Khun Jean Posted December 6, 2008 Share Posted December 6, 2008 (edited) Is it time to go to the gold shops and buy what you can? Sorry about the missing 'c' in bakwardation. It should read 'backwardation'. Can a topic title be edited? DONE Edited December 7, 2008 by Lite Beer Link to comment Share on other sites More sharing options...
LaoPo Posted December 6, 2008 Share Posted December 6, 2008 ...and what would you do with Gold in the worse crisis since decades ? The worse is yet to come ! Stay cash, save and don't invest in shares, bonds, gold, real estate, cars, boats.... Stay conservative. LaoPo Link to comment Share on other sites More sharing options...
Khun Jean Posted December 6, 2008 Author Share Posted December 6, 2008 The thought is that gold would mean a way of preserving purchasing power as its value will never go to zero. Paper money does not have that security. Link to comment Share on other sites More sharing options...
zorro1 Posted December 7, 2008 Share Posted December 7, 2008 ...and what would you do with Gold in the worse crisis since decades ? The worse is yet to come !Stay cash, save and don't invest in shares, bonds, gold, real estate, cars, boats.... Stay conservative. LaoPo I say buy now Laopo, the markets on friday night powered on in the face of the worst unemployment figures since the 1974 recession. And also most importantly, the 533,000 added to unemployment was well above 350,000 predicted. So Wall Street took a nasty shock in its stride." Certainly we are not getting the big shock down moves on the indexes we were seeing a few weeks ago...The fundamentals may be important but it's the human reaction to them that directs the market.... People are getting used to bad news.......you can only shock people so much and when they are expecting the worst it has little impact....and I think the market is stabilising... Link to comment Share on other sites More sharing options...
Khun Jean Posted December 7, 2008 Author Share Posted December 7, 2008 I am not an economist, but would a backwardation of gold not be a sign for something bigger. I just read a few things about it, and i must say it is not making me feel better. Link to comment Share on other sites More sharing options...
misterman21 Posted December 7, 2008 Share Posted December 7, 2008 Backwardation????????????? Link to comment Share on other sites More sharing options...
zorro1 Posted December 7, 2008 Share Posted December 7, 2008 (edited) Backwardation????????????? http://www.hotcopper.com.au/post_threadvie...=791820#3564601 Its a long article but apparently this guys is the Gold guru Antal E. Fekete Gold Standard University Live Backwardation December 2, 2008, was a landmark in the saga of the collapsing international monetary system, yet it did not deserve to be reported in the press: gold went to backwardation for the first time ever in history. The facts are as follows: on December 2nd, at the Comex in New York, December gold futures (last delivery: December 31) were quoted at 1.98% discount to spot, while February gold futures (last delivery: February 27, 2009) were quoted at 0.14% discount to spot. (All percentages annualized.) The condition got worse on December 3rd, when the corresponding figures were 2% and 0.29%. This means that the gold basis has turned negative, and the condition of backwardation persisted for at least 48 hours. I am writing this in the wee hours of December 4th, when trading of gold futures has not yet started in New York. According to the December 3rd Comex delivery report, there are 11,759 notices to take delivery. This represents 1.1759 million ounces of gold, while the Comex-approved warehouses hold 2.9 million ounces. Thus 40% of the total amount will have to be delivered by December 31st. Since not all the gold in the warehouses is available for delivery, Comex supply of gold falls far short of the demand at present rates. Futures markets in gold are breaking down. Paper gold is progressively being discredited. Already there was a slight backwardation in gold at the expiry of a previous active contract month, but it never spilled over to the next active contract month, as it does now: backwardation in the December contract is spilling over to the February contract which at last reading was 0.36%. Silver is also in backwardation, with the discount on silver futures being about twice that on gold futures. As those who attended my seminar on the gold basis in Canberra last month know, the gold basis is a pristine, incorruptible measure of trust, or the lack of it in case it turns negative, in paper money. Of course, it is too early to say whether gold has gone to permanent backwardation, or whether the condition will rectify itself (it probably will). Be that as it may, it does not matter. The fact that it has happened is the coup de grâce for the regime of irredeemable currency. It will bleed to death, maybe rather slowly, even if no other hits, blows, or shocks are dealt to the system. Very few people realize what is going on and, of course, official sources and the news media won’t be helpful to them to explain the significance of all this. I am trying to be helpful to the discriminating reader. Gold going to permanent backwardation means that gold is no longer for sale at any price, whether it is quoted in dollars, yens, euros, or Swiss francs. The situation is exactly the same as it has been for years: gold is not for sale at any price quoted in Zimbabwe currency, however high the quote is. To put