Gold Prices To Continue To Drop, Says Expert

[Naam]

The ship seems to be sinking pretty rapidly in Europe.

Those of us buying gold are not doing so to 'make money', we just want to maintain our purchasing power during the years ahead.

-some ships might be sinking in Europe but Europe won't sinking.

-correct is that a certain unknown percentage of those who buy gold are not doing so to make money. logic, markets and market figures however prove clearly that the majority owns gold or trades gold for no other reason than to make money.

[Naam]

It's each to his own and very much up to you.

For those with an interest in gold markets check out www.gata.org

(Mods: It's a non-profit making organisation, so not a commercial link)

notwithstanding the fact that "GATA" provides some interesting reports, the organisation is well known as being utterly biased pro-gold as well as providing an outlet for hair raising conspiracy theories and the spread of gloom&doom reports. for the record:

"The Gold Anti-Trust Action Committee seeks financial and moral support from gold mining companies, investors in gold mining companies and physical gold, and people who seek to preserve gold's vital role in the world's economy."

...incorporated in Delaware (most people have certain thoughts when they hear "Delaware Inc."

[Naam]

Equally I also find it psychologically fascinating that some people have an astonishing and naive belief that pieces of paper can continue to be printed ad nauseam bearing such laughable words as “ in God we Trust “ ( whereas the people behind it can't even be trusted to give you the right time of day ) should somehow continue to represent a measure of buying power?

[pipo1000]

Equally I also find it psychologically fascinating that some people have an astonishing and naive belief that pieces of paper can continue to be printed ad nauseam bearing such laughable words as “ in God we Trust “ ( whereas the people behind it can't even be trusted to give you the right time of day ) should somehow continue to represent a measure of buying power?

Probably they are aware of it and for that reason they print that we should only trust in God.

[farang000999]

I don't deny that many gold bugs, especially those on the internet, tend to be ecentric and believe in conspiracy theories. However, this does not take away from what is happening in real life.

-The US government has taken no steps to cutting spending. They are borrowing 40 cents for every dollar spent.

-China has slowed it's purchasing of UST and no longer runs trade surpluses.

-The Fed has become a significant purchaser of UST

-Bernanke gave a speech on deflation in 2002. In it he said that deflation is the result of a lack of agregate demand. He also said that deflation can be prevented by devaluing the currency. He praised FDR for devaluing the dollar by 40%. In the speech, he listed options available to the Fed should deflation continue to be a risk despite 0% interest rates. So far, he has followed ALL of his own suggestions: Q1+2, Twist, ZIRP, Dollar Swaps.

-Since the Fed came into existence we have had deflation only a couple of times and each period has been very short.

-Without cheap money, all the banks, all Ben's friends will be bankrupt

-Without cheap money, all the polititians will become unelected as seen in Europe.

Yet here we are again. We appear to be headed to recession and shelter is sought in the USD. Is this a rational decision?

It is possible that the market will never embrace gold. Personally, the only suckers I see are the ones holding the USD. You hold dollars. I will hold gold. And unlike other debates, we will eventually have a winner and a loser in this one.

Edited May 18, 2012 by farang000999

[midas]

Yet here we are again. We appear to be headed to recession and shelter is sought in the USD. Is this a rational decision?

It is possible that the market will never embrace gold. Personally, the only suckers I see are the ones holding the USD. You hold dollars. I will hold gold. And unlike other debates, we will eventually have a winner and a loser in this one.

Its delusional to think the dollar can continue as a safe haven.

And if the market doesnt embrace gold then ultimately i predict Americans at some point

will have greater faith in one of these ( or both ) above a piece of paper

Edited May 18, 2012 by midas

[xylophone]

Oh dear more incorrect info and doomsayers.If gold were an inflation hedge why did the inflation adjusted price of gold fall from almost $1850 in 1980 to $352 in 2001? Over that time period 21 years, it lost over 80% of its value. You'd have been well out of pocket then and still would be now even at this speculation fueled high.

there... there Xylophone, let's not get carried away. gold reached 850 not 1850 and its low during the afore-mentioned period was ~265

Appreciate your postings Naam, however the stats were from "InflationData.com" and not made up by me, although they could still be wrong of course. Anyway enough data around to show that gold has not been a good hedge against inflation over the past 30 yrs or more.

