than oil going from 1.20 to 147 USD? I want statistics and proof.

There is a theory largely made up I admit by gold bugs that gold is a valid currency a true store of value

This is actually funny...No its not, it is statiscally sound, and if you don't agree the burden of proof stays on the other side to prove it...as I and many others have done the analysis, and cannot see any holes in it.

Now occasionally a major currency halves or doubles in a decade but if you look at sterling dollar it just basically trades between 1 and 2.

These are both fiat currencies...Both are being devalued as central bankers and ignorant keyensian economists follow a similar monetary policy, so yes GBP?USD moves between 1 and 2...now measure both sterling and the USD against prices of sugar in each decade, cars, houses, wheat, corn, stocks, oil...in each of the last 10 decades...Now with the same set of data measure the same prices for sugar, cars, wheat, corn in gold and prove with numbers what is more stable...

Both currencys are flawed...they are boths devalued at the same rate, hence thats why we have ever increasing prices in sterling and USD..next statement...

You wish to tell me that gold is both a good currency and one that will have appreciated 12 fold in 15 years from its lows. While I will perhaps accept your price rise you must accept that it is a totally unacceptable currency.

On the other hand it is not that gold has went up in price, it is just gold, stable, slowly increasing supply, and a fairly constant demand...It is not that gold is volatile and increasing in value. Gold does increase in value, as it is just the same gold as 100 years ago, or 200 years ago...It is the that paper money has lost its value, and hence gold seems more expensive to buy in those paper currencies. Gold is aonly the barometer.

Unacceptable, again with all the preovious points show me statistically a more stable one in the last 300 years. That is all I ask.

Should be interesting Flying to get this data us crazy gold bugs crave...

[flying]

Golds price seems highly volatile, far too volatile to create a semblance of credibility that it is actually suitable as a currency.

On the other hand it is not that gold has went up in price, it is just gold, stable, slowly increasing supply, and a fairly constant demand...It is not that gold is volatile and increasing in value. Gold does increase in value, as it is just the same gold as 100 years ago, or 200 years ago...It is the that paper money has lost its value, and hence gold seems more expensive to buy in those paper currencies. Gold is only the barometer.

Should be interesting Flying to get this data us crazy gold bugs crave...

That is the exact answer to the preceding quote/question

You have to admit it is funny though. Gold & Silver has been money for thousands of years.

Fiat paper is just currency backed by a wing & a prayer. So of course it has more gyrations than a yo-yo. But for someone looking at silver & gold based on its price------> Based on a fiat price.......LOL Yes I fully expect volatility.

[Naam]

vedantafx,

Naam is manipulating data so as to imply something that is clearly not the case. You on the other hand, are manipulating fundamentals to suit yourself.

please elaborate Abrak. did you find a mistake in my percentage calculation?

1. Come off it Naam, in order to imply that gold has been a long term dog in any ways you have to a) select your data very carefully and take advantage of the extremely high volatility in the price of what is supposed to be a cash investment.

2. I also disagree with your implied logic which seemed to be that as gold had performed badly we should assume it will continue. If you look at say bull markets for equities or property at least 80% of the movement is in the P not in fundamental revisions. To the extent there are justified revisions of fundamentals they rarely exceed 25% in real terms during a cycle.

A 3 times real revaluation over 7 years is highly unusual for any asset 'class' without a degree of overvaluation (obviously things are very different with an underlying stock). To the extent that gold has stable underlying fundamentals and is well understood it is even less likely.

3. So to the extent that as you see gold as a dog in the past, it will be a dog in the future, I see that fact that it has performed so well as the main reason it wont continue to do in the future.

1. i did not imply anything. the data i listed and the results based on them are facts derived by simple maths.