it differently, all offers to sell gold are being withdrawn, whether it concerns newly mined gold, scrap gold, bullion gold or coined gold. I dubbed this event that has cast its long shadow forward for many a year, the last contango in Washington ? contango being the name for the condition opposite to backwardation (namely, that of a positive basis), and Washington being the city where the Paper-mill of the Potomac, the Federal Reserve Board, is located. This is a tongue-in-cheek way of saying that the jig in Washington is up. The music has stopped on the players of ‘musical chairs’. Those who have no gold in hand are out of luck. They won’t get it now through the regular channels. If they want it, they will have to go to the black market. I founded Gold Standard University Live (GSUL) two years ago and dedicated it to research of monetary issues that are pointedly ignored by universities, government think-tanks, and the financial press, centered around the question of long-term viability of the regime of irredeemable currency. Historical experiments with that type of currency were many but all of them, without exception, have ended in ignominious failure accompanied with great economic pain, unless the experiment was called off in good time and the authorities returned to monetary rectitude, that is, to a metallic monetary standard. It is also worth pointing out that the present experiment is unique in that all countries of the world indulge in it. Not one country is on a metallic monetary standard, under which the Treasury and the Central Bank are subject to the same contract law as ordinary citizens. They cannot issue irredeemable promises to pay and keep them in monetary circulation through a conspiracy known as check-kiting. Not one country will be spared from the fire and brimstone that once rained on the cities of Sodom and Gomorrah as a punishment of God for immoral behavior. In all previous episodes there were some countries around that did not listen to the siren song and stayed on the gold standard. They could give a helping hand to the deviant ones, thus limiting economic pain. Today there are no such countries. If you want to be saved, you must be prepared to save yourself. You cannot understand the process whereby a fiat money system self-destructs without understanding the gold and silver basis. The Quantity Theory of Money does not provide an explanation, because deflation may well precede hyperinflation, as it appears to be the case right now. For these reasons I placed the study of the gold and silver basis on the top of the list of research topics for GSUL. These can serve as an early warning system that will signal the beginning of the end. The end is approaching with the inevitability of the climax in a Greek tragedy, as the heroes and heroines are drawn to their own destruction. The present reactionary experiment with paper money is entering its death-throes. GSUL has had five sessions and could have established itself as an important, and even the only, source of information about this cataclysmic event: the confrontation of the Titanic (representing the international monetary system) with the iceberg (representing gold and its vanishing basis) as the latter is emerging from the fog too late to avoid collision. Unfortunately, this was not meant to be: GSUL has to terminate its operations due to a decision made by Mr. Eric Sprott, of Sprott Asset Management, to terminate sponsoring GSUL, saying that “results do not justify the expense.” I sincerely regret that our activities did not live up to the expectations of Mr. Sprott, but I am very proud of the fact that our research is still the only source of information on the vanishing gold basis and its corollary, the seizing up of the paper money system that threatens the world, as it does, with a Great Depression eclipsing that of the 1930’s. Let me summarize the salient points of discussion during the last two sessions of GSUL for the benefit of those who wanted to attend but couldn’t. The gold basis is the difference between the futures and the cash price of gold. More precisely it is the price of the nearby active futures contract in the gold futures market minus the cash price of physical gold in the spot market. Historically it has been positive ever since gold futures trading started at the Winnipeg Commodity Exchange in 1972 (except for some rare hiccups at the triple-witching hour. Such deviations have been called ‘logistical’ in nature, having to do with the simultaneous expiry of gold futures and the put and call option contracts on them. In all these instances the anomaly of a negative basis resolved itself in a matter of a few hours.) In the commodity futures markets the terminus technicus for a positive basis is contango; that for a negative one, backwardation. Contango implies the existence of a healthy supply of the commodity in the warehouses available for immediate delivery, while backwardation implies shortages and conjures up the scraping of the bottom of the barrel. The basis is limited on the upside by the carrying charges; but there is no limit on the downside as it can fall to any negative value (meaning that the cash price may exceed the futures price by any amount, however large). Contango whereby the futures price of gold is quoted at a premium to the spot price is the normal condition for the gold market, and for a very good reason, too. The supply of monetary gold in the world is very large relatively speaking. Babbling about