[Sophon]

Oh dear more incorrect info and doomsayers.If gold were an inflation hedge why did the inflation adjusted price of gold fall from almost $1850 in 1980 to $352 in 2001? Over that time period 21 years, it lost over 80% of its value. You'd have been well out of pocket then and still would be now even at this speculation fueled high.

there... there Xylophone, let's not get carried away. gold reached 850 not 1850 and its low during the afore-mentioned period was ~265

Appreciate your postings Naam, however the stats were from "InflationData.com" and not made up by me, although they could still be wrong of course. Anyway enough data around to show that gold has not been a good hedge against inflation over the past 30 yrs or more.

I think that Naam are quoting actual gold prices while you are talking about inflation adjusted gold prices - hence the difference.

Sophon

Edited May 19, 2012 by Sophon

[Naam]

I think that Naam are quoting actual gold prices while you are talking about inflation adjusted gold prices - hence the difference.

Sophon

that is clearly the case, therefore Ladies and Gentlemen, the winner is... Sophon

my mistake: i overlooked "the inflation adjusted price of gold fall from almost $1850 in 1980..."

Edited May 19, 2012 by Naam

[xylophone]

Settled then.......thanks to all.

[rakman]

While it is easy to see lots of gloom and doom spreading around, those of us who were around in the 1970's have seen it all before.

I'm sure ex-Pres Jimmy Carter is happy to find he's not the worst president in US history anymore.

Once the engine gets going again, a huge upswing in economic development will take off. What's keeping things from getting going is PrezBO saying one thing and his administration doing the opposite. He's added more to the deficit in 3 1/2 years than any other president in 8 or 12, with no end in sight of his budgets. His 2013 budget was voted down 513-0. No one in his party would even vote for his budget. Last year's budget was also nearly unanimously voted down, too.

His campaign promise to cut the deficit in half in his first term was a lie.

There is a term for PrezBO. ONE Term.

[cdmtdm]

u serious ..its that easy? get rid of obama and away we go ?

[Bpuumike]

u serious ..its that easy? get rid of obama and away we go ?

If it's not Ron Paul then more same-same and keep buying gold methinks.

[binjalin]

As a student I use to listen to speeches predicting the inevitable collapse of capitalism from representatives of the revolutionary left and now I am listening to weird stuff from gold bugs with their bags of coins. Maybe it is the same people a little older?

It is usually, but rather than being representative of the revolutionary left, their views have morphed into the extreme rabid right.

Some people need to cling to these sorts of beliefs; it is a comfortable and convenient worldview for them. It helps explain the chaos of modern life; a chaos and uncertainty that most of us are happy to accept and adjust to.

Sadly you are wrong, in that this world view is neither comfortable nor convenient. In fact, it is a terrifying and unsettling view, and one which I would rather not have. Life would be convenient if I could simply put my head in the sand and pretend that the status quo could continue and that business as usual would return. The problem is I understand too much about the physics of energy depletion, and I have studied way too much on the reasons and mechanisms which have caused civilizations throughout history to collapse.

We are on a collapse trajectory. You don't need to be a prophet to see that, only look at the data and accept what it is telling you. But there will always be people who refuse to accept what is happening, even as the Titanic is sinking around them. There is nothing anyone can do to help them. They will go down with the ship. The real problem is, the ship is so big and sinking so slowly that we may all die of old age before there is any consensus that the sinking is irreparable. That is one of the other things history tells us. Even if you know you are in a collapse scenario, it will be too difficult to convince the vast majority of the danger and change their habits in time.

So I just keep buying gold as I can. I like it when it goes down, because I know long term it is going up. But Naam is correct that short term predictions require a crystal ball. Whenever I try to talk to him about the price in 30 years though, all I get is that he isn't interested in that time frame as he will be dead. But I can't even begin to speculate what might happen on a scale shorter than that. As I said above...the ship is sinking slowly.