2+3. no such thing like implied logic. data is evidence that my claim "dog in the past" for the mentioned period is correct. i'm not one of the goldbugs who have (since i can think back) wet dreams about the future, i did not mention the future or extrapolate anything concerning the future. and as far as the past is concerned i am in good company as goldbugs always refer to the past (going back milleniae) and use the past to prophesie the future.

by the way, that the period i referred to (=life span of our friend Vedantafx) is a nice coincidence

[Naam]

You have to admit it is funny though. Gold & Silver has been money for thousands of years.

incorrect statement! ask your wife when was the last time that she paid with gold for steaks and potatoes and tell me how much gold you paid when you bought your car(s) and whether you send gold or dollars to the IRS.

thousands of years = yaaaawwwwwwnnnnnn...

[flying]

You have to admit it is funny though. Gold & Silver has been money for thousands of years.

incorrect statement! ask your wife when was the last time that she paid with gold for steaks and potatoes and tell me how much gold you paid when you bought your car(s) and whether you send gold or dollars to the IRS.

thousands of years = yaaaawwwwwwnnnnnn...

Silly Klingon of course you are right ....NOT

See this sorry excuse of a country has a law called legal tender

Hence our paper fiat has a small statement on it that reads...

This Note is legal tender for all debts public & private.

So sad too that they use to also say this note is redeemable for silver & some even said gold

It could be said that back then our currency was in fact REAL money

But as it stands today yes many merchants do in fact take both gold & silver

But that aside I can always take a single gold coin that use to be valued at $50 US dollars

(back when our currency was backed by money that is )

I can at that point take it & use it as $50 dollars anywhere & buy steaks potatoes etc.

But better yet I can take it down the street to my favorite metals dealers & he will give me not 50 but 900+ US dollars for it.

See it seems the paper currency wanna be money has lost a little ground over the years

"Although gold and silver are not by nature money, money is by nature gold and silver."

Karl Marx

Edited July 30, 2009 by flying

[trogers]

Well gold is stupid......Well if you had bought 30 years ago & did nothing with it since you would be sorry today

I bought a few kilos of gold when prices were below USD350. And I rented them out at USD2 a month per oz, free from property taxes.

Edited July 30, 2009 by trogers

[Naam]

Silly Klingon of course you are right ....NOT

[Naam]

Well gold is stupid......Well if you had bought 30 years ago & did nothing with it since you would be sorry today

I bought a few kilos of gold when prices were below USD350. And I rented them out at USD2 a month per oz, free from property taxes.

a 6.86% yield p.a. achieved by gold leasing? how many months did that last? one or two?

[trogers]

Well gold is stupid......Well if you had bought 30 years ago & did nothing with it since you would be sorry today

I bought a few kilos of gold when prices were below USD350. And I rented them out at USD2 a month per oz, free from property taxes.

a 6.86% yield p.a. achieved by gold leasing? how many months did that last? one or two?

Quite a few years. Had them cast into little tulips and engraved with the message 'Remember 1637' and leased them out as tabletop paperweights to the high tech companies back in the late 90s...

[AlexLah]

Was cleaning up the garage this morning.

[trogers]

Was cleaning up the garage this morning.

How much do these copper ingots worth?

[Abrak]

On the otherhand...

Ok Verdantafx now you are just taking the piss. My comment that gold wasnt worth anything because it doesnt have a yield was just joking.

Your chart showing oil is worth so much more than the dollar because the dollar yields something and oil doesnt is very amusing and looks much like the declining 3.8% chart of dollar verses assets which also have no yield. Just goes to show the power of compounding interest.

And to the extent that you were account for nominal interest yields all that you go to prove is that the dollar flatlines which has its attractions. Equities obviously make greater returns but that is because of the risk. So obviously I see excess investment returns as either its cash and there fore overvalued or its a commodity or equity and returns represent a rick for which people are making poor assumptions about.

However if you look at that PPP decline of the dollar you will see that the dollar has not much inherent volatility.

If you think of things another way. Gold bugs argue that gold as a currency would imply permanent low interest rates while others might argue that its value volatility would result in a high volatility in prices with all the negative implications of negative inflation rates that we could result.

