Friday, Aug 22, 2008
One for all the gold bugs here...
FT Alphaville: The American Eagle flies Away
Of note, but maybe not of great significance, the US Mint stopped selling American Eagle gold coins yesterday due to high demand.
Posted by james @ 10:25 AM (1280 views) Add Comment
42 Comments
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1. debtfree said...
No matter how hard the central banks try and force the price down, it aint gonna happen.
The demand is there, it was at $1000 and will be at $1500.
Everyone knows what cards the US are holding yet they are still trying to bluff the other players.
2. sneaker said...
The squeeze is on!
3. plato said...
Is anyone honestly surprised? Another case where denial ruled common sense.
4. mountain goat said...
No not surprised at all. We have soaring oil prices, war (and threat of more serious war if Israel bombs Iran), simultaneous inflation and deflation of housing and imminent bank failures.
5. harold said...
Wise comment on this can be found here:
http://goldmoney.com/en/commentary.php
Basically there is huge disconnect between the bullion market and paper market.
6. debtfree said...
Harold,
Here's another explanation as well:
http://seekingalpha.com/article/91357-the-disconnect-between-supply-and-demand-in-gold-silver-markets?source=yahoo
Well worth a read.
7. harold said...
debtfree
Yes, very interesting and plausible if somewhat convoluted. Turk is careful not to use the f-work as in "FRAUD". However, I'm sure he's aware of it. At present there are shortages of coins and small bars. If this morphs into a shortage of LBMA bars, then the price manipulation will become so obvious as to be laughable. When the big boys have closed out their short positions gold will be allowed to advance. At current prices gold seems a bargain (if you can get hold of it).
8. mountain goat said...
Nice conspiracy theory! Big bullion banks covering their short positions knocked down the price. Looks like it was hedge funds mainly that got hurt though. Quite a few blew up in the past weeks with the collapse of commodities and strength of USD. Small simple-minded people (like myself) simply started buying or held onto their holdings.
9. denzil said...
Interesting article. I'm not too proud to admit I don't know a huge amount about the gold market but after reading the article a couple of questions spring to mind, that hopefully someone can explain:
1: Based on supply and demand why is gold not much higher than it is. Are the big boys holding so much before closing out that they can artificially stifle an increase in price?
2: What real value does gold have? We need oil but is gold so essential to our survival that it warrants crazy prices, or is it similar to the emporers new clothes?
S2R1, where are you. I bet your (Calleman) end of money beliefs, love articles like this.
10. mountain goat said...
"What real value does gold have?"
Since we have a financial crisis you should ask this question about all things now, £, $, banks, your house ...
11. sold 2 rent 1 said...
denzil,
I just bought a load of gold stocks when the HUI was 315. It is now at 350.
We should see the HUI reach 500+ in spring 2009 and after a summer correction reach 900+ in spring 2010 when gold stocks have their mania
"1: Based on supply and demand why is gold not much higher than it is. Are the big boys holding so much before closing out that they can artificially stifle an increase in price?"
Gold is being suppressed to panic the weak investors so the big boys can buy it up on the cheap
The Fort Knox gold has not been audited for decades; it may well have been stolen years ago (by the big boys)
"2: What real value does gold have? We need oil but is gold so essential to our survival that it warrants crazy prices, or is it similar to the emporers new clothes?"
Firstly oil is not as essential as you think. The "free energy" systems that I have been studying may not be as free as I first thought. Read this
http://nasascience.nasa.gov/astrophysics/what-is-dark-energy
"It turns out that roughly 70% of the Universe is dark energy. Dark matter makes up about 25%. The rest - everything on Earth, everything ever observed with all of our instruments, all normal matter - adds up to less than 5% of the Universe"
So “free energy” systems could just be about obtaining energy from undetectable sources.
The first law of thermodynamics can still remain intact.
Secondly, the real power of gold (monatomic gold) has yet to be realised. I am still learning about this but if we have a total of ten dimensions in all of existence, gold may be them most important substance in existence coming from the ninth dimension.
Mad stuff but you did ask.
12. denzil said...
MG, that's not an answer.
I'll reword.
"what true real value does gold have or is its value an illusion?"
If you take a house as an example (albeit an over-priced house, because they all are still). That house comprises a large amount of raw materials, that took a large work effort to extract, fabricate, deliver and erect. The builder has to put in labour to construct those materials. The purchaser of that property needs to at least satisfy the effort in material and labour to construct the house, therefore it is possible to associate value with that house. But Gold, what intrinsic value does it have? In itself, what use does it provide other than being shiny and worn as either a fashion statement or wealth statement.
It has always struck me of another instance of dutch tulip bulbs. Like sheep people follow gold but its value has nothing to do with its value.
13. sold 2 rent 1 said...