the ‘scarcity of gold’ reflects the opinion of uninformed or badly informed people. In terms of the ratio of stocks to flows the supply of gold is far and away greater than that of any commodity. Silver is second only to gold. It is this fact that makes the two of them the only monetary metals. The impact on the gold price of a discovery of an extremely rich gold field, or the coming on stream of an extremely rich gold mine, is minimal ? in view of the large existing stocks. Paradoxically, what makes gold valuable is not its scarcity but its relative abundance, which evokes that superb confidence in the steadiness of the value of gold that will not be decreased by a banner production year, nor can it be increased by withdrawing gold coins from circulation. For this reason there is no better fly-wheel regulator for the value of currency than gold. The same goes, albeit to a lesser degree, for silver. Here is the fundamental difference between the monetary metal, gold, and other commodities. Backwardation will pull in stocks from the moon as it were, if need be. The cure for the backwardation of any commodity is more backwardation. For gold, there is no cure. Backwardation in gold is always and everywhere a monetary phenomenon: it is a reminder of the incurable pathology of paper money. It dramatizes the decay of the regime of irredeemable currency. It can only get worse. As confidence in the value of fiat money is a fragile thing, it will not get better. It depicts the paper dollar as Humpty Dumpty who sat on a wall and had a great fall and, now, “all the king’s horses and all the king’s men could not put Humpty Dumpty together again.” To paraphrase a proverb, give paper currency a bad name, you might as well scrap it. Once entrenched, backwardation in gold means that the cancer of the dollar has reached its terminal stages. The progressively evaporating trust in the value of the irredeemable dollar can no longer be stopped. Negative basis (backwardation) means that people controlling the supply of monetary gold cannot be persuaded to part with it, regardless of the bait. These people are no speculators. They are neither Scrooges nor Shylocks. They are highly capable businessmen with a conservative frame of mind. They are determined to preserve their capital come hel_l or high water, for saner times, so they can re-deploy it under a saner government and a saner monetary system. Their instrument is the ownership of monetary gold. They blithely ignore the siren song promising risk-free profits. Indeed, they could sell their physical gold in the spot market and buy it back at a discount in the futures market for delivery in 30 days. In any other commodity, traders controlling supply would jump at the opportunity. The lure of risk-free profits would be irresistible. Not so in the case of gold. Owners refuse to be coaxed out of their gold holdings, however large the bait may be. Why? Well, they don’t believe that the physical gold will be there and available for delivery in 30 days’ time. They don’t want to be stuck with paper gold, which is useless for their purposes of capital preservation. December 2 is a landmark, because before that date the monetary system could have been saved by opening the U.S. Mint to gold. Now, given the fact of gold backwardation, it is too late. The last chance to avoid disaster has been missed. The proverbial last straw has broken the back of the camel. I have often been told that the U.S. Mint is already open to gold, witness the Eagle and Buffalo gold coins. But these issues were neither unlimited, nor were they coined free of seigniorage. They were sold at a premium over bullion content. They were a red herring, dropped to make people believe that gold coins can always be obtained from the U.S. Mint, and from other government mints of the world. However, as the experience of the past two or three months shows, one mint after another stopped taking orders for gold coins and suspended their gold operations. The reason is that the flow of gold to the mints has become erratic. It may dry up altogether. This shows that the foreboding has been evoked by the looming gold backwardation, way ahead of the event. Now the truth is out: you can no longer coax gold out of hiding with paper profits. If the governments of the great trading nations had really wanted to save the world from a catastrophic collapse of world trade, then they should have opened their mints to gold. Now gold backwardation has caught up with us and shut down the free flow of gold in the system. This will have catastrophic consequences. Few people realize that the shutting down of the gold trade, which is what is happening, means the shutting down of world trade. This is a financial earthquake measuring ten on the Greenspan scale, with epicenter at the Comex in New York, where the Twin Towers of the World Trade Center once stood. It is no exaggeration to say that this event will trigger a tsunami wiping out the prosperity of the world. References By the same author: The Rise and Fall of the Gold Basis, June 23, 2006 Monetary and Non-Monetary Commodities, June 25, 2006 The Last Contango in Washington, June 30, 2006 Gold, Interest, Basis, March,7, 2007 Gold Vanishing into private Hoards, May 31, 2007 Opening the Mint to Gold and Silver, February 5, 2008 These and other articles of the author can be accessed at the website www.professorfekete Edited December 7, 2008 by zorro1 Link to comment Share on other sites More sharing options...
