Where Is Gold Going In This Market

[flying]

The next few weeks and possibly months should tell us whether it will dip significantly if at all, before resuming the upwards trajectory that we all expect

Maybe Dollar-Cost-Average is the best strategy for gold right now because of this uncertainty - when it's stacked like this, take the timing out of the equation???

Agreed & I definitely think it will continue the upward trajectory you mention.

Then again nothing has happened to suggest otherwise.

[Naam]

"Maybe Dollar-Cost-Average is the best strategy for gold right now because of this uncertainty - when it's stacked like this, take the timing out of the equation???"

although i fully agree that timing seems to be quite difficult i would like to mention that there are only few things which i hate more than "cost averaging".

a few examples: milk at any temperature, cereals for breakfast, coitus interruptus, whining Farangs in Thailand and "averaging down". cost averaging means "i have no bloody idea but put my money on <insert asset> and hope the <inserted asset> provides a good yield". averaging down is the consolation "initially i bought expensive, but hey... my average price is only x% higher then today's price."

[lannarebirth]

The next few weeks and possibly months should tell us whether it will dip significantly if at all, before resuming the upwards trajectory that we all expect

Maybe Dollar-Cost-Average is the best strategy for gold right now because of this uncertainty - when it's stacked like this, take the timing out of the equation???

Agreed & I definitely think it will continue the upward trajectory you mention.

Then again nothing has happened to suggest otherwise.

If it continues upward without building a foundation first, it will be the final upward move (though it could be considerable) to the cycle begun in 2001 IMHO. A foundation would require sideways action for a considerable period or a retest of its previous breakout.

Edited May 28, 2010 by lannarebirth

[Samuian]

missing the gold price / dollar / dollar depreciation ratio taken into accounting here!

the US$, £, € and some other currencies depreciated (f.E.) to the ThB a lot during the past 2 years...

"cost of living"hasn't really gone up... as many claim!

As the exchange rate is still well above the pre SEA Financial crash!

Fact is that there have been a couple of wonderful years... almost like a free lunch, when the Euro stood 54 against the Baht or the Pond was cruising above the 70 mark... but yeah' the experts, take it as a gift, those days, for now they are over, others are reaping the benefits of a low currency now - gold? yep I sold it, nearly all - made a nice profit and bought madam a nice Burmese ruby... don't like diamonds though', very pricey carbon allotrope, less stable then graphite and at best the buyer/investor might end up with silicon carbide - greetings from Russia!

ah'well......

[Gambles]

"Maybe Dollar-Cost-Average is the best strategy for gold right now because of this uncertainty - when it's stacked like this, take the timing out of the equation???"

although i fully agree that timing seems to be quite difficult i would like to mention that there are only few things which i hate more than "cost averaging".

a few examples: milk at any temperature, cereals for breakfast, coitus interruptus, whining Farangs in Thailand and "averaging down". cost averaging means "i have no bloody idea but put my money on <insert asset> and hope the <inserted asset> provides a good yield". averaging down is the consolation "initially i bought expensive, but hey... my average price is only x% higher then today's price."

Naam, Admit it you just don't like it when you're not in control of the situation (i.e. gold price right now). But then in terms of your own gold holdings you are - if it dips I wouldn't be surprised if you bought more which is a form of averaging...... chai mai??

BTW the first 4 things on your list of hates - are they separate events or did you mean if that happens all at the same time - a naked woman serves you muesli with milk and just when it's getting interesting you're interrupted by a visitor from TV complaining about the price of Somtam and saying that he's leaving here for good yet again??

BTW are holding any subordinated perps/PIBS? I've turned very, very negative on these in the last few days just because I was asked to think about them again and I didn't like where my thoughts took me......

Edited May 28, 2010 by Gambles

[churchill]

An article from the FT that explains why Gold is going up and likely to go up more until Governments sort out their finances - and that won't be any time soon /

"The only currency that can’t be printed on a whim

You probably think gold is in a bubble. After all, it hit new highs in dollars, pounds and euros this week – and has pretty much quintupled since its lows of 2001.

What’s more, everyone from Germany to China is still nuts for it. Earlier in the week, this newspaper reported that the Germans have been snapping up coins and gold bars faster than they did even in the aftermath of the Lehman Brothers’ collapse. In the UAE, you can buy bars direct from a vending machine. At Harrods, you can pick up a variety of gold coins over the counter. And – as the gold bears are keen to point out – you can see ads for the purchase of gold all over TV.

