Thursday, Feb 21, 2008
Gold hits 946 and ounce
Safe Haven: Gold & Whirlwind of Crisis
The gold & silver prices will rise from the cheap money, low interest rates, stimulus packages to ward off recession, rescues to banking, and lower USDollar. But the USEconomy desperately needs the next ‘Policy Bubble’ in order to come back to life, to produce jobs, to change national psychology, to revive hope. Without a plan to puff a new bubble, which will buy some years of time, the nation will morph into chaos. A military dictatorship would be the only alternative. The urgent next step is leaders with some vision, rather than a plan for private profiteering, founded upon fear. Hope pays off more than fear, unless fascism is the end game.
Posted by sold 2 rent 1 @ 09:22 AM (990 views) Add Comment
27 Comments
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1. sold 2 rent 1 said...
2. bystander said...
what does 185/ 175 mean in laymans terms???????????
3. nopensionnohouse said...
Just sold mine... Kerching ;o)
4. techieman said...
bystander - thats a difficult one to answer! In laymans terms the opinion expressed it means its going down obviously :-). Essentially its a weighted average against a basket of currencies. Found this (quickly) on the US $ index. The detail of the equivalent will be on the exchange that trades it.
https://www.theice.com/publicdocs/nybot/ICE_Dollar_Index_FAQ.pdf (page 2 should help!).
s2r1 - Looks like the 940 level was an intermediate top - TM = Wrong!!! :-) Still thinks its part of an extended 5th though!
5. techieman said...
Here's his view thats pertinent here:
"The British are also feeding the gold bull. The Bank of England has ordered two official rate cuts, not back to back though. My forecast is for the complete decline of the UK housing market, the complete decline of the UK economy built atop it, and the complete drubbing of the British pound sterling currency. When the pound sterling 20-week moving average crosses below the 50-wk MA (circled in green), technical traders will take the sterling currency down toward 187. My eventual forecast target is in the 175 neighborhood. A disaster comes to the UK, just like the Untied States. Think AngloSphere. The tough call is whether money exiting England will pursue the euro or USDollar. As problems crop up further in Europe, my bet is the money will chase the USTreasurys, crude oil, and gold."
What does a "complete decline" mean?
6. cornishman said...
bystander, techieman - I took the numbers 185/175 to be cents to the pound. Is that not right?
eg 2.10 dollars to the pound last November and 1.95 about now...
That being the case, 1.75 is only where we were not very long ago.
7. techieman said...
Whoops!! TM = Wrong again (best i liquidate all positions!)_ - I thought i hadnt heard of a BP Index!! :-). But then just cause i hadnt heard of it doesnt mean it didnt exist somewhere! I thought that chart looked familiar! Duh! you're right Cornish!!! Trick question from bystander!! Break of 1.94 triangle = swift break lower as the end of the 1st move down. Then a retracement.........
8. sold 2 rent 1 said...
TM,
"As problems crop up further in Europe, my bet is the money will chase the USTreasurys, crude oil, and gold."
USTreasurys - no no no no no.
US M3 is growing at 18.3pc so massive inflation and USD devaluation ahead.
The USD index may bottom at the low 70s but that is because the EUR, GBP and YEN will fall too and mask the USD devaluing.
Proper devaluation must always be benchmarked against gold.
Read - Bubble Trouble: Could the US Treasury market be due for a rapid price deflation?
http://www.pr-inside.com/bubble-trouble-could-the-us-treasury-r422955.htm
9. happyrenterz said...
Gold has been a laggard compared to a lot of commodities Platinum Price Goes Ballistic; Gold to Follow?. When recession fears get stronger I suspect a lot of these industrial commodities are going to come down and the money will go into gold. The IMF selling gold was just another attempt by financial authorities to keep it down, and based on history means gold is about to gallop up a lot further.
10. techieman said...
s2r1 - yes i'd go along with you re US Bonds, have thought that for a while.... re currencies- am still a fan of the Swissy. Am still reluctant to be uber bull re gold - i suppose because if that works out it would be uber good for me! BTW there is a google presentation re Mayan stuff that i havent watched yet.(guy with a flipboard) ... is that a good (basic) source?
11. techieman said...
s2r1 - I was just highlighting the extract applicable to this site - i.e. re the HP, I suupose i should have left out the "tough call...." sentence.
12. cornishman said...
The price of diesel at the pumps took an age to go through the £1.00/litre mark recently - but when it did, it romped up to £1.09 very easily. I reckon that now the oil price has breached $100/barrel, it will similarly go to $109 very easily. That being the case, gold being in lockstep, gold should follow it up. Then gold will be near $1000 and will 'dither' around there for quite a while.
That's my un-educated, gut-feel, two-pennyworth anyway!
13. stillthinking said...
