Gold strategy in the current economy

[Killer Bunny]

Slightly off topic but what happened to the Bubbly Bitcoin thread? I can't find it.

[jiltedjen]

http://www.housepricecrash.co.uk/forum/index.php?/topic/194150-the-bubbly-bitcoin-thread-merged-threads/

[Killer Bunny]

TUVM

[200p]

Tracking George Soros' Portfolio - Q1 2016 Update

Barrick Gold (NYSE:ABX) & SPDR Gold Trust ETF (NYSEARCA:GLD) Calls: These two are large positions established this quarter. The BX stake is the largest individual stock position in the 13F at 5.82% of the portfolio. It was purchased at prices between $7.38 and $15.18 and the stock is now at $17.63.

From
http://seekingalpha.com/article/3976281-tracking-george-soros-portfolio-q1-2016-update

Note 13F filings have a 45 day lag, so he may be out of the position, holding, or adding at this time.

I think he probably bought in the $10-12 area.

Edited May 20, 2016 by 200p

[Errol]

- On average during the exact spans of all 11 of the Fed’s rate-hike cycles of the modern era, gold rallied 26.9% higher.

- The majority 6 of these 11 cycles have seen gold gains averaging a staggering 61.0%! Gold is more likely to rally big during a Fed-rate-hike cycle than fall, contrary to speculators’ self-fueled delusion today.

http://investmentresearchdynamics.com/fed-funds-rate-hike-another-empty-threat/

Edited May 20, 2016 by Errol

[dgul]

Looks like the pound gold after brexit.

Well, to throw it around the other way, what % pop in the pound (and thus drop in Au in £) would we expect if the country votes Bremain?

[Killer Bunny]

None.

[dgul]

None.

I'm not sure it is priced in. It would be minor compared with the impact of Brexit on the £ (in the short term)

[Killer Bunny]

£, house prices, st mkt, gilts etc will do what they were going to do

[dgul]

£, house prices, st mkt, gilts etc will do what they were going to do

We could have had that on page 1 of the thread and saved ourselves a lot of typing.

[200p]

I'd better add, gold prices will go down COLLAPSE if we vote for Brexit. (assuming if you are a bull).

And they will go up ROCKET if you also vote for Brexit. (assuming if you are a bear).

BASICALLY EVERYTHING WILL GO AGAINST YOU IF YOU VOTE BREXIT.

"Don't vote for Brexit!" Says cute puppy!

Edited May 21, 2016 by 200p

[GreenDevil]

I expect a pullback until the FOMC fantasy rate hike in June. Then in june, whatever the fed does, either raise or not, youll see gold breakout above 1300 and the stock market fall. Then following the referendum, there may be a small pullback in the pound but shortly after as the economy starts to grow after a brexit, longer term youll see UK rate hikes, the pound strengthen above 1.6 long term. If we stay in the EU, itll be more of the same, ZIRP NIRP, QE HPI, lower standards of living, stagnation, house price rises 20% every year.

[Silverfinger]

No. I've admitted to not being overly informed with all the associated dynamics - interplays - comparison charts - possible new currency/gold backed payment systems (independent or like that suggested 'gold Ruble' theory the Russians might go for).

£900 quid, or just under as of today, for a 1oz gold coin, just seems a lot of money, to me. Yet perhaps not so to others, given these house prices and so many other high costs in the world.

It is funny that you would not compare gold to other things, but you still think that it is expensive. I'll look the house:gold ratio up for you.

Edited May 21, 2016 by Silverfinger

[Silverfinger]

So, Venger, the minimum price of the average UK house was a little less than 60 ounces in approx. 1937 and again in 1980. The max. was reached in approx. 2004 with 725 ounces for a house. Now we are at approx. 234 ounces/house, trending down since 2004. On top of that the greatest financial crisis the planet has ever seen started in 2007. What do you think?

PS: And if you compare credit creation to gold, you'll just get vertigo (hint: not from the gold price...).

Edited May 21, 2016 by Silverfinger

[Venger]

Hey Silverfinger / all - I'm prepared to be wrong. Very wrong even.

I'm not convinced with comparing gold to house prices of old, but you do have a good point. (Also I do hold to a hpc coming in). Also for all the credit creation, a lot seems to be parked up back at central banks (although not all of it by any means). Then you have negative rate scares, but also tightening credit in some sectors, and cravings for liquidity.

Also if you want to buy a house with gold gainz, at some point you will need to be in cash.