But look at the actual price of gold and it is hard to see real evidence of a bubble. Gold may have hit new highs in nominal terms, but it hasn’t come close to hitting its old highs in real terms. Adjust the 1980 high of $850 for US inflation and you get a price of around $2,400 – a level only the most bullish are predicting even now.

Then look to the last few years. The bears would have you believe that the gold price has somehow gone “parabolic”. But, in fact, the price in US dollars has only risen around 25 per cent in the last two years.

Compare that with, say, shares in Rockhopper Exploration, the lucky owner of the prospects where oil was struck off the Falklands the week before last. Its shares started the month at around 40p and have since more than quadrupled. But no-one is shouting “bubble!”. Far from it. Instead, they are all claiming the company has seen a transformational event, which makes its shares worth more than they are even now (which arguably they are).

But hasn’t there been a transformational global event that has changed the case for gold, too?

Back when gold’s bull run kicked off, there were precious few gold bugs and we tended to make the case for the metal based on likely demand for “bling” from the new middle classes of emerging markets. We only mentioned in passing the fast rising US national debt and the nagging fear that fiat currencies might not be all they were cracked up to be.

Today, however, gold has reverted to its historical role as the global currency of the last resort. You no longer buy it because you think the Chinese and Russians are likely to up their consumption of gold- plated mobile phones. You buy it because you think there is a chance that governments, caught in a debt trap from which there is no honourable escape, will eventually think they have no choice but to print their way out of it. And the risk of hyperinflation is a transformational event for gold – it being the only global currency that can’t be printed on the whim of a central bank. "

continued .. http://www.ft.com/cms/s/2/d6a8da26-64fd-11...144feab49a.html

[Gambles]

An article from the FT that explains why Gold is going up and likely to go up more until Governments sort out their finances - and that won't be any time soon /

"The only currency that can't be printed on a whim

You probably think gold is in a bubble. After all, it hit new highs in dollars, pounds and euros this week – and has pretty much quintupled since its lows of 2001.

What's more, everyone from Germany to China is still nuts for it. Earlier in the week, this newspaper reported that the Germans have been snapping up coins and gold bars faster than they did even in the aftermath of the Lehman Brothers' collapse. In the UAE, you can buy bars direct from a vending machine. At Harrods, you can pick up a variety of gold coins over the counter. And – as the gold bears are keen to point out – you can see ads for the purchase of gold all over TV.

But look at the actual price of gold and it is hard to see real evidence of a bubble. Gold may have hit new highs in nominal terms, but it hasn't come close to hitting its old highs in real terms. Adjust the 1980 high of $850 for US inflation and you get a price of around $2,400 – a level only the most bullish are predicting even now.

Then look to the last few years. The bears would have you believe that the gold price has somehow gone "parabolic". But, in fact, the price in US dollars has only risen around 25 per cent in the last two years.

Compare that with, say, shares in Rockhopper Exploration, the lucky owner of the prospects where oil was struck off the Falklands the week before last. Its shares started the month at around 40p and have since more than quadrupled. But no-one is shouting "bubble!". Far from it. Instead, they are all claiming the company has seen a transformational event, which makes its shares worth more than they are even now (which arguably they are).

But hasn't there been a transformational global event that has changed the case for gold, too?

Back when gold's bull run kicked off, there were precious few gold bugs and we tended to make the case for the metal based on likely demand for "bling" from the new middle classes of emerging markets. We only mentioned in passing the fast rising US national debt and the nagging fear that fiat currencies might not be all they were cracked up to be.

Today, however, gold has reverted to its historical role as the global currency of the last resort. You no longer buy it because you think the Chinese and Russians are likely to up their consumption of gold- plated mobile phones. You buy it because you think there is a chance that governments, caught in a debt trap from which there is no honourable escape, will eventually think they have no choice but to print their way out of it. And the risk of hyperinflation is a transformational event for gold – it being the only global currency that can't be printed on the whim of a central bank. "

continued .. http://www.ft.com/cms/s/2/d6a8da26-64fd-11...144feab49a.html

Thanks Churchill,

Good stuff

Actually I understand the long term supply and demand arguments; it's the short term pricing where my uncertainty resides

[Naam]

"What’s more, everyone from Germany to China is still nuts for it. Earlier in the week, this newspaper reported that the Germans have been snapping up coins and gold bars faster than they did even in the aftermath of the Lehman Brothers’ collapse."

if everyone is "nuts for it" why has Gold not appreciated a single copper penny during the last six months? one can understand the Germans because they are scared what the EUR is doing. the Chinese however have their currency pegged to the USD and pressure is on revaluation of the CNY. whatever they "snapped up" since end of last year yielded zilch. just to mention a fact

[Naam]

"Maybe Dollar-Cost-Average is the best strategy for gold right now because of this uncertainty - when it's stacked like this, take the timing out of the equation???"

although i fully agree that timing seems to be quite difficult i would like to mention that there are only few things which i hate more than "cost averaging".

a few examples: milk at any temperature, cereals for breakfast, coitus interruptus, whining Farangs in Thailand and "averaging down". cost averaging means "i have no bloody idea but put my money on <insert asset> and hope the <inserted asset> provides a good yield". averaging down is the consolation "initially i bought expensive, but hey... my average price is only x% higher then today's price."