And if you wish to disagree with me about everything else I am sure you will agree about this. If you invest indiscriminately or for all the wrong reasons in something then you are lucky to make money. If say you think that I dont understand golds fundamentals then I am doing the right thing. Someone who doesnt understand something shouldnt own it in the first place. And if I vaguely understand it is more of a sell. From my perspective, which is that I 'know' nothing, any 3x time revaluation is a selling opportunity.

[AlexLah]

Quote: How much do these copper ingots worth?

Less than that, they are plastic....

It's Friday!!!!!!

Let us go for women and beer!

[flying]

http://uk.reuters.com/article/idUKLU883672...30?rpc=401&

Gold lures inflation-wary hedge fund chiefs-survey

Thu Jul 30, 2009 1:10pm BST

By Martina Fuchs

LONDON, July 30 (Reuters) - U.S. hedge fund managers are increasingly likely to buy gold to protect their personal wealth against inflation, an investment management firm said on Thursday.

London-based Moonraker said a survey it carried out in the United States found that 20 out of 22 fund managers interviewed bought physical gold for personal investment on concerns the U.S.' quantitative easing programme may lead to higher prices.

"Gold is the ultimate currency,Money performing best when economies are at extremes, whether that is inflationary or deflationary," Jeremy Charlesworth, chief investment officer at Moonraker, said in a statement.

"The managers I met in the U.S. know that if the politicians get the quantitative easing programme wrong, then the value of money Fiat relative to real assets will dwindle," he added.

Gold was seen as a safe haven asset during the financial crisis, as many investors considered it a less risky investment than stocks and shares.

As the economic outlook improves gold is also being bought as a hedge against inflation, which analysts say may soar as the economy recovers.

A Federal Reserve report this week said the pace of the recession slowed or stabilized in most areas of the United States. [iD:nN29285802]

"Everyone agreed that sentiment is better than it was a few months ago, but none of the structural problems have yet been fixed. Double-digit inflation two or three years down the line is a very real possibility," Charlesworth said.

NOTE: Highlights & strike out editing are mine....unaltered article at address link above

Edited July 31, 2009 by flying

[Abrak]

http://uk.reuters.com/article/idUKLU883672...30?rpc=401&

Gold lures inflation-wary hedge fund chiefs-survey

Thu Jul 30, 2009 1:10pm BST

By Martina Fuchs

LONDON, July 30 (Reuters) - U.S. hedge fund managers are increasingly likely to buy gold to protect their personal wealth against inflation, an investment management firm said on Thursday.

London-based Moonraker said a survey it carried out in the United States found that 20 out of 22 fund managers interviewed bought physical gold for personal investment on concerns the U.S.' quantitative easing programme may lead to higher prices.

"Gold is the ultimate currency,Money performing best when economies are at extremes, whether that is inflationary or deflationary," Jeremy Charlesworth, chief investment officer at Moonraker, said in a statement.

"The managers I met in the U.S. know that if the politicians get the quantitative easing programme wrong, then the value of money Fiat relative to real assets will dwindle," he added.

Gold was seen as a safe haven asset during the financial crisis, as many investors considered it a less risky investment than stocks and shares.

As the economic outlook improves gold is also being bought as a hedge against inflation, which analysts say may soar as the economy recovers.

A Federal Reserve report this week said the pace of the recession slowed or stabilized in most areas of the United States. [iD:nN29285802]

"Everyone agreed that sentiment is better than it was a few months ago, but none of the structural problems have yet been fixed. Double-digit inflation two or three years down the line is a very real possibility," Charlesworth said.

NOTE: Highlights & strike out editing are mine....unaltered article at address link above

Flying,

While I do appreciate these arguments as a bull argument for buying gold, I hope you can see that the very same arguments can be used for being slightly negative.

