Where Is Gold Going In This Market

[russianrobert]

" Owning a gold ETF is not the best way to own gold. In a real panic for gold, which is what will happen if investors finally lose confidence in Western paper money, there will be a demand for physical gold. Those investors who will be best positioned will be those who have the ability to deliver physical gold into the market."

no doubt about that. the real winners will be those who live in Nakhon Nowhere near the laotian border, having access to the Mekong, and are therefore able to ship their physical gold in no time to any place on this planet, respectively to the highest bidder and gladly accept paper money.

but perhaps that's wrong thinking? would anybody sell his/her physical gold when a real panic and a high demand for physical gold prevails? i am referring to people who can think logically and not to some brain-amputated ones.

The great gold bull will eventually turn into the great gold bubble and end like every other. Investors who sell into the final panic can make fortunes.

That being said, I expect the end game to be exceptionally wild, since unlike the other financial bubbles we have experienced in our lifetimes, the gold blowoff looks more and more likely to be accompanied by a catastrophic reset of the system, with massive government interference, and fear and confusion all around.

So even those who've guessed right on gold will have to be extraordinarily nimble in order to fully realize and bank their gains. That's why I participate in forums like this one, looking for end game ideas from like-minded investors.

I agree. Gold has had an exceptional run up lately. The higher it goes the harder it will eventually fall. Perhaps when interest rates start to rise in the states will be the catalist for bursting the bubble?

That seems like a long way off at the moment and i think the present bull market has a ways to run.

But as you say, you need an exit stratagy with gold at these levels.

[Naam]

crusader79

So even those who’ve guessed right on gold will have to be extraordinarily nimble in order to fully realize and bank their gains. That’s why I participate in forums like this one, looking for end game ideas from like-minded investor

russianrobert

I agree. Gold has had an exceptional run up lately. The higher it goes the harder it will eventually fall. Perhaps when interest rates start to rise in the states will be the catalist for bursting the bubble? That seems like a long way off at the moment and i think the present bull market has a ways to run. But as you say, you need an exit stratagy with gold at these levels.

getting out of gold is easy when one doesn't hold the metal physically. no exit strategy required selling mining shares, options, futures or any "paper gold". a few key strokes / clicks with the mouse, or a phone call, et voilà!

exiting is much more difficult when the gold bars / coins are kept in a safe, buried in the backyard or stored in another country. those who want to get rid of their physical silver, platinum or the like will have an even harder time to liquidate their holdings. but then... the hardcore believers in gold and other precious metals have no intention to sell and exit, no matter what the prices are doing. you don't believe me? ask my wife!

[crusader79]

crusader79

So even those who've guessed right on gold will have to be extraordinarily nimble in order to fully realize and bank their gains. That's why I participate in forums like this one, looking for end game ideas from like-minded investor

russianrobert

I agree. Gold has had an exceptional run up lately. The higher it goes the harder it will eventually fall. Perhaps when interest rates start to rise in the states will be the catalist for bursting the bubble? That seems like a long way off at the moment and i think the present bull market has a ways to run. But as you say, you need an exit stratagy with gold at these levels.

getting out of gold is easy when one doesn't hold the metal physically. no exit strategy required selling mining shares, options, futures or any "paper gold". a few key strokes / clicks with the mouse, or a phone call, et voilà!

exiting is much more difficult when the gold bars / coins are kept in a safe, buried in the backyard or stored in another country. those who want to get rid of their physical silver, platinum or the like will have an even harder time to liquidate their holdings. but then... the hardcore believers in gold and other precious metals have no intention to sell and exit, no matter what the prices are doing. you don't believe me? ask my wife!

Well, of course, but in a catastrophic end game paper securities all have potential problems, both imagined and unimagined (government shenanigans high on the list). Every single proponent of gold that I respect (Faber, Zulauf, Schiff, Wood,, etc.) advocates some portion of net worth in physical for that reason. For anyone who doesn't think catastrophic breakdown is possible there's perhaps no reason to own physical gold, although personally with today's enormous and growing economic imbalances, I'd rather be safe than sorry. I'm sure this forum has been over these issues many times before.