All of this is gambling on the price of gold, not really investing for a stable return. The gold price depends on inflation but so far it isn't clear yet whether we will suffer from extreme inflation or deflation. There is inflation coming now, true, but there are also opinions (right or wrong) that inflation will be short term. The example of Japan seems to suggest that there is a strong possibility of deflation when the housing bubble fully bursts, and that is in progress now.
If people borrow less either because they are denied or because their requirements are lower, then there will be less credit supplied->deflation. Further, the effects of heavy taxation and tightening of rates of borrowing are effectively the same as increasing interest rates, no matter what the "official" rate is.
Bernanke may -wish- to re-inflate the US economy, but that doesn't mean that he can successfully do so.
So the future price of gold is not known because you could argue up or down it seems to me. Pensioners, savers and property speculators becoming destitute is not the same as a systemic financial collapse.
14. stillthinking said...
On another note, it seems to me, assuming everything is correctly priced, that if the economy shrinks because of a recession, there is -no- safe haven because all values are relative, and so everybody, rich or poor, gets poorer. The real value of gold must shrink in a recession because that is the opposite of the value increasing when the economy expands. Gold is a static amount, the economy is either getting bigger or smaller, and gold if viewed as money reflects the economy. If the economy shrinks then there is relatively more gold per unit of economic production, and so the value of gold will go down. However, the supply of money can go up and down, and so if the economy shrinks and the money supply shrinks, then money will hold value but gold won't.
????????????????????????
15. techieman said...
ST - you are absolutely spot on in some of your comments:
1. "it isn't clear yet whether we will suffer from extreme inflation or deflation" and
2. "So the future price of gold is not known because you could argue up or down it seems to me"
If there is a debt deflation then if all other things are equal there will be deflation. If that is conteracted by other methods of inflating the money supply there could be (extreme) inflation.
This is where i differ from most people on here - which is very strange because i have a significant interest in Gold going higher. My view is with you that yes there will be deflation and recession / depression. In that period there will also be selling of all assets. The question then is when does this start and will prices of energy and commidities go higher which will then exacerbate the price inflation before the credit deflation. So first off yes, but then credit deflation comes in and takes out any additional inflation - so gold higher and then lower.
How much higher, and how long for are the quadzillin questions. Personally i let the charts decide, (the price of Gold in my view is a lead indicator) so if we get a blow-off i'm out. I'll also be a scale up seller going up, and wont be adding to a core position. Now relative to gamling with trades in and out then if i see opportunities in gold i'll go with that (long or short).
Now s2r1 things it will take longer and go higher than me and also that it will end with a new world order per the Mayan calender's prediction of 2012. I hope i havent misquoted him.
16. techieman said...
p.s. sorry about the spelling am in a bit of a rush at the mo.
17. cornishman said...
Stillthinking - my understanding is that gold did not do very well between 1980 and 2000 because one could get a better return in the stockmarket or property. But, if we go into a major recession/depression, as you say, the price of most assets should fall. Many people will sell and hold cash in the short term. But if the value of that cash is being eroded because of government/central bank efforts to reflate the economy by printing money, then increasing numbers of people will look to gold as a store of value. The very limited amount of gold in the world will then be in demand from increasing numbers of people. The price will inevitably end up in bubble territory though at some point - so picking the best time to get out will be interesting!
I think we are going to have decreasing asset prices, increasing energy prices, and eventually increasing wages/strikes/winter of discontent - and Gordon Brown will wish he hadn't bottled it when he did!
18. happyrenterz said...
@TM at what level do you call it a blow-off? Does it have something to do with the speed of the price spike to identify it as a blow-off? I would say the platinum price spike at the moment is a blow off. Pic from the article I posted above.
19. sold 2 rent 1 said...
techieman and stillthinking,
The US money supply has to keep growing at faster and faster rates to prevent deflation. Currently US M3 is 18pc and rising
The Fed cannot win because at some point inflation begins to take off (a recession may delay the inflation but cannot stop it eventually if M3 keeps growing).
More debt is the only way to emerge from a recession.
The Fed are balancing massive deflationary and inflationary forces to give us an acceptable net result.
At some point in the future (possibly 2010-11 when M3 is 30+pc) the whole system will become so unstable that it will explode into either massive deflation or hyperinflation.
Which one is not important because the fiat monetary system will be finished.
A new currency will be required and since all counties are exploding their own money supply as well, we might as well have a world currency which will be backed by gold seized from us at a knocked down price.
The guy with the flip chart is Ian Lungold. He and Calleman worked on the Mayan Calendar theories together. Their ideas tie in with other cycle theories and gold.
http://www.gold-eagle.com/editorials_04/bloom060904.html
20. stillthinking said...
hmmmm....
The only point to reflating the economy is to jump start real economic activity, if that isn't possible, then I don't think the government will pursue inflation as a strategy because without additional economic activity then what is the advantage? If lower interest rates don't encourage spending then there is no benefit. Lower interest rates are being brought in to keep people in houses and to avoid repossession, not to stimulate the economy. Aren't we talking specifically about the pound vs. gold because whether the government prints money or not doesn't affect real value, as in you can strip paper money out of the real activities which are basically highly organised swapping of labour. The problem is a potential collapse in real activities.