So I just keep moving slowly towards the exit away from all fiat currencies, and hope for the best. My children will hopefully appreciate my efforts.

and there are not enough 'lifeboats' - jeeze it's frightening - I am losing on Gold but have no intention of bailing out as there is... really... no alternative

I do think, though, that this may take decades to roll out - the enormity of it - and so hopefully I will be much closer to dying and not have to worry too much

Edited May 20, 2012 by binjalin

[lovetotravel]

Having lost my ass on gold before, I'm a firm believer in the fact it won't ALWAYS go up. My neighbor bought in big time last summer. He now wishes he hadn't.

Here's an interesting article:

http://money.cnn.com...arkets/thebuzz/

For any investor who views gold as an alternate currency and believes that the metal's price should move higher thanks to turmoil in Europe and worries that the euro would completely unravel if Greece exits the eurozone, think again.

Gold bugs may be forgetting that gold really thrives during times when inflation fears are running rampant. This is not one of those times. The sluggish U.S. job market, slowing growth in China and recession in much of Europe all scream global economic weakness.

"Inflation is modest because of significant unemployment, The case for gold is when the economy is getting better," said Barry Ritholtz, CEO of Fusion IQ, a New York-based research firm. "Right now, gold is less than an ideal investment."

Investors in gold miners seem to be betting on further price declines as well. The Market Vectors Gold Miners ETF (GDX), which owns shares of mining leaders like Barrick Gold (ABX), Goldcorp (GG) and Newmont Mining (NEM, Fortune 500), is down nearly 20% this year.

"Gold doesn't have any earnings. It doesn't pay you interest. It's a shiny yellow metal. Its value only comes from its relative rarity. It should trade on supply and demand," he said.

Gold is a commodity first and foremost, not a currency. Commodity prices, even for something like gold that doesn't have as much commercial use as other metals, tend to closely track consumer demand. So it should be no surprise that gold prices are now tumbling.

[Bpuumike]

As a student I use to listen to speeches predicting the inevitable collapse of capitalism from representatives of the revolutionary left and now I am listening to weird stuff from gold bugs with their bags of coins. Maybe it is the same people a little older?

It is usually, but rather than being representative of the revolutionary left, their views have morphed into the extreme rabid right.

Some people need to cling to these sorts of beliefs; it is a comfortable and convenient worldview for them. It helps explain the chaos of modern life; a chaos and uncertainty that most of us are happy to accept and adjust to.

Sadly you are wrong, in that this world view is neither comfortable nor convenient. In fact, it is a terrifying and unsettling view, and one which I would rather not have. Life would be convenient if I could simply put my head in the sand and pretend that the status quo could continue and that business as usual would return. The problem is I understand too much about the physics of energy depletion, and I have studied way too much on the reasons and mechanisms which have caused civilizations throughout history to collapse.

We are on a collapse trajectory. You don't need to be a prophet to see that, only look at the data and accept what it is telling you. But there will always be people who refuse to accept what is happening, even as the Titanic is sinking around them. There is nothing anyone can do to help them. They will go down with the ship. The real problem is, the ship is so big and sinking so slowly that we may all die of old age before there is any consensus that the sinking is irreparable. That is one of the other things history tells us. Even if you know you are in a collapse scenario, it will be too difficult to convince the vast majority of the danger and change their habits in time.

So I just keep buying gold as I can. I like it when it goes down, because I know long term it is going up. But Naam is correct that short term predictions require a crystal ball. Whenever I try to talk to him about the price in 30 years though, all I get is that he isn't interested in that time frame as he will be dead. But I can't even begin to speculate what might happen on a scale shorter than that. As I said above...the ship is sinking slowly.

So I just keep moving slowly towards the exit away from all fiat currencies, and hope for the best. My children will hopefully appreciate my efforts.

and there are not enough 'lifeboats' - jeeze it's frightening - I am losing on Gold but have no intention of bailing out as there is... really... no alternative

I do think, though, that this may take decades to roll out - the enormity of it - and so hopefully I will be much closer to dying and not have to worry too much

Your'e obviously younger and more optimistic than me

[pcruzer]

there is no shortage of gold so the market is dominated by speculation. the big boys will move out without notice & your gold investment will be trashed. its happened before. be careful

[Bpuumike]

there is no shortage of gold so the market is dominated by speculation. the big boys will move out without notice & your gold investment will be trashed. its happened before. be careful

There is a shortage of gold in many places (so premiums increase), even sometimes in Bangkok.