Newman Energy Machine Beats the 9volt Energizer Bunny
http://video.google.com/videoplay?docid=-2699190582411275088
http://en.wikipedia.org/wiki/Joseph_Newman_(inventor)
14. denzil said...
Thanks S2R1.
Yes, that was mad!
Using the comparison of oil, long-term I would agree with you but most of the planet is massively dependant on oil NOW. Imagine a severe shortage of oil now, next year or the year after, economies would grind to a halt and the price of a "needed" resource would rise.
Looking at gold, it strikes me it is "coveted" not "needed", and it is a regarded as a safe haven that people turn to in periods of inflation but its true value is questionable because it has little value as a commodity but more to do with the fact that people percieve it to have value because other people are all jumping on the gold life raft and pushing up its price not its value.
I'm sure I'm not alone in finding it difficult to truly figure out golds value, but I've yet to read anything that logically explains it value, hence the comment emperors new clothes.
15. mountain goat said...
denzil will try be more explicit.
Your house may have cost £100k to build. A lot of this would be due to wages, which are a relative rather than fixed value. In 2007 the house may have cost £200k to buy, but in a depression you might only be able to sell it for £20k. So value is relative. You did ask about value. Gold is the default money when society breaks down, war, inflation, bank and currency failures (so your savings are lost) etc. At the moment our society is under financial stress so it is logical that gold has more value. When things recover people wont want to own so much gold anymore and its value will recede.
16. denzil said...
MG, thanks!
I was going to add to my reply to that your points about £, $ houses etc are really relevent if you believe in the severe deflation scenario (i dont) but it didn't answer the gold question.
I'll shutup now as I'm hogging this blog.
17. matt_the_hat said...
@ 9 denzil
I'd use Ron Paul's expanation - if 1 million squid was lost in a ship wreck tomorrow, and 1 million pounds worth of gold (68 kg) was also lost the same day - in ten years time which one do you think people would put their effort, i.e. human capital, into salvaging.
excuse the artistic license
18. Will said...
Why did Gordon Brown sell off our Gold last year ?
Because he has agreed with the US - they will not allow Gold to be used as a 'safe haven', as during past recessions.
PAST PERFORMANCE IS NO GUIDE TO FUTURE RETURNS.
19. James said...
Umm... To bring it back to the article, this isn't a jumping off point for conspiracy theories. The mint may just have run out of a very specific type of coin, due to not having enough of the type of stamp that produces it:
http://www.reuters.com/article/companyNewsAndPR/idUSN2151501220080821?pageNumber=2&virtualBrandChannel=0
You can still buy any number of types of other gold coins - and, indeed, American Eagles on the secondary market.
Still, good to see the usual suspects rocking up to spread their usual nonsense. s2r1, trust me on this, you don't understand dark matter. No one really does - even to the point of knowing if it exists or not. That's one of the reasons CERN's been built - you need a massive facility to even get a glimpse of the stuff. Suggesting that a bloke in a garage has come up with an engine that can run off it is utterly credulous. As is a belief in "monatomic gold from the 9th dimension". Though it would make a good name for a B-movie.
Mountain Goat - you don't appear to understand shorting -
"Big bullion banks covering their short positions knocked down the price"
Ummm... Explain to me how a 'big bullion bank' BUYING gold to cover a short *decreases* the price? How restricting supply would *decrease* the price? Basic stuff.
20. george monsoon said...
Mountain Goat - If what you say is correct, then it is no longer cost effective to build new. Developers will all go bust.
21. letthemfall said...
denzil:
The value of gold is pretty much down to its rarity and its traditional use as money. It seems to be universally regarded as a store of value, and is bought up when the more ephemeral forms of money (based on a promise to pay) look shaky in times of big debts which can't be repaid, as now. But as for the workings of future markets and the market affect various ways of holding the stuff, I understand little.
s2r1:
A lot of wacky pseudo-science I'm afraid. And as for free energy, solar energy is free. It's harnessing it that's the problem.
22. handle_it said...
@17 The only reason why anybody would risk fetching gold from the ocean floor would be to exchange it for assets or a fiat currency (the same thing essentially). The only only reason we want to hold-onto any particular asset or currency is how that possession makes us feel. The substance is of little importance. The ratio between an assets value in currency or gold will fluctuate depending on how people feel.
23. mountain goat said...
george monsoon - "Developers will all go bust."
Go bust or stop building now, reduce staff and weather the storm.
24. beartil2010 said...
Handle it - That's true
Gold fulfils many criteria to make it valuable. Colour is one; malleability is another; rarity is another, but again the key is it is not so rare thatit cannot be used for money, whereas platinum would be too rare and also not as easily identified; historically jewellery and wealth have been identified with gold. This makes it a perfect value store as well as a medium of exchange, all in one metal.