I keep half my gold in physical and half in a basket of mining shares to try to spread my risk. Fortunately I spend the majority of the year in Hong Kong where physical gold storage and trading is relatively fast and easy, although I worry that system may still break down in a final crisis.

I believe physical gold is expected to greatly outperform mining shares in the final stage of the bubble. When exactly to sell, and as you say how much not to sell, will be very difficult decisions, if and when a serious crisis and blowoff ensues.

ETFs still make me uneasy, as Warren Buffet famously said never invest in anything you don't fully understand. I just wonder whether in retrospect they'll end up being the CDOs of the gold bubble.

Anyway it sounds like Mrs. Naam has got you covered, women are great like that

[crusader79]

" Owning a gold ETF is not the best way to own gold. In a real panic for gold, which is what will happen if investors finally lose confidence in Western paper money, there will be a demand for physical gold. Those investors who will be best positioned will be those who have the ability to deliver physical gold into the market."

no doubt about that. the real winners will be those who live in Nakhon Nowhere near the laotian border, having access to the Mekong, and are therefore able to ship their physical gold in no time to any place on this planet, respectively to the highest bidder and gladly accept paper money.

but perhaps that's wrong thinking? would anybody sell his/her physical gold when a real panic and a high demand for physical gold prevails? i am referring to people who can think logically and not to some brain-amputated ones.

The great gold bull will eventually turn into the great gold bubble and end like every other. Investors who sell into the final panic can make fortunes.

That being said, I expect the end game to be exceptionally wild, since unlike the other financial bubbles we have experienced in our lifetimes, the gold blowoff looks more and more likely to be accompanied by a catastrophic reset of the system, with massive government interference, and fear and confusion all around.

So even those who've guessed right on gold will have to be extraordinarily nimble in order to fully realize and bank their gains. That's why I participate in forums like this one, looking for end game ideas from like-minded investors.

I agree. Gold has had an exceptional run up lately. The higher it goes the harder it will eventually fall. Perhaps when interest rates start to rise in the states will be the catalist for bursting the bubble?

That seems like a long way off at the moment and i think the present bull market has a ways to run.

But as you say, you need an exit stratagy with gold at these levels.

Agree the end still seems a long way off, but for the first time I'm starting to seriously think/worry about it. Churchill's old 'end of the beginning', I guess (not our Churchill, the other one

Yeah, a turn in interest rates must surely have enormous effects, just look at the dive after China's small increase.

But it seems to me that gold is being purchased to protect against two risks: (1) a decline in the purchasing power of fiat currencies and (2) a cataclysmic, perhaps hyperinflationary event that 'resets' the system. So whereas a turn in the interest rate cycle might temporarily hammer gold, perhaps in the longer run its rise might resume? If those two risks remain substantial.

Who knows, that's why I'll continue to read guys like Faber and Zulauf, who know a helluva lot more than I ever will, and have a very good track record on the big picture issues.

[cloudhopper]

getting out of gold is easy when one doesn't hold the metal physically. no exit strategy required selling mining shares, options, futures or any "paper gold". a few key strokes / clicks with the mouse, or a phone call, et voilà!

Until the day comes when you try to log on to your brokerage account and get "I'm sorry I'm afraid I can't do that Dr." and endless busy signals.

They don't call them "flash crashes" for nothing.

[Naam]

getting out of gold is easy when one doesn't hold the metal physically. no exit strategy required selling mining shares, options, futures or any "paper gold". a few key strokes / clicks with the mouse, or a phone call, et voilà!

Until the day comes when you try to log on to your brokerage account and get "I'm sorry I'm afraid I can't do that Dr." and endless busy signals.

They don't call them "flash crashes" for nothing.

for the umpteenth time i repeat that i wouldn't entrust any broker with more than the value of a dinner for two including a good bottle of wine. and should there be a flash crash that gold in paper gold in any form can't be traded then there is also no market for physical gold. of course, a global financial freeze would halt any trading. but in this case neither Carrefour, nor Friendship nor Tesco would sell food stuff and accept goldbars as payment.