misterman21 Posted December 7, 2008 Share Posted December 7, 2008 Thanks! Very informative. Makes me wonder that if this situ. is relevant to the strong baht - in that it was reported recently that Thailand recently spent approx. 40% GDP on gold imports Link to comment Share on other sites More sharing options...
flying Posted December 7, 2008 Share Posted December 7, 2008 (edited) Is it time to go to the gold shops and buy what you can? I say buy it if you can find it & also as your avata is silver surfer I would not forget to consider some of that too. I would rather have a good portion of my liquid assets in a money that is traded worldwide since ................ & will be traded long after paper currency backed by a wing & a prayer have gone the way of Icelands. Why Not? I mean really can you think of one good reason not to have some? People invest their whole life in stocks that can & do go to zero worth. Has Gold or Silver ever gone that route? Will it ever go that route? Tam Mai Laa ? Edited December 7, 2008 by flying Link to comment Share on other sites More sharing options...
VegasVic Posted December 7, 2008 Share Posted December 7, 2008 Is it time to go to the gold shops and buy what you can?Sorry about the missing 'c' in bakwardation. It should read 'backwardation'. Can a topic title be edited? DONE The worlds economies are just in the early stages of massive deflationary trend and commodities will continue to head lower, oil will hit $30/bb, copper $1.25/lb, and gold will be back in the $600's within the next 60 days. The Dollar will continue its bull run as the Pound, Euro and Aussie dollar depreciate further after a series of rate cuts! Goldbugs like yourself come up with the most desperate stories about why gold should rise, there is always hyperinflation just around the next corner or the COMEX is going to crash or the Dollar is going to become worthless or there is some fantastic worldwide banking conspiracy holding the price of gold down, and now this backwardation nonsense You clowns worship at the alter of Sinclair, Schiff, Rogers, Faber and now this latest false profit (sorry I couldn't resist!) Feteke, the only problem is that all of these individuals claimed in past predictions that gold would be over $2000/ounce by now, but instead as everyone here knows gold is at $750/ounce and has been dropping for the past 4-5 months Your plea for everyone to go out and buy gold is a desperate attempt to try and suck more people in to the mistake that you have apparently already made, hopefully you will wise up and not dig yourself a deeper hole, but if you are like most goldbugs you are way out there on the ledge and cannot be talked down. Link to comment Share on other sites More sharing options...
lannarebirth Posted December 7, 2008 Share Posted December 7, 2008 I am not an economist, but would a backwardation of gold not be a sign for something bigger. I just read a few things about it, and i must say it is not making me feel better. Generally speaking backwardation (when future month contracs are less than front month) is a negative sign for a commodity. To carry the contract, contract holders would need to "rollover" periodically, and when in backwardation they will get them a negaive roll yield . The normal situation is futures being in contango, with future months costing more than front month. Link to comment Share on other sites More sharing options...
lannarebirth Posted December 7, 2008 Share Posted December 7, 2008 I am not an economist, but would a backwardation of gold not be a sign for something bigger. I just read a few things about it, and i must say it is not making me feel better. Backwardation is generally a negative sign for a commodity. Link to comment Share on other sites More sharing options...
london Posted December 7, 2008 Share Posted December 7, 2008 Is it time to go to the gold shops and buy what you can?Sorry about the missing 'c' in bakwardation. It should read 'backwardation'. Can a topic title be edited? DONE The worlds economies are just in the early stages of massive deflationary trend and commodities will continue to head lower, oil will hit $30/bb, copper $1.25/lb, and gold will be back in the $600's within the next 60 days. The Dollar will continue its bull run as the Pound, Euro and Aussie dollar depreciate further after a series of rate cuts! Goldbugs like yourself come up with the most desperate stories about why gold should rise, there is always hyperinflation just around the next corner or the COMEX is going to crash or the Dollar is going to become worthless or there is some fantastic worldwide banking conspiracy holding the price of gold down, and now this backwardation nonsense You clowns worship at the alter of Sinclair, Schiff, Rogers, Faber and now this latest false profit (sorry I couldn't resist!) Feteke, the only problem is that all of these individuals claimed in past predictions that gold would be over $2000/ounce by now, but instead as everyone here knows gold is at $750/ounce and has been dropping for the past 4-5 months Your plea for everyone to go out and buy gold is a desperate attempt to try and suck more people in to the mistake that you have apparently already made, hopefully you will wise up and not dig yourself a deeper hole, but if you are like most goldbugs you are way out there on the ledge and cannot be talked down. IMO 100% Correct. And lets face it, for the amount of gold that any of us can buy (as being able to realistically afford... and thats certainly not much in my case !!) is not going to make that much difference anyway if the world economy collapses....which I don't feel its going to happen anyway ! Link to comment Share on other sites More sharing options...