I have sold physical before. Like many others, took a small position around 2008 - (even though was hoping for HPC... the Northern Rock queues, and later in 2008 the Mortgage Rescues all over the place, with Gordon laughing if another bank had gone under - spooked me - HPI Super Bubble 1.0 to bank crashes and bailouts and his laughter).

..but sold some time ago, and at quite a lower price than today (so what do I know). What a chore though. Contacting dealer, asking for a price. Going to post-office. Sending out Special Delivery (max insurance cover is £2,500 per parcel btw, although my parcel didn't require that much cover).

For physical holders, do you know what sort of sell price one of the main dealers would offer today, if the buy is around £890-£910? I say it's expensive because £900 a 1oz coin, for £900 goes a long way for me, but yes, I might be lacking in wider perspective. After all current market we have people banging down mad money on all types of stuff, and there's the Chinese hundreds of billionaires and even more millionaires. £100m artworks, and all the risks of fiscal irresponsibility. So I am prepared to be wrong.

For those of you sat on good solid gainz from quite a long wave run, holding physical, are you not tempted to sell some of your position, to diversify?

https://www.bullionvault.com/gold-news/gold-investment-051720161

Edited May 22, 2016 by Venger

[Killer Bunny]

Another one saying house prices will rise 20% pa ad infinitum.

Hasn't realised economy is slowing down and stock mkt in downtrend.

Can't slash rates ever again.

Negative rates will be hugely deflationary.

[Silverfinger]

Negative rates will be hugely deflationary.

Does that mean that house prices will go down once the banks start paying us for the favour to take a loan from them?

[Killer Bunny]

So you believe all / most mortgages will be neg rates? Too funny.

[Silverfinger]

When the central banks move to negative refinancing IRs or if treasury yields become too negative (eg in Germany), I think that is a real possibility.

Only 10 years ago people thought that the idea of NIRP was ludicrous.

[Killer Bunny]

Lend me £1m and pay me £50k pa to borrow it. Er, ok.

[Silverfinger]

Lend me £1m and pay me £50k pa to borrow it. Er, ok.

Already happening in the bond markets. What will you do eg as a large insurer (and if you are too stupid to buy or prohibited from buying gold)? Buy 10,000,000 times a EUR 100 bill? You rather take a small hit and do it electronically the old way.

I also hear it is already happening in the corporate banking sector in the US. No interest, but a fee to deposit larger sums with the bank.

Edited May 22, 2016 by Silverfinger

[Killer Bunny]

What have those examples got to do with a bank lending me £1m and paying me £50k pa tp borrow? Nothing.

You're quoting deposits.

And yes lending as above like is going to happen to us. I look forward to it. Will be too funny if it happened.

Edited May 22, 2016 by Killer Bunny

[dgul]

Lend me £1m and pay me £50k pa to borrow it. Er, ok.

I think this is likely to happen soon.

eg, small company, borrows £1m to invest at 0% (in allowable project types), gets £50k pa over the loan lifetime as cashback from gov (as tax rebate, but with possibility of payment if the co. isn't paying that much tax).

Edited May 22, 2016 by dgul

[Venger]

I say you're lulling yourself into false sense of values with such views.

The hype from the press adds to such an outlook.

Yet money is still tight for many business/individuals. They're not just handing it over at the banks in giveway loans. Look at rise of payday lenders.

Banks stronger. Things set up for correction.

With government borrowing now absorbing so much of the total credit activity, even some conventional economists have begun to wonder whether still higher deficits would not do more harm than good - but to this point there has been little retreat from the view that easy money and more spending can get the economy moving again.

First of all, there is a structural impediment that limits the price reduction of credit. Nominal interest rates in the banking system cannot fall below zero. Banks cannot pay people to take money away.

Furthermore, people who borrow money must be able to retire their debt. This limits the willingness of creditors to lend and of borrowers to use the available reserves to create loans.

At interest rates above zero, investment generated by new debt must produce a rise in income higher than the interest rate, and sufficient to amortize the principal. Otherwise, any additional debt is contractionary.

The crux of the issue is whether running down the balance sheet buys recuperative time or merely postpones the inevitable. We suspect it is a policy of postponement, not prevention. It is the equivalent of encouraging a man who is afloat over his head to treat water rather than turn back to shore. Unless he is able to regain solid footing, he will eventually become exhausted and drown. So it is will an economy floundering in red ink. The multi-trillion-dollar losses are real. They can only be disguised until the good credit of governments is exhausted.

[Killer Bunny]

G and S and miners in downtrend for now.

Remember catching falling knives.

The mkt will tell if/when prices bottom by its behaviour