:jap:

Edited October 20, 2010 by Naam

[cloudhopper]

... and should there be a flash crash that gold in paper gold in any form can't be traded then there is also no market for physical gold. of course, a global financial freeze would halt any trading. but in this case neither Carrefour, nor Friendship nor Tesco would sell food stuff and accept goldbars as payment.

:jap:

Should there be a sudden global financial freeze-up Tesco will still be accepting Baht notes for rice. But the banks might be on holiday or unable to wire/exchange any foreign currencies and the ATM screens all dark. There will always be those around who will exchange Baht gold for Baht notes.

[crusader79]

Well, I think the Tesco argument is a bit of a red herring. I continue to hold physical gold not to ensure I have food on the table, but because of the ease with which governments, singly or in concert, can so easily seize, freeze, tax, manipulate and otherwise creatively interfere with securitized gold. Wealthy families throughout history have protected themselves from worst case scenarios in the same way.

[teletiger]

I for one won't listen to your rhetoric.

your wisdom does hurt although it is completely irrelevant as far as my posting is concerned i am thinking of comitting suicide. perhaps buy a rope and shoot myself.

To be even more surreal......buy a gun and hang yourself. Hey, man, this gold is really, really gree....err, shiny.

Regards.

[Abrak]

I for one won't listen to your rhetoric.

your wisdom does hurt although it is completely irrelevant as far as my posting is concerned i am thinking of comitting suicide. perhaps buy a rope and shoot myself.

To be even more surreal......buy a gun and hang yourself. Hey, man, this gold is really, really gree....err, shiny.

Regards.

I dont really want to create a debate but I believe it is more surreal to buy a rope and shoot yourself than the other way round.

Still the really surreal thing will happen when those who buy gold for financial aramegeddon are faced with it. Martians have invaded the earth, all paper transactions have frozen never to return. The Martians say that in order to swap rice for a bar of soap you must use gold or you will be zapped by a Martian thingy. At that point the World's gold is worth more than New York, more than California, in fact it is worth as much as the whole of the

US put together. Demand is ridiculously high. But there will be someone going 'you just wait.... I tell you, you just wait.... soon the shit is really going to hit the fan......'.

[teletiger]

I dont really want to create a debate but I believe it is more surreal to buy a rope and shoot yourself than the other way round.

You've obviously never tried putting a slip-knot on a snub-nose.

Surreal would be letting the US buy, beg, steal all the worlds gold.....and then we (6.3 Billion non US) decide that gold is very overvalued after all. In fact, $5 per oz would cover it. Now silver?......different matter altogether.

Regards.

[Abrak]

Now silver?......different matter altogether.

Oh come on I am a Brit we have already run that particularly one to death at least twice...

(Although I do maybe own large amounts of silver (well paper junk actually) and have done for about 4 years without any real success apart from in the last month. I firmly believe that when financial Armageddon happens, then Brits and related Etonians will actually run the world and that digital cameras will be banned.)

[churchill]

I remember an exchange with Naam sometime ago about Germany's Gold reserves and all of this is speculation and unbelievable but where there is smoke ..

Currency War: Germany about to lose 66% of its gold reserves

http://www.chaostheo...reserves&page=1

Does this ring any bells for you?

http://www.cass.city.ac.uk/conferences/BFWG_Meeting2/1st%20July/3B_Taffler.pdf

Bubbles - You mean USD ?

[Naam]

Germany's Merkel accuses Obama of stealing her Gold.

http://www. naams_bullshit.org

[lannarebirth]

Germany's Merkel accuses Obama of stealing her Gold.

http://www. naams_bullshit.org

That's a valuation metric you know.

[Naam]

interesting graph!

[churchill]

Wow THB 75% Undervalued that is going to hurt many !

( Figures from ? US I'm sure !)

"Using OECD measures of PPP, one finds that INR is about 165% undervalued, THB, PHP, and TWD all about 75% undervalued, and CNY about 70% undervalued. So a case could be made for those four to be put in group 1 along with CNY. However, INR does not draw much attention because India remains a current account deficit country. The other three in Asia are surplus countries with very undervalued currencies, which would naturally draw the attention of US officials calling for a rebalancing of global growth."