PCA Posted December 7, 2008 Share Posted December 7, 2008 I am not an economist, but would a backwardation of gold not be a sign for something bigger. I just read a few things about it, and i must say it is not making me feel better. Backwardation is generally a negative sign for a commodity. I don't know where you got this from but its exactly the opposite. When a market goes into backwardation it is mostly a strong bullish signal, how long it will last is another story. Nevertheless Gold is not really in backwardation yet, so simply based on the assumption that it might is meaningless at the current stage. Link to comment Share on other sites More sharing options...
lannarebirth Posted December 7, 2008 Share Posted December 7, 2008 I am not an economist, but would a backwardation of gold not be a sign for something bigger. I just read a few things about it, and i must say it is not making me feel better. Backwardation is generally a negative sign for a commodity. I don't know where you got this from but its exactly the opposite. When a market goes into backwardation it is mostly a strong bullish signal, how long it will last is another story. Nevertheless Gold is not really in backwardation yet, so simply based on the assumption that it might is meaningless at the current stage. You're right. It is contango which is negative, as futures holders get a negative roll yield when rolling out. Backwardation the opposite. I mistakenly thought it was the same situation as back in March for other commodities, which were contango. Still, what do you think of the weekly Gold chart from a wave perspective? I'm out of all things Gold now, as the ES offering far better opportunities. Link to comment Share on other sites More sharing options...
PCA Posted December 7, 2008 Share Posted December 7, 2008 I am not an economist, but would a backwardation of gold not be a sign for something bigger. I just read a few things about it, and i must say it is not making me feel better. Backwardation is generally a negative sign for a commodity. I don't know where you got this from but its exactly the opposite. When a market goes into backwardation it is mostly a strong bullish signal, how long it will last is another story. Nevertheless Gold is not really in backwardation yet, so simply based on the assumption that it might is meaningless at the current stage. You're right. It is contango which is negative, as futures holders get a negative roll yield when rolling out. Backwardation the opposite. I mistakenly thought it was the same situation as back in March for other commodities, which were contango. Still, what do you think of the weekly Gold chart from a wave perspective? I'm out of all things Gold now, as the ES offering far better opportunities. Admittedly at the current moment I am unbiased towards gold. Fundamentals point up whilst the chart shows an established downtrend on the weekly and monthly. Nevertheless volatility for me is too high to enter short as it requires a big stop to maintain a position and I am not going to watch possible profits getting wiped out within a few hours. I am basically bearish which would change at a gold price above 930. Link to comment Share on other sites More sharing options...
flying Posted December 7, 2008 Share Posted December 7, 2008 IMO 100% Correct.And lets face it, for the amount of gold that any of us can buy (as being able to realistically afford... and thats certainly not much in my case !!) is not going to make that much difference anyway if the world economy collapses....which I don't feel its going to happen anyway ! Not everyone buys gold thinking of a SHTF scenario.I know many folks who have already lost 50% of their IRA's which were based in stocks. Also ask vic if he owns any gold......perhaps not physical eh vic? Link to comment Share on other sites More sharing options...
fredfromalaska Posted December 7, 2008 Share Posted December 7, 2008 id be wary of a guys advice who uses the word backwardation Link to comment Share on other sites More sharing options...
churchill Posted December 7, 2008 Share Posted December 7, 2008 Malaysia proposes that OIC Countries use Gold Dinar for trade . http://www.bernama.com.my/bernama/v3/news_lite.php?id=376788 Link to comment Share on other sites More sharing options...
