Where Is Gold Going In This Market

[flying]

Another interesting article at FOFOA...

Snippet....

"It's the Debt, Stupid"

Why is global recapitalization impossible through fiat, yet inevitable through gold?

The answer is quite revealing.

It's the debt. Not the currency itself. The government could easily decree its money to be 50 times more valuable. It could announce that your taxes are cut to just 2% of what they used to be (in nominal terms), increasing the value of the currency already in circulation 50-fold. But the problem is all the private debt that's denominated in that currency!

For it to be a system-wide recapitalization, every debtor would have to pay (in real terms) 50x more than he signed up for. Salaries would be cut by 98% yet your debt would remain the same. If your monthly mortgage is $1,000 and your monthly income is $4,000, under a 50x fiat revaluation/recapitalization your mortgage would stay at $1,000/mo. and your income would drop to $80 per month. Can you see how this is impossible?

But gold is different. The (100%) holders of physical gold can become 50x wealthier and no debtor has to lift a pinky. (Someone holding 2% in physical gold would retain the same purchasing power.)

Full article at link above

[flying]

New highs in Euro for gold again today...

I imagine one Mrs. Naam is strutting about Mr. Naams office today with a smile

Also Silver up 4% here today...I think of not for the fact that silver is tied to industrial

components it would have gone long ago to new highs. But still think that is destined to change.

I was tempted last week when it got above the 70/1 GS ratio

Last time I bought Silver was 77/1 or $9.45/oz

I see it dropped back to 68/1 today

Edited June 7, 2010 by flying

[Naam]

New highs in Euro for gold again today... I imagine one Mrs. Naam is strutting about Mr. Naams office today with a smile

not yet because she is still sleeping. but in about five hours she will definitely be strutting around, producing most arrogant grimaces and making subtle derogatory comments about some "experts" who keep 44% of the portfolio value in cash at zero yield whereas bakers and butchers are busy preparing "for sale" signs.

[flying]

not yet because she is still sleeping. but in about five hours she will definitely be strutting around, producing most arrogant grimaces and making subtle derogatory comments about some "experts" who keep 44% of the portfolio value in cash at zero yield whereas bakers and butchers are busy preparing "for sale" signs.

:D

[lannarebirth]

So what about Copper? It ran up almost 600% in the time Gold ran up almost 400%. It really IS money. Almost as much utility (maybe more) as Gold, but at a tiny fraction of the price.

Looking back in 2000, they ran the Tech stocks while they had been distributing the rest ot the NYSE for a year and a half. In 2008 they ran oil while they sold the market off. All eyes focused on the runner.

[flying]

So what about Copper? It ran up almost 600% in the time Gold ran up almost 400%. It really IS money. Almost as much utility (maybe more) as Gold, but at a tiny fraction of the price.

Well copper is not my interest but as to it being money yes so is nickel & silver.

Copper has not even been able to reach its 2008 highs has it? In fact a good ways from it still.

As to what I said before about silver being somewhat held back by its industrial usage I tend to think it is because folks still tie it so to its industrial use & forget its monetary ability. I think it will come too...

But as to how much false paper silver there is...That may have to be dealt with first?

Beats me but I cannot ignore the fact that for me Silver is still outperforming gold both bought at the same time from 10/08

So copper..... gold is the money of kings silver is the money of gentlemen

Copper I have only ever used to by bubble gum from machines when I was a kid

I think most have the same feeling for it.

Now explain why Platinum & Palladium haver done so well?

Edited June 8, 2010 by flying

[lannarebirth]

So what about Copper? It ran up almost 600% in the time Gold ran up almost 400%. It really IS money. Almost as much utility (maybe more) as Gold, but at a tiny fraction of the price.

Well copper is not my interest but as to it being money yes so is nickel & silver.

Copper has not even been able to reach its 2008 highs has it? In fact a good ways from it still.

As to what I said before about silver being somewhat held back by its industrial usage I tend to think it is because folks still tie it so to its industrial use & forget its monetary ability. I think it will come too...

But as to how much false paper silver there is...That may have to be dealt with first?

Beats me but I cannot ignore the fact that for me Silver is still outperforming gold both bought at the same time from 10/08

So copper..... gold is the money of kings silver is the money of gentlemen

Copper I have only ever used to by bubble gum from machines when I was a kid

I think most have the same feeling for it.

I think if you were to conduct a survey as to which metal the world could most easily do without, Gold would come out a distant second.

Now explain why Platinum & Palladium haver done so well?