Read more: http://www.creditwritedowns.com/2010/10/more-on-geithners-currency-classifications.html#ixzz135JpZzr3

[churchill]

Capital controls: new front in the ‘currency wars’

"Writing in the latest issue of his client newsletter Greed & Fear, Wood says it’s way too premature to worry about capital controls, or an asset bubble in Asia. Rather, incremental moves will only be made after further gains in currencies and asset values.

Concludes Wood:

Such a policy context will not end the Asian bull story. Rather it will only slow down and thereby extend the path to an asset bubble… True, Asian policymakers can crush asset bubble risk by raising interest rates aggressively and letting their currencies float. But it is unlikely in the extreme that Asian markets will be hit by such proactive tightening. In a world where US interest rates remain at zero, all sell-offs in Asian and emerging markets are buying opportunities. While asset prices in Asia are, in due course, going to become REALLY expensive."

http://ftalphaville.ft.com/blog/2010/10/22/375981/capital-controls-new-front-in-the-currency-wars/

[badge]

Ben Davies: Out of knowledge of money comes freedom

Submitted by cpowell on Fri, 2010-10-22 06:52. Section: Daily Dispatches 2:52a ET Friday, October 22, 2010

Dear Friend of GATA and Gold:

Ben Davies, CEO of Hinde Capital in London and the rising star of the gold world, was a sensation Thursday evening in his U.S. speaking debut at the fall dinner meeting of the Committee for Monetary Research and Education (www.CMRE.org) at the Union League Club in New York. His address is appended with a short preface, your secretary/treasurer's introduction of him at the meeting.

CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc.

http://www.gata.org/node/9189

[crusader79]

Ben Davies: Out of knowledge of money comes freedom

Submitted by cpowell on Fri, 2010-10-22 06:52. Section: Daily Dispatches 2:52a ET Friday, October 22, 2010

Dear Friend of GATA and Gold:

Ben Davies, CEO of Hinde Capital in London and the rising star of the gold world, was a sensation Thursday evening in his U.S. speaking debut at the fall dinner meeting of the Committee for Monetary Research and Education (www.CMRE.org) at the Union League Club in New York. His address is appended with a short preface, your secretary/treasurer's introduction of him at the meeting.

CHRIS POWELL, Secretary/Treasurer

Gold Anti-Trust Action Committee Inc.

http://www.gata.org/node/9189

Interesting, thanks.

[churchill]

G-20 Pledges to Avoid Devaluations in Push to Defuse Global Trade Tensions

"Today’s agreement will nevertheless encourage Asian nations to allow their exchange rates to rise without having to worry they will end up doing so alone and lose a trading edge, said Douglas Borthwick, head of foreign-exchange trading at Stamford, Connecticut-based Faros Trading. He said the yuan may rise to 6.60 per dollar in November from 6.66 yesterday and predicted the dollar will drop against the euro, yen and sterling.

For all the complaints it faces, China let the yuan gain the most against the dollar since 2005 in September and by more than 20 percent in the last five years. The Bloomberg-JPMorgan Chase & Co. Asia Currency Index is also up about 3 percent since the end of August.

“China and its neighbors see the need to strengthen their currencies to cool growth and to especially cool inflation,” said Borthwick, whose firm executes currency transactions on behalf of hedge funds and institutional clients. “Going forward they will all move together and allow their currencies to strengthen, over time resulting in a more balanced economy.” "

http://www.bloomberg.com/news/2010-10-23/g-20-pledge-to-avoid-competitive-devaluations-endorse-market-driven-rates.html

[churchill]

Art of the Collapse, October 2010

http://dollarcollapse.com/uncategorized/art-of-the-collapse-october-2010/

Edited October 23, 2010 by churchill

[cloudhopper]

G-20 Pledges to Avoid Devaluations in Push to Defuse Global Trade Tensions

Sorted then.