Given state enforcement of paying bills in sterling, taxes, energy, food all being purchased in sterling, the whole market in gold is entirely psychological and always so. Plus its very easy to sell. So if the government fail to inflate, as they basically look as though might be the case, bank interest rates going up and borrowing falling now, as in today, then gold could collapse immediately. So even the thought that gold will go up and then fall seems a little bit suspect to me, because the fall might be tomorrow morning.
Having said that, I very nearly bought a few coins 4/5 months ago (all I can afford), but now I think too many people are thinking about gold and also there are too too many people who will realise a lot of profit by getting out. So seems like loaded up ready for a fall already.
Probably there will be strikes, because people won't want to accept the fact that in reality they are poor. An inflationary spiral won't change that.
21. techieman said...
Thanks s2r1 - I will watch the videos.
HR re a "blow off". Basically thats a good question! - My point is if the market goes up in large lumps with large volumes then i will want to get out. A good ( i think) comparison is the HP Bubble - that would qualify (probably) as a blow off top. How high, and how long - well thats what we have been trying to decide!
As for platinum, well i dont really know that market - looks good though would expect a blow off to be with people saying this is ridiculous (again sound familiar?) . I suppose if you look at an old Silver chart or even Gold (at the prior high) you will see what i mean. I dont think anyone really knows when the blow off top is in, its a case of luck really if you call it. I think Drewster mentioned the hairdresser indicator, so if your hairdresser mentions that a platinum ring is the must have then i suppose its time to get out. I'd say just dont be too greedy! Technically you could probably use a 10 DMA and determine when its too far away from that (again even thats subjective), In gold i'd say if you get a few days of $100+ per ounce moves AT THESE LEVELS (say 10% of the total value) then I'd be heading for the exits!!!!
I dont want to put you off though - take a look at how wrong this was (its 2006):
http://www.thestreet.com/markets/activetraderupdate/10280198.html?puc=_tscs
22. stillthinking said...
I think probably we all work in IT, so just as an aside, there is an XML trading interface exposed at GoldBullion (or maybe it was another one) for when the tension becomes too great and you need to sleep.
23. sold 2 rent 1 said...
"So if the government fail to inflate, as they basically look as though might be the case, bank interest rates going up and borrowing falling now, as in today, then gold could collapse immediately"
But this would indicate banks going bust as the 60 year debt bubble bursts.
If there were bank bailouts then this would be creating more money/debt and inflationary - so gold a good buy.
If there are NO bank bailouts then people queue up NR style and withraw deposits. Stocks crash, banks fail, gold is the safe haven.
Gold is the winner - until it is seized by the elite few who run the world.
24. Greenbay said...
thought i would stick my two pence worth in again just to stir it up a little...
i went to a landlord meeting yesterday concerning a lease back scheme being offered to landlords, they basically offer landlords a five year contract where they guarantee rent upfront every month without any void periods regardless if the property is tenanted, they guarantee any damage is covered etc etc and deal with all tenants basically totally handsfree for the landlord plus there is get out clause with six months notice if i required any of the properties back.
The rents are very good in terms of property prices around the newport area for example a 3 bed terrace they will give a net value of £525 per month and they range from 80000 upwards. so i must say im looking to purchase a few more and likewise the feeling im getting is many other landlords are doing the same....
Value mortgage interest Profit annually
£85,000.00 £76,500.00 £318.75 £206 2,475.00 7.4% yield
so for me its ching ching.. :-)
25. Happy Mondays said...
s2r1
Gold is the winner - until it is seized by the elite few who run the world.
Thats not such a bad thing, perhaps it will wake us up to the Numpties that control us! and maybe Ian Lungold is right, perhaps the beginning of another evolutionary step!
26. happyrenterz said...
Maybe talk of buying and selling gold is just playing the fiat currency game. They have made us view gold as a commodity. Gold is money. It is really not a commodity apart from to make jewellery. Do you trust your savings in fiat money or gold money? The fiat money used to offer value because you earned interest. But now central banks are destroying the value of our fiat money. So does the interest rate you earn now match up to the devaluation versus essentials like food, fuel, housing and goods? I suspect gold money will do a better job of holding its value against these things. And the added bonus is that if the whole fiat currency disaster goes down the drain, gold will be the only money left.
27. drewster said...
techieman,
The hairdresser indicator only works for things that hairdressers can trade. Platinum can't be bought easily, whereas gold coins and trinkets can be picked up from jewellers, antique dealers, grandmother's attic, etc. I expect hairdressers to start telling me about allotments this year or next, and how you can grow your own food far more cheaply.
I don't know enough about platinum to call this one, but I'm tempted by a flutter. It would really be just that, a flutter.
Read this very prescient MoneyWeek article from last month, when the price was just $1590: MoneyWeek: Why you should invest in platinum this year