When 20 out of 22 fund managers are bullish on gold then only 2 are not. Future circumstances are therefore just as likely (or not more) to turn more people into sellers than buyers. Someone showed a good chart of how bullish futures positions were inversely correlated to price.

The other side of your argument relates to essentially that the reason for this is QE, which in its purest form is creating money to buy Government debt. In a more quazi form it amounts to a bank like the Fed expanding its balance sheet to buy what ever it chooses.

The case for 'QE' leading to excess monetary growth is increasingly dodgy. The concept that excess monetary supply growth in real terms relative to gold growth implies debasement of cash or general out performance of gold is much more solid.

Without going into all the arguments about why any expansion of the Fed's balance sheet doesnt necessarily result in big increase in monetary aggregates - I hope it is fair to say this - the expansion took place 9 months ago - broad based monetary aggregates are now growing at levels v. gold that are around their lowest levels for 15 years and amongst the lowest for 50.

Look at the difference between M1 and M2 in the depression....

http://www.sjsu.edu/faculty/watkins/depmon.htm

[flying]

When 20 out of 22 fund managers are bullish on gold then only 2 are not. Future circumstances are therefore just as likely (or not more) to turn more people into sellers than buyers.

While I do not dismiss the fact that it could or could not be a good investment.....

I do not think everyone is buying silver & gold strictly with the thought of making a profit.

Gold & Silver is money

The managers I met in the U.S. know that if the politicians get the quantitative easing programme wrong, then the value of money Fiat relative to real assets will dwindle

I do see the same reason as quoted above by those managers being a real enough possibility to have a portion of liquid assets in PM's. It is just a personal choice & I am not expecting you or others to hold this money...(In fact I rather hope most do not) ....

Folks could go on for days back & forth showing charts & possible scenarios.

What is the difference? It is a personal choice based on my lack of faith in the decisions being made by the government here. You know ultimately the central banks & other countries probably hold it for the very same value/hedge/reason.

Profiting as an investment could be a side benefit who knows...

I am not really sure what your premise is in all of these posts you make.

Is it that you want to buy PM's but have mixed feelings?

Is it that you worry that others are getting set up to be burned?

Then again you are not the first poster down on PM's & Mr. Naam pounds us regularly

Edited August 1, 2009 by flying

[Naam]

Then again you are not the first poster down on PM's & Mr. Naam pounds us regularly

- Mr Naam pounds only wet dreams and a bunch of fairy tales he hears since 35 years (price of gold will explode any time from now),

- Mr Naam thinks it is wise to hedge a shitty currency with gold,

- Mr Naam does not object that prudent Mrs Naam has stashed away an amount of physical gold equivalent to one year's expenses,

- Mr Naam belittles those who are trying to bullshit others and claim they have bought gold some years JUST BEFORE the metal started to appreciate

and

- Mr Naam has a benign smile on his otherwise ugly face when he reads "...for thousands of years" and the like.

to be continued...

[flying]

- Mr Naam pounds only wet dreams since 35 years

- Mr Naam thinks it is wise to hedge a shitty currency with gold,

- Mr Naam does not object that prudent Mrs Naam has stashed away an amount of physical gold equivalent to one year's expenses,

- Mr Naam belittles those who are trying to bullshit others and claim they have bought gold some years JUST BEFORE the metal started to appreciate

and

- Mr Naam has a benign smile on his otherwise ugly face when he reads "...for thousands of years" and the like.

Well I agree with 4 out of 5 things you said

As long as you mean you have a benign smile because it is true?

If not then 3 out of 5

Edited August 2, 2009 by flying

[Abrak]

It is a personal choice based on my lack of faith in the decisions being made by the government here. You know ultimately the central banks & other countries probably hold it for the very same value/hedge/reason.

Profiting as an investment could be a side benefit who knows...

I am not really sure what your premise is in all of these posts you make.

Is it that you want to buy PM's but have mixed feelings?

Is it that you worry that others are getting set up to be burned?