[flying]

Today’s agreement will nevertheless encourage Asian nations to allow their exchange rates to rise

Which will cause many falangs to grind their teeth

[flying]

interesting

Dabchick's Gold Index

This index is intended to show how gold is valued throughout the world independently of the value of any country's individual currency. It is not really much use as a day-to-day indicator when currencies are stable relative to one another, and is best plotted as a monthly chart.

The 18-year decline seen in the index from its start in 1982 appears to have come to an end in 1999 with the sharp upward movement at the time of the Washington Agreement on Gold (WAG). Let us hope the WAG marked the beginning of a climb of similar duration.

The Dabchick Gold Index is calculated each day using this formula : A x B / 452 where :

A = Today's Gold price in US Dollars

B = Today's Bank of England Effective Exchange Rate Index ( ERI ) for the US Dollar

452 = a constant which contains the values of A & B in Jan 1982 and also makes allowance for the rebasing of the ERI from 1973 to 1990 conditions in 1995

Calculation of Rebasing Constant ( 452 )

{ ( $ Gold Price Jan 82 ) x ( $ ERI Jan 82 [basis 1973] ) }

divided by

Adjustment factor when BoE rebased the ERI to 1990 in 1995

equals................. { ( $ 386 ) x ( 1.10 ) } / 0.94

equals .................424.6 / 0.94

equals..................452

January 1982 was chosen as the starting point because gold seemed to have settled down quite well by then after the excesses of 1979 - 1981.

The Index was 100.00 on 1st Jan 1982

Regards...........Dabchick

Edited October 23, 2010 by flying

[Naam]

G-20 Pledges to Avoid Devaluations in Push to Defuse Global Trade Tensions

Sorted then.

for the weekend = yes. let's see what will happen when the markets open tomorrow

[flying]

That seems like a long way off at the moment and i think the present bull market has a ways to run.

But as you say, you need an exit strategy with gold at these levels.

Perhaps when gold & the DOW reaches parity

I like that....easy to remember

2011 after it goes parabolic?

[crusader79]

BOSTON (MarketWatch) — An exchange-traded fund that invests in gold-miner stocks has tripled in price since bottoming two years ago, but the ETF suffered a sudden correction last week as an attempt to break through its 2008 apex failed.

Market Vector Gold Miners ETF /quotes/comstock/13*!gdx/quotes/nls/gdx (GDX 55.70, +0.81, +1.48%) lost about 5% last week, falling harder than gold itself as futures prices dropped sharply after rallying close to $1,400 a ounce.

The miner ETF stalling near its 2008 high could be an ominous sign for gold prices, which some say are due for a pullback after a nearly uninterrupted upward surge since the beginning of August.

“To see any product struggle at highs and break support, at a minimum it is time to become cautious on the holdings,” said Chris Kimble, head of Kimble Charting Solutions, a firm specializing in technical analysis.

Market Vector Gold Miners ETF “has done very well of late, due in part to the U.S. dollar falling over 15% in the past few months,” Kimble noted in an email.

Yet pessimism about the dollar might be overdone, so “gold-stock owners should pull at least part of their holdings off the table at this point in time,” the analyst said. If the dollar does rally after falling close to a multiyear low, it would be “ugly” for gold-miner stocks, Kimble added.

The PowerShares DB US Dollar Bullish Fund /quotes/comstock/13*!uup/quotes/nls/uup (UUP 22.47, 0.00, 0.00%) , an ETF that tracks the dollar’s movement against a basket of foreign currencies, has been in a steep decline on fears the Federal Reserve will debase the greenback in its efforts to jump-start the U.S. economy. However, it hasn’t breached $22 a share, which is roughly the level that has halted previous declines over the past three years.

http://www.marketwatch.com/story/gold-miner-etf-fails-to-break-2008-peak-2010-10-24

[teletiger]

Perhaps when gold & the DOW reaches parity

I like that....easy to remember

2011 after it goes parabolic?

Flying,

That might be @ $2000.

Better to like Silver and the S&P parity..........@$300.

Regards.

[lannarebirth]

http://www.youtube.com/watch?v=pWAu7FmKbYc&feature=player_embedded