Could Gold Be In A New Bear Market?

[Orion76]

I am pretty neutral on gold at the moment, but a lot of folks seem to have strong convictions that the price of gold is going significantly higher.

Many strong arguments of why the price of gold will go up have been made.

The argument that seems absent from the debate however, is a reason of why the price of gold could not go down.

Isn't there a reasonable probability, let's say 30%, that the price of gold could be around $800 by the end of 2010?

If not, then why?

[Naam]

"Isn't there a reasonable probability, let's say 30%, that the price of gold could be around $800 by the end of 2010?"

good question! but the reasonable probability depends mainly on the ambient outside temperature at midnight on dec 31, 2010 in Nakhon Nowhere and of the course on the local prevailing relative humidity. once you have established these factors please let me know and the software i developed will answer your question.

[Orion76]

"Isn't there a reasonable probability, let's say 30%, that the price of gold could be around $800 by the end of 2010?"

good question! but the reasonable probability depends mainly on the ambient outside temperature at midnight on dec 31, 2010 in Nakhon Nowhere and of the course on the local prevailing relative humidity. once you have established these factors please let me know and the software i developed will answer your question.

The probability can also be affected by how sacred the amulets you wear are, if your amulets are very powerful and you are bearish then the bulls better hope someone on their side has even more sacred amulets

But let's not allow the definition of what is a reasonable probability detract from the question: why can't the price of gold go down?

[dmax]

what i want to know is this,, in the past ive bought some gold, took it back a few months or a year later and lost money on it, so why does my wife insist that i keep buying her gold ? shes convinced it allways goes up in value.

am i being taken for a ride ?

[12DrinkMore]

am i being taken for a ride ?

Hopefully you are getting enough rides to compensate for the losses made in gold speculation.

:D

[flying]

"Isn't there a reasonable probability, let's say 30%, that the price of gold could be around $800 by the end of 2010?"

good question! but the reasonable probability depends mainly on the ambient outside temperature at midnight on dec 31, 2010 in Nakhon Nowhere and of the course on the local prevailing relative humidity. once you have established these factors please let me know and the software i developed will answer your question.

Glad to hear from you Herr Naam

I was starting to worry .......Had not seen any posts in awhile

As for the OP

Of course gold could go either way same as any

Edited January 21, 2010 by flying

[ericthai]

what i want to know is this,, in the past ive bought some gold, took it back a few months or a year later and lost money on it, so why does my wife insist that i keep buying her gold ? shes convinced it allways goes up in value.

am i being taken for a ride ?

Gold can go either way, but if you hold on to it long enough yes, it will go up. Are you buying in Thailand? If you are buying outside of Thailand and then selling in Thailand this will make a big difference as the gold outside of Thailand (Jewelry) costs more than in Thailand as you are paying high labor costs and then it's hard to make profit.

If you bought gold in Thailand and then sold it later you should have made some money as gold has been going up and the last 2yrs had a very good increase. It would be good to check the buying price before you sell to make sure you are selling for more than what you paid if not then hold on to it until the price goes up that simple.

[thrilled]

My opinion that if your buying it for the short t then it might be A little iffy.but if your buying it for 10,15,20 years or more,i'd say go for it.

[Naam]

"Isn't there a reasonable probability, let's say 30%, that the price of gold could be around $800 by the end of 2010?"

good question! but the reasonable probability depends mainly on the ambient outside temperature at midnight on dec 31, 2010 in Nakhon Nowhere and of the course on the local prevailing relative humidity. once you have established these factors please let me know and the software i developed will answer your question.

Glad to hear from you Herr Naam I was starting to worry .......Had not seen any posts in awhile

i am very busy with two things Mr. Flying. one is trying to convince Mrs Naam that we have already all the physical gold which is needed to last us for our statistical lifetime (reincarnations not considered) and that there is really no need to add more whenever a price pullback of 0.000014% occurs. the other one is that my dogs and i are looking for that... whatchamacallit... ah YES... financial crisis which seems to have gone into hiding and can't be found anywhere enabling us to make a buck or two for dog biscuits and perhaps a bottle of cheap Portwine.

[Naam]

My opinion that if your buying it for the short t then it might be A little iffy.but if your buying it for 10,15,20 years or more,i'd say go for it.

why not going for the safe side and buy it for 500 years?