1. Naam, Admit it you just don't like it when you're not in control of the situation (i.e. gold price right now).

2. But then in terms of your own gold holdings you are - if it dips I wouldn't be surprised if you bought more which is a form of averaging...... chai mai??

3. BTW the first 4 things on your list of hates - are they separate events or did you mean if that happens all at the same time - a naked woman serves you muesli with milk and just when it's getting interesting you're interrupted by a visitor from TV complaining about the price of Somtam and saying that he's leaving here for good yet again??

4. BTW are holding any subordinated perps/PIBS? I've turned very, very negative on these in the last few days just because I was asked to think about them again and I didn't like where my thoughts took me......

1. guilty as charged Your Honour

2. i am not in charge of gold purchases, Mrs. Naam is and she is presently in Singapore... i fear the worst

3. even the most attractive nekkid woman cannot turn me on if she carries a bowl with cereals and milk (muesli and orange juice are acceptable if she has big knockers, a big behind and is willing to pick up nuts and raisins which i throw on the floor without bending her knees).

4. i turned negative on most subs some weeks ago, pruned my positions down to a mere three and cashed in. my problem is what to do with the surplus cash. i always carry ample cash but when it gets too much it makes me cranky

p.s. one can still find good value in €UR denominated subs provided they are LT2.

[Abrak]

"What’s more, everyone from Germany to China is still nuts for it. Earlier in the week, this newspaper reported that the Germans have been snapping up coins and gold bars faster than they did even in the aftermath of the Lehman Brothers’ collapse."

if everyone is "nuts for it" why has Gold not appreciated a single copper penny during the last six months? one can understand the Germans because they are scared what the EUR is doing. the Chinese however have their currency pegged to the USD and pressure is on revaluation of the CNY. whatever they "snapped up" since end of last year yielded zilch. just to mention a fact

To be fair to the FT, I think they meant to imply that 'everyone is nuts for it' was a reason why it was a bubble and the price should go down rather a reason to buy it. And they were making the argument that 'despite this' gold is not really in true bubble territory.

[Abrak]

i always carry ample cash but when it gets too much it makes me cranky

I totally agree, my only consolation is that to the extent it is making me cranky, I suspect it might be the right think to hold.

[flying]

if everyone is "nuts for it" why has Gold not appreciated a single copper penny during the last six months? :

I would not be surprised if all the while the many who talk trash about gold are not in fact buying up physical gold. As even you ( I think?) said long ago ...why would one like China broadcast intentions & drive the price up? That line of thought works at lower than CB levels too.

Dont let the paper tiger gold confuse you. The paper priced gold is not gold. Physical is being bought.

The paper price can & will be manipulated the physical cannot be manipulated. As for it not going crazy for a few month many call that basing & like it. What is interesting though is the relation to crude. Seems more & more crude is deciding where paper gold is going.

Lastly gold has gone up a little more than a single copper penny in the currency I use here

Not to say it cannot go down but at this time I do not see repairs to the major systems occurring. After all that is really what has driven the price of gold isn't it? The loss of faith in paper & ink

[Naam]

Dont let the paper tiger gold confuse you. The paper priced gold is not gold. Physical is being bought. The paper price can & will be manipulated the physical cannot be manipulated.

i don't understand Flying. there is no price difference except the surcharge when buying coins are tiny ingots.

[flying]

Dont let the paper tiger gold confuse you. The paper priced gold is not gold. Physical is being bought. The paper price can & will be manipulated the physical cannot be manipulated.

i don't understand Flying. there is no price difference except the surcharge when buying coins are tiny ingots.

Correct Sir !

But... There is a big difference in actual worth. The physically held gold ( like Mrs Naam's ) is worth every bit of that price.

Actually more because as you mentioned the premium exists on coins & to a lesser extent bullion.

But the paper is worth only the promise that backs it. The promise that there actually exists such amounts of gold or any other PM.

There may come a time when folks actually want their gold.

Those that have it have it...Those that have paper have a promise for gold & it need only be refunded in fiat if the issue is pressed.