Also its non-reactive nature means it stores over the longest time periods. Hence all the movies about recovering ancient gold; it never deteriroates. The fact that you can't eat it or live in it does not mean it is useless; eating a burger now is great, but that burger has a finite period of usefulness, and so has a different type of value.
All these criteria together make gold valuable. Very interesting articles above, demand is sky high but the price is dropping!
25. debtfree said...
Coming 1st in the olympics warrants a Gold medal.
Pirates bury teasure...... full of gold.
Buddhist temples are coated in gold leaf.
The best known storage of wealth has and always will be.... gold.
Oh why oh why oh why.... please explain.
because gold the is rarest of the traditional precious metals in the Earth's crust.
26. Skingley78 said...
guys - I'd recommend reading cryptonomicon by Neal Stephenson if you want a cracking gold conspiracy theory.
27. James said...
debtfree - it's not. There are a *lot* of metals that are more rare.
beartil2010 - 'demand is sky high but the price is dropping' - you can't infer that from any of these articles. We know that retail demand for coins does not match supply. Is gold primarily bought by retail investors in coin form? If not, it's not true to say that demand is sky high as other, more significant forms of buying may have collapsed. Also, it appears supply has been constricted, so even demand for retail coins may not have increased.
Let me also say that gold at its current level does look quite attractive and (having missed my opportunity with the dollar) I may now have a punt in it. It's still a barbarous relic, but a profit's (hopefully) a profit!
28. sold 2 rent 1 said...
Now I am on a metaphysical roll
Read: Gold's Underlying Truth
http://www.marketoracle.co.uk/Article5389.html
QUOTE from article
"There are ten levels in all of creation. The top three are “not of this world” and the bottom seven are “of this world”. Further, as the quantum physicists are beginning to understand, the Universe is not only infinitely large it also infinitely small. There are wheels within wheels within wheels. Within each discrete wheel, these same ten levels exist. Gold, it appears, is “not of this world”. It is in the second highest level of all that exists. Silver, on the other hand, is in the top level of the bottom seven levels. Energetically speaking, it is at the highest level that is “of this world”. Remember that it was the shekel (made from silver) that was used as money in the days of the bible. Gold, it turns out, was never money. It had a far more important role – which was why it was so prized, and which was also why there was so much emphasis placed on gold in the Holy Temple. "
I watched this video on visualising the tenth dimension
http://video.google.com/videoplay?docid=4280922161474483340
Does the "ten levels in all of creation" in Brian Bloom's article refer to the "ten dimensions" in the video?
If so can monatomic gold allow our consciousness to get to the ninth dimension?
Maybe calleman's "global enlightenment" is about reaching the "tenth dimension".
Maybe as global consciousness reaches the ninth dimension, we will see the gold bubble peak, then it will be worthless as gold will not be required for the final evolutionary step to the tenth demension.
29. Will said...
debtfree
Gold medals are plated silver
Modern Pirates deal in drugs
Buddhist temples were built thousands of years ago.
Gold maybe rare but so are hens teeth. Ha Ha.
30. Will said...
Most website who believe Gold will rise in value in the next year or so are dealing in the stuff.
31. beartil2010 said...
Can I just point out that the Romans (who were around significantly before Jesus) used gold coins for high denominations - silver was more common hence lower value, gold rarer so higher denomination.
Of course I don't know anything about the ten levels of creation...
32. beartil2010 said...
Can I just point out that the Romans (who were around significantly before Jesus) used gold coins for high denominations - silver was more common hence lower value, gold rarer so higher denomination.
Of course I don't know anything about the ten levels of creation...
33. beartil2010 said...
sorry double post oops
34. mountain goat said...
James @19
You clearly haven't read the conspiracy theory article mentioned @6
35. James said...
MG - I did the first couple of paragraphs, then stopped. If the chap has no evidence and relies on unverifiable 'reports' as he seems to then I have no interest in his conclusions as they are built on foundations of sand.
36. Denzil said...
debtfree said:
"because gold the is rarest of the traditional precious metals in the Earth's crust."
Actually I don't think it is. The general theme seems to be that it's always been coveted therefore it still is. One day somebody will turn around and say, "that shiny stuff isn't of much use really, we can live without out". It's value will then plummet.
Does Gold tanking fit in with the Calleman model?
37. letthemfall said...
Good post s2r1. Great gooblegook. I bet you don't really believe any of it.
38. sold 2 rent 1 said...
Denzil,
Gold will be worth zero when global enlightenment is reached
39. malct said...
well done
40. malct said...
effing busy day!
41. This comment has been removed as it was found to be in breach of our Blog Policies.
42. debtfree said...
James / Denzil,
Just for the record.
TRADITIONAL metals. Not ALL metals.