[flying]

i am very busy with two things Mr. Flying. one is trying to convince Mrs Naam that we have already all the physical gold which is needed to last us for our statistical lifetime (reincarnations not considered) and that there is really no need to add more whenever a price pullback of 0.000014% occurs. the other one is that my dogs and i are looking for that... whatchamacallit... ah YES... financial crisis which seems to have gone into hiding and can't be found anywhere enabling us to make a buck or two for dog biscuits and perhaps a bottle of cheap Portwine.

Ahhh Good To Hear !

My guess is the puppies hid it near the crystal ball

[badge]

Gold can go either way, but if you hold on to it long enough yes, it will go up.

[...]

It would be good to check the buying price before you sell to make sure you are selling for more than what you paid if not then hold on to it until the price goes up that simple.

... suuuuuuure, like if you bought Gold in the late 1970's, and it consistantly declined for over 25yrs, by 75%.

Infact you had to wait 30yrs to break even, and thats on a nominal basis, on a real basis your still out of the money.

[SantiSuk]

Gold can go either way, but if you hold on to it long enough yes, it will go up.

[...]

It would be good to check the buying price before you sell to make sure you are selling for more than what you paid if not then hold on to it until the price goes up that simple.

... suuuuuuure, like if you bought Gold in the late 1970's, and it consistantly declined for over 25yrs, by 75%.

Infact you had to wait 30yrs to break even, and thats on a nominal basis, on a real basis your still out of the money.

Thank you for that touch of realism. I knew in the back of my mind that gold is a horrible long hold (unless you buy at a cyclical long term low) and you saved me doing some research to comment similarly. No doubt you chose the worst to the best to prove your point but it does nonetheless prompt justifiable caution.

IMO gold is only useful as a short to medium term hedge (or speculation) in the face of recession - and for that other purpose of getting a particularly passionate jump or two . It will carry on going up significantly if (as I think is likely on balance) we get double dip recession. I would surmise that it does not go down if the world does motor on out of recession (third world will feel flush and retail consumers will start filling their boots). A thin sickly crawl out of recession could send it down. If it got to $800 I would be filling my boots for the long term.

Useful as a hedge right now if you are fully in the equity market and don't want to liquidate some of your positions. I'm only 60% invested at the moment but strongly considering buying gold (ETFs or mutual funds) for that purpose.

My landlord in the UK 10 years ago was South African and he always used to say that you had to have a healthy pot of physical gold in your portfolio as your 'if all else fails' Armageddon scenario. I used to tell him I would probably do the same if I had a background of living in South Africa. It just occurs to me that the more I patriate towards Asia perhaps I should do the same and kick out the safe and sound mentality you tend to get living in the UK

[ericthai]

Gold can go either way, but if you hold on to it long enough yes, it will go up.

[...]

It would be good to check the buying price before you sell to make sure you are selling for more than what you paid if not then hold on to it until the price goes up that simple.

... suuuuuuure, like if you bought Gold in the late 1970's, and it consistantly declined for over 25yrs, by 75%.

Infact you had to wait 30yrs to break even, and thats on a nominal basis, on a real basis your still out of the money.

Thank you for that touch of realism. I knew in the back of my mind that gold is a horrible long hold (unless you buy at a cyclical long term low) and you saved me doing some research to comment similarly. No doubt you chose the worst to the best to prove your point but it does nonetheless prompt justifiable caution.

IMO gold is only useful as a short to medium term hedge (or speculation) in the face of recession - and for that other purpose of getting a particularly passionate jump or two . It will carry on going up significantly if (as I think is likely on balance) we get double dip recession. I would surmise that it does not go down if the world does motor on out of recession (third world will feel flush and retail consumers will start filling their boots). A thin sickly crawl out of recession could send it down. If it got to $800 I would be filling my boots for the long term.

Useful as a hedge right now if you are fully in the equity market and don't want to liquidate some of your positions. I'm only 60% invested at the moment but strongly considering buying gold (ETFs or mutual funds) for that purpose.

My landlord in the UK 10 years ago was South African and he always used to say that you had to have a healthy pot of physical gold in your portfolio as your 'if all else fails' Armageddon scenario. I used to tell him I would probably do the same if I had a background of living in South Africa. It just occurs to me that the more I patriate towards Asia perhaps I should do the same and kick out the safe and sound mentality you tend to get living in the UK

Read what I said, I said it an go either way so that means up or down, but again if you hold on to it long enough it will go up. I never said how long did I?