Then again you are not the first poster down on PM's & Mr. Naam pounds us regularly

I really come from the position of someone who used to own gold and has recently sold it

This call was mostly based on the fact that based on the fundamentals as I see them, they have a) deteriorated while gold has gone up gold looks to be overvalued as well as over recommended and even possibly overowned.

I dont particularly argue this with much conviction as I am not entirely sure I understand gold's fundamentals. But if I do it appears a sell and if I dont, I shouldnt really be holding it.

But I agree it is all very much a personal choice. I can understand peoples bias towards holding it even if the price doesnt go up. I have a bias towards not holding it even if the price goes down as I think it gives the wrong impression of what exactly it is to the holder.

[flying]

I really come from the position of someone who used to own gold and has recently sold it

This call was mostly based on the fact that based on the fundamentals as I see them, they have a) deteriorated while gold has gone up gold looks to be overvalued as well as over recommended and even possibly overowned.

I dont particularly argue this with much conviction as I am not entirely sure I understand gold's fundamentals. But if I do it appears a sell and if I dont, I shouldnt really be holding it.

But I agree it is all very much a personal choice. I can understand peoples bias towards holding it even if the price doesnt go up. I have a bias towards not holding it even if the price goes down as I think it gives the wrong impression of what exactly it is to the holder.

Ah I see

Well hopefully you sold at a good time & enjoyed a nice profit.

Everyone has their reasons.

Your statement about needing to understand is interesting.

I dont particularly argue this with much conviction as I am not entirely sure I understand gold's fundamentals. But if I do it appears a sell and if I dont, I shouldnt really be holding it.

I say interesting because although I have not been *in* the markets since 2000 (per investing, trading )

The one thing I remember most is at the end of a day when it comes to markets, Nothing is ever written in stone... charts, fundamentals etc..No hard rules when something can be driven by news, fears, corruption, sentiment etc. It will do the oddest things at times. I will agree that if one was thinking about it gold would seem past its prime. I mean in the same way in 1929 Kennedy said he knew it was time to short the market when the shoe shine guy started giving him stock tips.

But then again as I said above it is sometimes moved by more than fundamentals that scream this cannot be happening eh? For myself holding seems the likely thing to do & I have room from my entry to do so. I am not a zealot & have no intention of losing money on the deal either.

But if I were wondering about the fundamentals I would say gold is & always was a safe haven for many during times of economic upheaval. I have a feeling most still feel that way....for now.

I know from your posts that you see many green shoots or have read about them & I think you said something along the lines of it would be unwise not to believe them. That again could be true but is not what I am*seeing*. I am only seeing a reaction to our sorry government throwing tons of their worthless zeros onto the balance sheet & yes it has in fact had an effect.

But since this effect is only caused by what I see as worthless zeros I do not see it as honest sustainable improvements/growth. The curtain will more than likely fall on this.

Good Luck with your decision !

Edited August 2, 2009 by flying

[Naam]

for the record: if USD remains at present levels vs. other major currencies (JP¥, €UR, AUD, CAD) and gold crosses $1,100/ounce i will buy that worthless metal which has no intrinsic value at all like a madman.

if not, i will continue to admire the gold jewelry (nearly all was designed by my [not so] humble self) when Mrs Naam wears it (studded with some "stones") around her neck, wrists and on her ears and fingers. i will also always treasure and hold in high esteem two gold coins which were worn as pendants by my beloved late mother and my beloved late mother-in-law.

Edited August 2, 2009 by Naam

[flying]

for the record: if USD remains at present levels vs. other major currencies (JP¥, €UR, AUD, CAD) and gold crosses $1,100/ounce i will buy that worthless metal which has no intrinsic value at all like a madman.

if not, i will continue to admire the gold jewelry (nearly all was designed by my [not so] humble self) when Mrs Naam wears it (studded with some "stones") around her neck, wrists and on her ears and fingers. i will also always treasure and hold in high esteem two gold coins which were worn as pendants by my beloved late mother and my beloved late mother-in-law.