gregb Posted December 7, 2008 Share Posted December 7, 2008 If you check the actual figures, you'll find that gold futures were only in backwardation for a few days, and quickly returned to contango. For those of you who don't know, the reason this is so compelling is that backwardation in gold would be like a money tree. Sell your gold at spot today, get the cash, buy a future's contract to pick up your gold in a few months, and pocket the difference. A form of gold leasing for the rest of us with minimal risk. Contango is the normal state for gold, where the price in the future represents gold's value today plus an interest rate. After all, gold is money to a central bank. Backwardation should never appear in the gold market unless people fear counter party default. This means they sell their physical today, but are afraid the futures market won't deliver it later due to supplies being unavailable. If they fear this, they are willing to pay a premium for spot gold today, even over a lower cost in the future, because they are assured of delivery. The people speculating on a Comex default were using the backwardation condition that lasted for a few days to prove their case about impending default on physical delivery. Unfortunately, this is now old news, and you can clearly see the markets have returned to contango. No story here. Everyone go home. With that said, there is still huge demand for small, investment grade coins and bars of gold, and insufficient infrastructure in mints to meet demand. With the world economic crisis, nobody is willing to fund an expansion of their production line either. Demand for small coins and bars is continuing to increase, and delivery delays are increasing and rationing occurs by the major producers. This is causing the price of small, investor grade coins and bars to rise significantly above spot, such that there are becomming effectively 2 spot prices for gold. One is on the major exchanges for 400 oz. good deliver bars, and the other on E-bay where individual traders sell the smaller rounds and bars at significantly over spot. Investor demand for smaller rounds and bars is continuously increasing, and supply is shrinking due to hoarding. Thus, small bars and rounds have been an extremely good investment over the past few months if you are willing to sell on E-bay and other small trading communities. This is happening even while the Comex markets have shown dismal performance. If you are looking at getting into gold, understand there are 2 markets currently. The informal physical market for small pieces, which are currently in short supply, and the formal exchange markets which are dominated by paper contracts. Right now, there does not appear to be any indications that the infrastructure will ever be brought online to meet demand in the former and allow the 2 markets to merge. I tell you this story to explain why people are hyping backwardation as evidence of fear of counter party risk. If there is any evidence that the shortages present in the retail markets could also be coming in the formal exchanges, it would show clear evidence of manipulation by central banks to suppress the price for their own purposes (e.g. a run on gold as France did in the 70's when Nixon closed the gold window). However, to date there does not appear to be sufficient evidence to support this theory. Still, better to get your gold now before hyperinflation sets in. As soon as the derivatives markets finish unwinding, the US Dollar will crash, and hyperinflation will ensue as all those US Treasuries making nearly 0% are sold and money floods the market. Once that happens, counterparty risk on tangible gold delivery may become a very serious concern. Buy gold to protect the wealth you have today. Do not buy it to become rich. It is an insurance policy against hyperinflation, which is a very real fear right now. Link to comment Share on other sites More sharing options...
flying Posted December 7, 2008 Share Posted December 7, 2008 Buy gold to protect the wealth you have today. Do not buy it to become rich. It is an insurance policy. Good explanation Link to comment Share on other sites More sharing options...
Naam Posted December 7, 2008 Share Posted December 7, 2008 Sell your gold at spot today, get the cash, buy a future's contract to pick up your gold in a few months, and pocket the difference. an innocent question to all the gold gurus here: "how does one pocket a loss?" Link to comment Share on other sites More sharing options...
flying Posted December 7, 2008 Share Posted December 7, 2008 (edited) an innocent question to all the gold gurus here: "how does one pocket a loss?" I'm no guru but I play one on TV ( LOL... pun intended ) Truth be told I have never sold any gold I have bought. But.......I would imagine they pocket the loss the same way as the trillions that were pocketed on the stock market following financial advisors world wide. Edited December 7, 2008 by flying Link to comment Share on other sites More sharing options...
london Posted December 7, 2008 Share Posted December 7, 2008 IMO 100% Correct.And lets face it, for the amount of gold that any of us can buy (as being able to realistically afford... and thats certainly not much in my case !!) is not going to make that much difference anyway if the world economy collapses....which I don't feel its going to happen anyway ! Not everyone buys gold thinking of a SHTF scenario.I know many folks who have already lost 50% of their IRA's which were based in stocks. Also ask vic if he owns any gold......perhaps not physical eh vic? Possibly true....but then the question is: why would you hold it? No income. Difficult to store. Uninsurable (from experience) if you hold the physical. ( I sold all my physical gold earlier this year having held it for around 4 years ) Oh, the only reason bought it in the first place was as a hedge against times such as these. We're in interesting times, that for sure. Link to comment Share on other sites More sharing options...