Also i believe you are wrong, if you bought in early 70"s (less than $50 USD per ounce) by mids 70's it was up around $150 USD per ounce and then 10years later in early 80's it was up around what $600 so tens years you would have a very good gain.

It did drop back down around $300-$400 per ounce through out the 80's, 90's and mid 2000' but then started to increase again mid 2000 until now which it is what a little over $1000 USD per ounce. Just like any investment weather it's in precious metals, commodities or stocks it is all timing.

Im not telling anyone to invest in gold either.

[Orion76]

ericthai - small issue with your numbers, they are not inflation adjusted

[ericthai]

ericthai - small issue with your numbers, they are not inflation adjusted

Yes, you have inflation, so you are trying to tell me that between 1970 and 1980 it was over 150%?

You would be wrong, the actual rate between 1970 and 1980 was about 105% so there is still a gain.

Even when gold did drop down to about $400 in the late 80, 90s and early 2000 the total rate of inflation between 1970 and 2000 was at about 350% this still gives you a gain. the rate from 1970 to 2009 is at about 540%. So $1 in 1970 has the same buying power today of about $5.40, so one ounce of gold at $50 in 1970 would sell for today at about lets say $1050 (it actually a little higher than this) Take into consideration for inflation that $50 in 1970 would be the same as $270 in todays money and you would still have had a gain.

[Orion76]

ericthai - small issue with your numbers, they are not inflation adjusted

Yes, you have inflation, so you are trying to tell me that between 1970 and 1980 it was over 150%?

No, I am saying that today the price of gold is down 50% from it's inflation adjusted high, 30 years ago.

[ericthai]

ericthai - small issue with your numbers, they are not inflation adjusted

Yes, you have inflation, so you are trying to tell me that between 1970 and 1980 it was over 150%?

No, I am saying that today the price of gold is down 50% from it's inflation adjusted high, 30 years ago.

understood.. however that is not what you said, you said i did not take into consideration for inflation, which I did.

I was talking about "badge" comment that gold had a 75% decrease in value if you bought in 1970, which was incorrect.

Yes, you are correct, it's not 50% but close if you take the 1980 high of $800, which with todays inflation from 1980 until today would be about $1360. So if someone made the mistake and bought during the one year high in 1980 they would still not be able to sell at a gain, if they purchased anytime before 1980 or after 1980 and sold today you would be ok even with inflation.

[hawthorne]

Back to the topic...where will gold price be at the end of the year. I feel $800/oz is a better bet than $1200. Why I feel this way is because is getting less attention from the speculative buyers right now. The attention has moved to Paladium and Platnium.

Gold used as a hedge is IMHO the best use of gold except for Jewelry. Never have more than 5% in gold as a rule. As a gold investor for many years (precious metals) I prefer the movement and investment of mining companies over bullion. That said, mining stocks are trading in too high of multiples for my taste.

If bullion I suggest buying coins because you can find enjoyment in collecting them. It is fun to pull them out. (hobby)

sorry to regress...Yes many people (investor newsletters and gurus) have recently made claims that gold is going to $2000 soon. That is Usually a warning sign. Do you remember oil was being tauted to hit $250 a barrel by many folks right before the big pull back.

I can not remember the guys name (help me someone) well known Hege Fund Manager who just came out saying he is short on China!!! He has a fantastic track record. If he is right that China (China bubble burst) is going to have a big pull back then this will affect gold and it could have many people going to it for a safe haven which then we go over the $1200.

To show you how much I know I am heavily into China. None in gold. Maybe broke by end of 2010.

Good luck.

[flying]

I have been gathering since the start of the other gold thread...Oct 08

I will continue to do some more gathering soon if gold pulls back at the end of this month.

$800 I doubt 99.9% you will see that price. But if it hits 1020 I will add.

I also have a stake in Silver....btw I am talking physical in both not paper.

As for Platinum it is not unusual for Jan.

http://fofoa.blogspot.com/

Edited January 22, 2010 by flying

[haybilly]

Gold can go either way, but if you hold on to it long enough yes, it will go up.

[...]

It would be good to check the buying price before you sell to make sure you are selling for more than what you paid if not then hold on to it until the price goes up that simple.

... suuuuuuure, like if you bought Gold in the late 1970's, and it consistantly declined for over 25yrs, by 75%.