My theory is it is because their chart is constructive. That, and many people have more money than sense. I think at least one of them has some industrial utility as well.

[flying]

As Gold Hits Record, Central Banks in Focus

Yellow Metal Settles at $1,244 as Indications Emerge of a Shift Out of the Euro and Into Safer Assets

"This is a beginning, I am afraid," said Andy Smith, a senior metals strategist at Bache Commodities Group in London. "Gold is reflecting so many things that could possibly go wrong."

Full article at link

Edited June 10, 2010 by flying

[sokal]

I think if you were to conduct a survey as to which metal the world could most easily do without, Gold would come out a distant second.

A man once defined hel_l as a place where there is no reason and with a comment like that, you just dragged me into hel_l.

[badge]

A distant second? What metal is so more useless than Gold?

[Naam]

A distant second? What metal is so more useless than Gold?

Unobtainium (i think)

[churchill]

A distant second? What metal is so more useless than Gold?

Unobtainium (i think)

or Euronium

[lannarebirth]

I think if you were to conduct a survey as to which metal the world could most easily do without, Gold would come out a distant second.

A man once defined hel_l as a place where there is no reason and with a comment like that, you just dragged me into hel_l.

The choices were Copper and Gold. Would anyone really notice if there were no more Gold? How about Copper?

[churchill]

I think if you were to conduct a survey as to which metal the world could most easily do without, Gold would come out a distant second.

A man once defined hel_l as a place where there is no reason and with a comment like that, you just dragged me into hel_l.

The choices were Copper and Gold. Would anyone really notice if there were no more Gold? How about Copper?

Copper + Gold = Silver ?

[lannarebirth]

I think if you were to conduct a survey as to which metal the world could most easily do without, Gold would come out a distant second.

A man once defined hel_l as a place where there is no reason and with a comment like that, you just dragged me into hel_l.

The choices were Copper and Gold. Would anyone really notice if there were no more Gold? How about Copper?

Copper + Gold = Silver ?

Never mind.

[churchill]

So which one Gold / Silver / Copper is the best bet in today's market in your opinion ?

with the risk of Governments printing more money /

They want to create employment and will keep printing until they do - but are more likely to encourage inflation

Charts give good probabilities but that is all and with a further dip likely copper may come in at no 3

Silver is a good middle man IMO /

[sokal]

I think if you were to conduct a survey as to which metal the world could most easily do without, Gold would come out a distant second.

A man once defined hel_l as a place where there is no reason and with a comment like that, you just dragged me into hel_l.

The choices were Copper and Gold. Would anyone really notice if there were no more Gold? How about Copper?

peasants wouldn't notice(not to mention any names)

[sokal]

Never mind.

So gold isn't money ?

I guess you think the central banks will fill their vaults with lumber. Good luck with those lumber futures.

[flying]

A distant second? What metal is so more useless than Gold?

Unobtainium (i think)

or Euronium

:D

[sokal]

FOFOA has a new piece out today. FOFOA basically says you will get rich by hoarding as much bullion as you can. Not all gold bugs look at it that way.

[badge]

hehe

11/06 15:30 - Iran President: US Dollars Are Worthless Paper

(MORE TO FOLLOW) Dow Jones Newswires

June 11, 2010 04:30 ET (08:30 GMT)

[churchill]

"US pension schemes, in particular, have been buying gold, including the Teachers Retirement Scheme of Texas and the New Jersey Division of Investment. The former scheme invested $125m in the SPDR Gold Trust last October and a similar amount in precious metal mining stocks, setting up a separate gold portfolio to hold the investments, according to the World Gold Council."

FT.com / FTfm / Investment strategy - Record inflows for gold funds

I think this will increase as gold prices rise with more funds having to hold gold as a % - Many have been waiting for gold to fall before investing - This may not happen and there may be a surge as people think they may have missed the boat -

[churchill]

Some interesting charts

Dan Caldwell (10 Per Page) - Public ChartList - Free Charts - StockCharts.com[s200377054]&disp=O

[churchill]

Low interest rates to keep gold rally going for years

The Next Move for Gold

There’s no doubt the financial world is facing a lot of uncertainty. The failure of the Euro experiment, ballooning government debts and deficits, and a general economic malaise have all sent investors running into the perceived safety of corporate and government bonds (they seem safe now, but rising interest rates will destroy their value).

This flight to safety has actually been the greatest catalyst for gold prices. Investors piling money into bonds have kept long-term interest rates very low and Bernanke has kept short-term interest rates near zero. And low rates have been driving gold prices higher.