flying Posted December 7, 2008 Share Posted December 7, 2008 (edited) IMO 100% Correct.And lets face it, for the amount of gold that any of us can buy (as being able to realistically afford... and thats certainly not much in my case !!) is not going to make that much difference anyway if the world economy collapses....which I don't feel its going to happen anyway ! Not everyone buys gold thinking of a SHTF scenario.I know many folks who have already lost 50% of their IRA's which were based in stocks. Also ask vic if he owns any gold......perhaps not physical eh vic? Possibly true....but then the question is: why would you hold it? No income. Difficult to store. Uninsurable (from experience) if you hold the physical. ( I sold all my physical gold earlier this year having held it for around 4 years ) Oh, the only reason bought it in the first place was as a hedge against times such as these. We're in interesting times, that for sure. I cannot say why others hold it. I know I have read many reasons but would not say I agree with most. I can only say why I hold it. I am not 100% comfy with banks at this time. FDIC I believe is a blanket to keep folks warm. Yet the blanket is woefully too small for everyone. It will be fine as long as someone does not tug too hard on ones side of it. I do not find it hard to store at all. Way easier than silver thats for sure But then I store a few things As for uninsurable I guess you could say that to some degree. But what do you see happening to it? theft? Fire? It is interesting times isn't it? I am glad I am where I am & will see what we see this next year. Edited December 7, 2008 by flying Link to comment Share on other sites More sharing options...
Martian Posted December 7, 2008 Share Posted December 7, 2008 Since the current "crisis" is global, it will affect almost everyone to almost the same extent. Global economies won't collapse, they will all adjust in proportion to each other. It is interesting that not too long ago all the USA haters were reveling in the thoughts that the dollar was on its last leg and yet when things go into a downward spiral, the big investors seek the dollar for safety, not gold. Also, I think it is obvious that almost all currencies have lost a lot of ground on the dollar...even in the face of the US government printing another Trillion to shore up the economy and industries...think about objectively. If the US dollar collapses, the whole world will be in anarchy...and nothing else will matter (except maybe how many of what type of weapons/ammo you have) that's just the way it is, like it or not. Regards Link to comment Share on other sites More sharing options...
Khun Jean Posted December 7, 2008 Author Share Posted December 7, 2008 Thanks Gregb for the detailed post. I don't have any gold (never had only for decoration:) ) and i just have a little in shares. I am just a small player and i got a beating when the last stock market crash happened. Since then i have just a little in stock which is also much lower now. I don't want to do anything in the stockmarket yet, i feel that it is way to volatile and although you can make money in such a market it is to much of a bother to be glued to my screen. Could backwardation a signal for something that is going to happen? I ask this because i have read that it never happened before with gold. And as i see it gold would be a good way to at least keep most of your current value as it will not be possible to go to zero value as paper can. Link to comment Share on other sites More sharing options...
cloudhopper Posted December 8, 2008 Share Posted December 8, 2008 As soon as the derivatives markets finish unwinding, the US Dollar will crash, and hyperinflation will ensue as all those US Treasuries making nearly 0% are sold and money floods the market. Who would buy all this paper, should the holders actually try to dump it, with what money in this scenario? Link to comment Share on other sites More sharing options...
dageshi Posted December 8, 2008 Share Posted December 8, 2008 Backwardation differs from commodity to commodity, the last time it happened in oil was right before the giant blowoff runup to $140, backwardation in that circumstance was the market saying "I want oil and I want it now!", with gold it only happened for a relatively short time so let's not get too hyped up about it. Now onto the subject of golds long term prospects, Mish Shedlock the arch type uber deflationist who both called the current mess and also predicted that it would be the dollar and US treasuries that benefitted is bullish gold because "gold is money", money does well in deflation, it's the only thing that does well in deflation. This is why small coins and bars are going for a premium, you can hold em in your hand, they look like money, they feel like money, you can walk into a shop and assuming the shop keeper is of a similar mind swap your gold coin for goods. You can't really or easily do that with a share in gld. Link to comment Share on other sites More sharing options...
churchill Posted December 8, 2008 Share Posted December 8, 2008 Gold rising in a parabolic fashion read http://caps.fool.com/Blogs/ViewPost.aspx?b...808419327792238 Link to comment Share on other sites More sharing options...
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