Musical chairs......

Edited May 28, 2010 by flying

[sokal]

"Maybe Dollar-Cost-Average is the best strategy for gold right now because of this uncertainty - when it's stacked like this, take the timing out of the equation???"

although i fully agree that timing seems to be quite difficult i would like to mention that there are only few things which i hate more than "cost averaging".

a few examples: milk at any temperature, cereals for breakfast, coitus interruptus, whining Farangs in Thailand and "averaging down". cost averaging means "i have no bloody idea but put my money on <insert asset> and hope the <inserted asset> provides a good yield". averaging down is the consolation "initially i bought expensive, but hey... my average price is only x% higher then today's price."

Some people know exactly where to put there money for the next 5 years but the problem is the market is full of morons. That goes for all asset classes. Just because some idiot sells an asset for less then what you paid for it, doesnt mean you dont know what you are doing.

Never over estimate the intelligence of investors.

[sokal]

The next few weeks and possibly months should tell us whether it will dip significantly if at all, before resuming the upwards trajectory that we all expect

Maybe Dollar-Cost-Average is the best strategy for gold right now because of this uncertainty - when it's stacked like this, take the timing out of the equation???

Agreed & I definitely think it will continue the upward trajectory you mention.

Then again nothing has happened to suggest otherwise.

If it continues upward without building a foundation first, it will be the final upward move (though it could be considerable) to the cycle begun in 2001 IMHO. A foundation would require sideways action for a considerable period or a retest of its previous breakout.

Final upward move

[sokal]

missing the gold price / dollar / dollar depreciation ratio taken into accounting here!

the US$, £, € and some other currencies depreciated (f.E.) to the ThB a lot during the past 2 years...

"cost of living"hasn't really gone up... as many claim!

As the exchange rate is still well above the pre SEA Financial crash!

Fact is that there have been a couple of wonderful years... almost like a free lunch, when the Euro stood 54 against the Baht or the Pond was cruising above the 70 mark... but yeah' the experts, take it as a gift, those days, for now they are over, others are reaping the benefits of a low currency now - gold? yep I sold it, nearly all - made a nice profit and bought madam a nice Burmese ruby... don't like diamonds though', very pricey carbon allotrope, less stable then graphite and at best the buyer/investor might end up with silicon carbide - greetings from Russia!

ah'well......

If the BHT is appreciating against the reserve currency then obviously the cost of living in Thailand will have gone down. Commodities are priced in US dollars. Yet allot of people in this world think that its good to have a devalued currency.

[sokal]

"What's more, everyone from Germany to China is still nuts for it. Earlier in the week, this newspaper reported that the Germans have been snapping up coins and gold bars faster than they did even in the aftermath of the Lehman Brothers' collapse."

if everyone is "nuts for it" why has Gold not appreciated a single copper penny during the last six months? one can understand the Germans because they are scared what the EUR is doing. the Chinese however have their currency pegged to the USD and pressure is on revaluation of the CNY. whatever they "snapped up" since end of last year yielded zilch. just to mention a fact

In what fiat currency ? In Australia gold closed at $1127 in November, its now at $1432. Just a fact.

[lannarebirth]

The next few weeks and possibly months should tell us whether it will dip significantly if at all, before resuming the upwards trajectory that we all expect

Maybe Dollar-Cost-Average is the best strategy for gold right now because of this uncertainty - when it's stacked like this, take the timing out of the equation???

Agreed & I definitely think it will continue the upward trajectory you mention.

Then again nothing has happened to suggest otherwise.

If it continues upward without building a foundation first, it will be the final upward move (though it could be considerable) to the cycle begun in 2001 IMHO. A foundation would require sideways action for a considerable period or a retest of its previous breakout.

Final upward move

Oh yeah? We'll see who's smiling after flying sells you his Gold.

[Naam]

"What's more, everyone from Germany to China is still nuts for it. Earlier in the week, this newspaper reported that the Germans have been snapping up coins and gold bars faster than they did even in the aftermath of the Lehman Brothers' collapse."

if everyone is "nuts for it" why has Gold not appreciated a single copper penny during the last six months? one can understand the Germans because they are scared what the EUR is doing. the Chinese however have their currency pegged to the USD and pressure is on revaluation of the CNY. whatever they "snapped up" since end of last year yielded zilch. just to mention a fact

In what fiat currency ? In Australia gold closed at $1127 in November, its now at $1432. Just a fact.

in the Central African Republic and Burkina Faso it was even more profitable. just a fact.

but i referred to (i will copy and paste slowly that the slow readers or those who are reading impaired will understand too)

quote: "the Chinese however have their currency pegged to the USD and pressure is on revaluation of the CNY. whatever they "snapped up" since end of last year yielded zilch."

and before some clown nails me on "end of last year" i draw his attention to the fact that i actually meant and mentioned

quote: "...Gold not appreciated a single copper penny during the last six months?"

case closed, Deputy take this man into custody till he is sober, Bailiff... next!