Infact you had to wait 30yrs to break even, and thats on a nominal basis, on a real basis your still out of the money.

That man was me----I was a jeweller and bought and sold gold, some of which I did have to keep for about 15 years just to break even--brilliant, eh--hence, I am always wary of the stuff; I even sold the small amount my ex-wife left me with a few years ago at a profit but nothing like as big a hike if I had sold it yesterday, or...oh well, you know what I mean.

[Orion76]

I have been gathering since the start of the other gold thread...Oct 08

I will continue to do some more gathering soon if gold pulls back at the end of this month.

$800 I doubt 99.9% you will see that price. But if it hits 1020 I will add.

1020 is the approximate intersection point of the .382 retracement, a downward ab=cd target and the strongest bull trend line.

Certainly an excellent area of interest if you're bullish, I think there will be a lot of large buyers there.

[flying]

1020 is the approximate intersection point of the .382 retracement, a downward ab=cd target and the strongest bull trend line.

Certainly an excellent area of interest if you're bullish, I think there will be a lot of large buyers there.

Thanks ......interesting chart & I agree on the 1020 buyers entry for many. I always thought it should have coiled at 1020 on the way up but it blew right by it.

I have never really thought of myself as bullish ......more wary of the condition of USD & the US for that matter.

It actually pains me a bit to back the truck up now as my existing adjusted cost is much lower....mai bpen rai

[Abrak]

i am very busy with two things Mr. Flying. one is trying to convince Mrs Naam that we have already all the physical gold which is needed to last us for our statistical lifetime (reincarnations not considered) and that there is really no need to add more whenever a price pullback of 0.000014% occurs. the other one is that my dogs and i are looking for that... whatchamacallit... ah YES... financial crisis which seems to have gone into hiding and can't be found anywhere enabling us to make a buck or two for dog biscuits and perhaps a bottle of cheap Portwine.

Out of interest roughly how much gold is needed for a statistical life time.

Obviously we are not talking Haiti earthquake survivors here or Zimbabwe dollar savers. I mean as a very rough guess relative to annual income or wealth or both.

(I fully understand that you might have not given this much thought on the basis that Mrs Naam simply has far too much. I feel rather the same about by Thai property (without the bonus that it actually accumulates in value.))

[Naam]

Out of interest roughly how much gold is needed for a statistical life time.

(I fully understand that you might have not given this much thought on the basis that Mrs Naam simply has far too much. I feel rather the same about by Thai property (without the bonus that it actually accumulates in value.))

i was of course shooting from the hip as there are different ways to calculate the "necessary ratio quantity of gold vs. statistical remaining life time." the calculation is even more distorted when assuming different rates of inflation and especially "how many bakeries will one Krüger Rand buy?"

however, based on today's available figures i think that holding any physical gold in excess of five years basic living expenses is not justified. Mrs Naam strongly begs to differ.

[lannarebirth]

Mrs Naam strongly begs to differ.

Those are the times one probably wishes they'd chosen a larger breed of dog as their pet. In case one needs to share lodgings.

[Abrak]

however, based on today's available figures i think that holding any physical gold in excess of five years basic living expenses is not justified. Mrs Naam strongly begs to differ.

Cant argue with that. Mrs Naam does however have an argument that this represents 'golden handcuffs' (or is it a 'golden parachute'.)?

[Abrak]

what i want to know is this,, in the past ive bought some gold, took it back a few months or a year later and lost money on it, so why does my wife insist that i keep buying her gold ? shes convinced it allways goes up in value.

am i being taken for a ride ?

Not really. When you buy your wife gold you will lose money.

My girlfriend comes up with amazing charts on diamonds - like their relative performance to the Zimbabwe dollar (not recently) and tells me I can make a lot of money by buying her a big ring.

[Naam]

however, based on today's available figures i think that holding any physical gold in excess of five years basic living expenses is not justified. Mrs Naam strongly begs to differ.

Cant argue with that. Mrs Naam does however have an argument that this represents 'golden handcuffs' (or is it a 'golden parachute'.)?

the only valid argument Mrs Naam has is that our income is a multiple of our expenses and that's the reason why it does not make any difference whether gold or (presently) cash rots away without providing any yield.

[Pakboong]

I sure hope gold is entering a bear market. I want to buy some more and would like a better price.