Gold strategy in the current economy

[Take Me Back To London!]

my guess is that there is a 50:50 split on here, or maybe a third each in bull bear and don't care.

You could always do a poll. I'm sure a poll thread on the main board would be allowed to stand, even if it was to do with gold.

We had all this in 2008, there were greater doubts back then as to the outcome. The only difference now are the fundamentals are even stronger.

[The Masked Tulip]

Is it not possible that gold and silver will go down much further first before any inflationary bounce or surge upwards?

[quibble]

Is it not possible that gold and silver will go down much further first before any inflationary bounce or surge upwards?

Yes, this is the point - and will be, in retrospect, how we define this pullback/crash.

For a long time, Faber et al have been very clear on:

Not forgetting 1974-76 when gold halved and then went up eightfold.

My guess is that this is today's equivalent to that 50% pullback (but relatively small (edit: so far !!!) - some have been hoping for more).

I'm really interested in separating the trolls/timewasters on this thread from those who are prepared to make a real prediction that the gold bull is over. Only 2 so far. Who knows - it could be a useful indicator.

edit: do you remember domo? The Prechterite who was saying that he would buy everyone's gold @ $300 when it was $700 or something.

Edited April 24, 2013 by renewable

[Kipper]

I joined this forum hoping to be educated, in some way, shape or form, as I'm a complete biff when it comes to trading/markets/investments etc., etc.

A good few years ago, when I was first able to afford it, I followed my Father's advice and bought an oz of gold and a lb of silver (all in coins) as an 'emergency stash' and that's as far as my involvement with PM's go.

I'm now in the happy position of having some spare cash, which is earning zilch interest in the bank plus a couple of properties rented out - but don't want to go down that route again - and a regular decent'ish income so was possibly looking to buy some gold/silver, especially at these prices, as a long-term hedge with the intention of leaving it to my children/grandchildren as a sort of legacy when I pop-off.

Thanks to this thread I am now more confused than ever about that idea as opinion seems to be not just divided but polarised.- and am now seriously thinking of just sticking it away for five years at some crappy interest rate.

Surely, there's a better alternative ?

[Quiet Guy]

Thanks to this thread I am now more confused than ever about that idea as opinion seems to be not just divided but polarised.- and am now seriously thinking of just sticking it away for five years at some crappy interest rate.

Surely, there's a better alternative ?

Maybe not such a bad idea.

If you have 25 minutes to spare, try listening to this interview with Prechter before the recent battering.

Prechter's message is simple: we have deflation coming in spades which will hit everything so building up cash to stay liquid for future opportunities may make sense.

Right now, I'm not selling (yet) but I'm not buying either and I've been a metal bug for a while.

http://www.housepric...it-cw-39190.php

[weaker]

Technically the gold bull is over. 20% off peak.

Exactly what the paper chart painters want, no doubt.

I note that some gold dealers (one of the biggest in fact) are paying £10 OVER spot per ounce atm.

[Quiet Guy]

Is it not possible that gold and silver will go down much further first before any inflationary bounce or surge upwards?

Yes. Deflation is the main risk for now. I used to think that gold would do quite well in an deflationary environment but my confidence in that respect has been somewhat dented.

The odds on another drop seem better than a recovery in the near future.

[weaker]

Yes. Deflation is the main risk for now. I used to think that gold would do quite well in an deflationary environment but my confidence in that respect has been somewhat dented.

The odds on another drop seem better than a recovery in the near future.

I agree that in the short-term we may see another drop buying opportunity. However there is no way TPTW will let deflation take hold. They WILL start giving money to the public and other such madness, when demand (for credit) drops from here, as it is already starting to.

[weaker]

hehehe....considering the premiums charged by the Royal Mint for gold, this is quite telling that we possibly have hoardes of "noob" buyers chipping in here. The US mint sales are astonishing.

http://www.zerohedge.com/news/2013-04-24/us-mint-gold-sales-surge-highest-2009

First it was a tripling of gold sales at the UK Royal mint, and now with just 23 days in the month of April gone, it is the US Mint's turn to reports that more gold has been sold month to date than any month since December 2009 when a record 231,500 ounces were sold. In one day, the mint sold yet another 13,000 ounces of gold, bringing the total to 196,500, or more than triple the 62,000 ounces sold in the previous month.

[quibble]

I joined this forum hoping to be educated, in some way, shape or form, as I'm a complete biff when it comes to trading/markets/investments etc., etc.

A good few years ago, when I was first able to afford it, I followed my Father's advice and bought an oz of gold and a lb of silver (all in coins) as an 'emergency stash' and that's as far as my involvement with PM's go.

I'm now in the happy position of having some spare cash, which is earning zilch interest in the bank plus a couple of properties rented out - but don't want to go down that route again - and a regular decent'ish income so was possibly looking to buy some gold/silver, especially at these prices, as a long-term hedge with the intention of leaving it to my children/grandchildren as a sort of legacy when I pop-off.

Thanks to this thread I am now more confused than ever about that idea as opinion seems to be not just divided but polarised.- and am now seriously thinking of just sticking it away for five years at some crappy interest rate.

Surely, there's a better alternative ?