In the “Real” Reason it’s Too Early to Bet Against Gold we wrote:

The main driver for gold prices is real interest rates.

Real interest rates are calculated by taking the nominal rate of interest (what is actually paid) and subtracting inflation.

Right now real interest rates are negative. They’re below zero. And the impact of negative real interest rates is always the same, asset bubble.

And when there’s no predominant “story” like the Internet is going to change the world, China will take over the world, or the world is running out of oil, investment dollars inevitably turn to gold.

One Trend to Make Your Friend

Despite Bernanke’s confusion, this is what we’re seeing play out right now.

The chart below shows gold compared to the yield on the benchmark 10-year U.S. Treasury bond:

There’s a clear correlation over the long run: interest rates down, gold up.

And this trend isn’t about to change anytime soon.

Bernanke’s Bind

There’s just no politically feasible way out in the short-term. All of the stimulus money, welfare/unemployment spending, and other efforts to delay the inevitable debt liquidation have put Bernanke in a bind.

He has two options. He can keep interest rates low, allow the economy to trudge along dipping in and out of recession, and keep investors buying bonds. Or he can raise rates and induce a Volker-style recession to eliminate the capital misallocations.

The choices are killing the economic “recovery” or eliminating the forming gold bubble.

Regrettably, for long-term focused investors, the short-term, politically viable option of keeping interest rates low and hoping everything works out has been, is, and will be the preferred solution for a long time to come.

The Bubble Nears

There’s no way out of the gold bubble at this point. There has been so much money created, the savings rate has increased so much, and it will be nearly impossible to draw it all back in once credit demand returns and the money multiplier effect gets rolling.

Sure, government debts and deficits are getting all the headlines, fears over the tax increases looming next year kicking off the second dip of a double dip recession, and a general lack of faith in fiat currencies has contributed greatly to gold’s rise, but it’s extremely low interest rates that will keep the gold rally going for years to come.

It’s simple really. Bernanke may not get, but we do. And this situation has bubble written all over it so different rules apply.

Value doesn’t matter, price does. Housing, tech stocks, Asia, oil…they’ve all been the same. The more they went up, the more people wanted them. Gold is no different. No one wanted gold at $300 or $500 an ounce. There has been considerably more interest at $1,000 an ounce. The record run-up to $1250 an ounce has only compounded demand. As the trend continues, gold demand will increase exponentially as it rises to $1500, $2000, and beyond.

Unless you’re expecting a bit of honesty and courage from politicians, buy gold and silver.

Low interest rates to keep gold rally going for years | 12 June 2010 | www.commodityonline.com

[teletiger]

Remember that "Moronic" rumour about containers full of Deutsche Marks and Germany leaving the Euro?......It's back.

Boersennews.de reintroduces Deutsche Mark stock prices (4749) | börsennews.de

Deutsche Mark Quotations Restored At German Financial Portal | zero hedge

"Jim Rickards' observation that Germany and Russia could be very well considering a new gold- and oil-backed currency, does not seem all that very ludicrous to us.In fact, should the two countries indeed be in such deliberations (and for their literal recent proximity , look no further than the seating chart in this year's Mayday parade in Moscow), the end of fiat could be approaching much faster than previously expected".

Regards.

[Naam]

Remember that "Moronic" rumour about containers full of Deutsche Marks and Germany leaving the Euro?......It's back.

Boersennews.de reintroduces Deutsche Mark stock prices (4749) | börsennews.de

Deutsche Mark Quotations Restored At German Financial Portal | zero hedge

"Jim Rickards' observation that Germany and Russia could be very well considering a new gold- and oil-backed currency, does not seem all that very ludicrous to us.In fact, should the two countries indeed be in such deliberations (and for their literal recent proximity , look no further than the seating chart in this year's Mayday parade in Moscow), the end of fiat could be approaching much faster than previously expected".

Regards.

it's a done deal. the currency will be called "Russki-Germanski RubbleMark"

[Naam]

"Jim Rickards" is ingesting illegal substances!

[sokal]

"Jim Rickards" is ingesting illegal substances!

I will gladly take the other side of that bet and say Bernanke is ingesting illegal substances.

[Naam]

"Jim Rickards" is ingesting illegal substances!

I will gladly take the other side of that bet and say Bernanke is ingesting illegal substances.

what has Bernanke to do with the €UR and Deutsche Mark?

[flying]

Hey Naam dont let the missus see this one

That would be one hard to hide coin

Colossal Canadian gold coin going up for auction

Edited June 15, 2010 by flying