Interested in hearing your premise for waiting till 1100 though.

Who knows eh?

Would love to see a pic of those coin pendants.

I have seen some nice pieces made from various coins.

[Naam]

for the record: if USD remains at present levels vs. other major currencies (JP¥, €UR, AUD, CAD) and gold crosses $1,100/ounce i will buy that worthless metal which has no intrinsic value at all like a madman.

if not, i will continue to admire the gold jewelry (nearly all was designed by my [not so] humble self) when Mrs Naam wears it (studded with some "stones") around her neck, wrists and on her ears and fingers. i will also always treasure and hold in high esteem two gold coins which were worn as pendants by my beloved late mother and my beloved late mother-in-law.

1. Interested in hearing your premise for waiting till 1100 though.

2. Would love to see a pic of those coin pendants.

1. i am not "waiting"

2. unfortunately i don't have any pictures. they are ancient coins which i bought during my "ancient" time in the Middle East and had three of them made into pendants.

[Abrak]

2. .... which i bought during my "ancient" time in the Middle East and had three of them made into pendants.

Did you actually wear these pendants? Bling... bling...

[AlexLah]

He also has some golden teeth, didn't ya know?

[AlexLah]

Fortunately there is Alexlah, me have many pictures. Imagine summin like this...

[Abrak]

But if I were wondering about the fundamentals I would say gold is & always was a safe haven for many during times of economic upheaval. I have a feeling most still feel that way....for now.

I know from your posts that you see many green shoots or have read about them & I think you said something along the lines of it would be unwise not to believe them. That again could be true but is not what I am*seeing*. I am only seeing a reaction to our sorry government throwing tons of their worthless zeros onto the balance sheet & yes it has in fact had an effect.

But since this effect is only caused by what I see as worthless zeros I do not see it as honest sustainable improvements/growth. The curtain will more than likely fall on this.

Actually my slightly negative view about gold doesnt have have anything to do with my assumptions about growth. A statistical bounce in the economy was inevitable. To the extent it might look like a bit more it has just been given a few zeros.

I am less negative about inflation though (I dont see either hyper or deflation.) Although the market takes the same view it hasnt really been reflected in the gold price.

The gold price should go up when inflation expectations rise...

As well as rise when real interest rates fall ...

This can be seen in price movements in that the bottom of gold reflects the greatest difference between inflation and real yields, most of the upside was seen in the very sharp narrowing of this differential up to 2005 and the peak was when the inflation expectations were near their highs and the real yield at its lows relatively. That is a perfect storm for gold.

Since then real yields have risen and inflation expectations fallen, without much fall out for the gold price. As I see it inflation expectations will probably fall further and the real yield may well rise.

Edited August 2, 2009 by Abrak

[Naam]

2. .... which i bought during my "ancient" time in the Middle East and had three of them made into pendants.

Did you actually wear these pendants? Bling... bling...

they were presents for my mother, my mother-in-law and my wife.

[Abrak]

2. .... which i bought during my "ancient" time in the Middle East and had three of them made into pendants.

Did you actually wear these pendants? Bling... bling...

they were presents for my mother, my mother-in-law and my wife.

UH AH.... so has your mother ever worn it. I know I would be disinherated on the spot if I gave my mother such a thing. Looks ok with your hip hop pals I gess,,,,

Edited August 2, 2009 by Abrak

[Naam]

2. .... which i bought during my "ancient" time in the Middle East and had three of them made into pendants.

Did you actually wear these pendants? Bling... bling...

they were presents for my mother, my mother-in-law and my wife.

UH AH.... so has your mother ever worn it. I know I would be disinherated on the spot if I gave my mother such a thing. Looks ok with your hip hop pals I gess,,,,

your hip hop pals wear ancient gold coins as pendants?