There's never any shortage of 'paper' gold which I think is what you're really talking about.

[how241]

And its gone up 400 Baht today already...maybe he needs to polish his crystal ball

Correct. It's all a guessing game. Good Luck.

[binjalin]

there is no shortage of gold so the market is dominated by speculation. the big boys will move out without notice & your gold investment will be trashed. its happened before. be careful

There is a shortage of gold in many places (so premiums increase), even sometimes in Bangkok.

There's never any shortage of 'paper' gold which I think is what you're really talking about.

they 'say' the paper is backed by 'physical' and that's just bo***cks

[farang000999]

where have you seen gold shortage in bkk?

[rick75]

I was watching a show this morning in Australia and they had an economist on, His advice is gold is way over valued and not a great way to hold your investment let alone make money........I really don't know, trying to guess the gold price is a mugs game and this was told to me by a bullion dealer some 10 years ago.....I have my jewellery store on the market at the moment if anybody wants to buy gold, you can buy a shop full.

Edited May 20, 2012 by rick75

[midas]

I was watching a show this morning in Australia and they had an economist on, His advice is gold is way over valued and not a great way to hold your investment let alone make money........I really don't know, trying to guess the gold price is a mugs game and this was told to me by a bullion dealer some 10 years ago.....I have my jewellery store on the market at the moment if anybody wants to buy gold, you can buy a shop full.

as an Australian myself I am interested in knowing more about this economist you refer to and the show he was on ?

Do you have any more details please such as what his name was?

[rick75]

Marcus Padley and it was on ABC Inside Business, I have a mate who is big in investing in metals, His focus moved away from gold and has been on the white metals, Palladium, Platinum and Rhodium.

[midas]

Marcus Padley and it was on ABC Inside Business, I have a mate who is big in investing in metals, His focus moved away from gold and has been on the white metals, Palladium, Platinum and Rhodium.

With all due respect this guy is listed as a stockbroker not an economist and as far as I'm concerned he has as much credibility regarding this issue as a snake oil merchant.

http://en.wikipedia.org/wiki/Marcus_Padley

That is why I asked you what his name is because I have never heard any bona fide economist recently talk in those terms – i.e. referring to gold as a means of making money as opposed to an insurance against economic uncertainty such as a loss of confidence in fiat currencies the effects of which could spread around the world like a bushfire.

I wonder what Marcus Padley’s opinion would have been about holding Zimbabwean dollars between 2006 and 2009 ?

[rick75]

You should be able to watch the segment on the ABC online and make up your own mind, He backed up His argument with a couple of Stats.

My gut feeling and I have been watching the gold market on a daily basis for 20 years as its a big part of my business, is that the World is not going to come crashing down and that He is right, Gold is over valued and will slide over the next 6 months. If I am wrong I guess I am ok as I have a fair whack of gold in stock.

[lovetotravel]

This seems to be a pretty good article on gold:

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=142718&sn=Detail

[midas]

This seems to be a pretty good article on gold:

http://www.mineweb.c...42718&sn=Detail

yes a good article

With a 1930's environment threatening to engulf Europe, the ECB and other central banks (including the PBoC) will maintain extremely loose monetary policies throughout 2012

[midas]

You should be able to watch the segment on the ABC online and make up your own mind, He backed up His argument with a couple of Stats.

My gut feeling and I have been watching the gold market on a daily basis for 20 years as its a big part of my business, is that the World is not going to come crashing down and that He is right, Gold is over valued and will slide over the next 6 months. If I am wrong I guess I am ok as I have a fair whack of gold in stock.

I don't think anyone is expecting the world to come crashing down but there are a few

currencies that look decidedly shaky

[Bpuumike]

where have you seen gold shortage in bkk?

Yaraowath Road (excuse the spelling) just a few months ago; Thai's like to buy in force when the price dips. The shops did not have 1, 2 or 5 Baht 'biscuits' available but for a 50% deposit they would supply them as soon as available at the price on the day you paid the deposit.