[flying]

Oh yeah? We'll see who's smiling after flying sells you his Gold.

[sokal]

More inflation vs deflation debate

The dollar deflationists expect the dollar to suddenly reverse its 100 year long drop in purchasing power. Ain’t gonna happen. What the government is doing now – i.e. spending raw printed money into a contracting economy - assures us that we will end up with the hyperinflation of the dollar. The only thing they can do is prolong its demise with intermittent bouts of induced apparent “deflation” to keep the inflationary scam going a little bit longer - remember 2008? (h/t Gary). Initially, of course, many people (such as Mr. Denninger) – mistakenly thinking the dollar to be “money” – will rush to its perceived safety causing the dollar to rise. But ultimately, as more and more people realize that the government will not – indeed, cannot – stop inflating the currency into oblivion, will choose to hold the ultimate “marketable good”, i.e. Gold. This is the reason why Gold is the only asset class at new all time highs. Rest assured, even the big boys are holding Gold in their private vaults, not dollars.

[churchill]

Charts, Oil, Gold and Dollar

http://temo1051.blogspot.com/2010/06/chart...and-dollar.html

[flying]

Which chart would best show folks sentiment/faith in their countries fiat?

[churchill]

Iran to Change 45 Billion Euros for Dollars, Gold: Report

http://www.cnbc.com/id/37464422/

[teletiger]

Iran to Change 45 Billion Euros for Dollars, Gold: Report

http://www.cnbc.com/id/37464422/

They might have some trouble buying dollars due to current regs about dealing with Iran, so that's a lot of gold.

Regards.

[Abrak]

Iran to Change 45 Billion Euros for Dollars, Gold: Report

http://www.cnbc.com/id/37464422/

Arent these the same bozos who wanted all their oil paid in euros because the dollar was going down.

Gee.... the E Entertainment channel offers far better advice - think I will stick with that.

[flying]

Iran to Change 45 Billion Euros for Dollars, Gold: Report

http://www.cnbc.com/id/37464422/

Arent these the same bozos who wanted all their oil paid in euros because the dollar was going down.

Gee.... the E Entertainment channel offers far better advice - think I will stick with that.

All anyone can do is react to the mess...That is what they did. Why would they act any differently than many others?

They did see the dollar in serious need...also no small part as protest to US foreign policy.... & went Euro.

Now they see contagion attacking the Euro ...is it not smart to get out/reduce exposure ?

But more & more stacking gold as larger part of reserve

[Abrak]

All anyone can do is react to the mess...That is what they did. Why would they act any differently than many others?

They did see the dollar in serious need...also no small part as protest to US foreign policy.... & went Euro.

Now they see contagion attacking the Euro ...is it not smart to get out/reduce exposure ?

But more & more stacking gold as larger part of reserve

Forgetting the gold bit.... which I fully understand...

The answer to your question is 'NO' as a general rule it 'doesnt make sense chasing markets.'

So here we were 12 months ago saying that the dollar was a bunch of crap led by a central banker determined to make things crappier, so we switch to Euro. 12 months later we have seen the collapse in the Euro led by a Banana Republic determined to show that all Europeans are complete morons. (Obviously at this stage you interject that against this background a shiny piece of metal seems very attractive.)

But no, it doesnt make any sense at all in divesting something that 'people' believe is being rendered worthless into something else that 12 months later you wish to divest out of because you think it is being rendered worthless.

I remember Iran first announced this 'diversification' strategy it 'seemed quite smart' - now we actually know it is actually a deliberate attempt to 'panic at the bottom' strategy.

So 'Flying' the day they want all their oil settled in gold, I suspect it is time to jump ship. Iran, Jay-Z, Jennifer Lopez and 50 Cents - great contra-indicators.

[flying]

Forgetting the gold bit.... which I fully understand...

So 'Flying' the day they want all their oil settled in gold, I suspect it is time to jump ship.

Very short memory

Lets Truly forget the gold bit which you fully understand???

As for the rest perhaps it is easier to be calm with the amount of cash you hold compared to the amount of cash they hold?

Me? I assure you I do not know...but I am not surprised to see governments thrashing about like this & fully expect to see more.