Well, for a start you need to have been reading HPC for more than 10 days

Then you have to figure out the motives for each individual HPC poster on the gold thread (if you're going to be swayed by anyone). Some listened to cgnao, some listened to RealistBear. Some might be happy, some might be bitter. Some might be trying to sell you gold, some will be trying to get you to follow their shorts. But you mustn't let some random anonymous poster on the internet decide your investment strategy.

The most difficult thing for you to decide is whether we are facing a future of inflation or deflation. Even if you manage that (and nobody knows), then you have to decide the effect of that inflation/deflation (or any of the myriad of half way options) will have on gold (or silver - which may well be different).

Then there are further complexities. Many of which have been covered in this thread. A good start would be to read it.

Then you have to do more research and decide for yourself.

Nobody knows. It's up to you to make your own decision.

Personally, I'm betting on gold going a lot higher.

Edited April 24, 2013 by renewable

[quibble]

Yes. Deflation is the main risk for now.

Haven't the CBs of the world demonstrated clearly enough that they will fight deflation with everything that it takes?

At the end of the day, they could post everyone on the planet a million pound bundle of notes.

Special delivery of course.

[Errol]

US Mint Gold Sales Surge To Highest Since 2009

US Mint's turn to reports that more gold has been sold month to date than any month since December 2009

http://www.zerohedge.com/news/2013-04-24/us-mint-gold-sales-surge-highest-2009

[pepactonius]

I joined this forum hoping to be educated, in some way, shape or form, as I'm a complete biff when it comes to trading/markets/investments etc., etc.

A good few years ago, when I was first able to afford it, I followed my Father's advice and bought an oz of gold and a lb of silver (all in coins) as an 'emergency stash' and that's as far as my involvement with PM's go.

I'm now in the happy position of having some spare cash, which is earning zilch interest in the bank plus a couple of properties rented out - but don't want to go down that route again - and a regular decent'ish income so was possibly looking to buy some gold/silver, especially at these prices, as a long-term hedge with the intention of leaving it to my children/grandchildren as a sort of legacy when I pop-off.

Thanks to this thread I am now more confused than ever about that idea as opinion seems to be not just divided but polarised.- and am now seriously thinking of just sticking it away for five years at some crappy interest rate.

Surely, there's a better alternative ?

When in doubt, diversify. Put some percentage in gold or silver, if you can find any for sale. Invest the rest in more conventional ways -- bonds, cash, shares, etc.

BTW, here's my prediction: I have no idea what gold will be in 10 years, maybe somewhere between $100/oz and $1000000000000/oz.

[Quiet Guy]

Haven't the CBs of the world demonstrated clearly enough that they will fight deflation with everything that it takes?

Attempts by central banks to create inflation have been surprisingly ineffective. Have you heard of the Japanese 'widowmaker trade'?

As well as money supply, you need to consider things like velocity, demand for currency and credit destruction.

I am happy enough with the idea that central banks have created latent inflation but right now we seem to be headed for deflation.

(edit for spelling)

Edited April 25, 2013 by Quiet Guy

[weaker]

by the way, i think it is comex options expiry TODAY, so watch out for another dip (the paper boys like to make sure as few people as possible get paid out).

[bearwithasorehead]

snip

so was possibly looking to buy some gold/silver, especially at these prices, as a long-term hedge with the intention of leaving it to my children/grandchildren as a sort of legacy when I pop-off.

snip

Very worrying comment. Still very high prices and you seek an entry point. And yet, with the same issue in property you don't want to invest there. Tell me, what's the difference between a bubble in property and in precious metais?

[The Masked Tulip]

Very worrying comment. Still very high prices and you seek an entry point. And yet, with the same issue in property you don't want to invest there. Tell me, what's the difference between a bubble in property and in precious metais?

That is a very good point. Arguably, FLS will push up prices so a speculator would now be looking perhaps to buy and flip property.

Re above - would love to know what the Japanese Widowmaker is.

[Guest_FaFa!_*]

That is a very good point. Arguably, FLS will push up prices so a speculator would now be looking perhaps to buy and flip property.

Re above - would love to know what the Japanese Widowmaker is.

Shorting Japanese Government Bonds on the assumption that Japan will lose control of its interest rates is the Widowmaker trade. People making that trade have suffered eye watering losses due to their poor grasp of the monetary system.

[Errol]

due to their poor grasp of the monetary system.

Kyle Bass?

"I actually think it's the beginning of the end... When you have 20 years of pro-cyclicality of thought manifesting itself in the way that it has in Japan…I am not naive enough to think I can predict the end of a 70-year debt super cycle with any kind of precision, but looking at the changes in the qualitative perception of the participants is something that I think is key to the situation and we saw a big change on Friday."

"When I started sharing our views more globally it was the middle of 2010 and I said I believe the stress would begin to show itself in the next three years. Pretty much three years in, we're close, and the stress is beginning to show. Maybe that was luck at the time, but now when you ask the timing--look everyone wants the crystal ball and it's really difficult to predict this, but what you can do is follow where I think the stresses are going to show in the marketplace, but more importantly, you have to get into the heads of the participants because they all have a collective sense of fatalism. When you do the quantitative analysis here, you know they are insolvent. Everyone who owns the bonds knows they are insolvent. It's a question of how long they can hang on. What changes their views are a multitude of variables, but it's really important to follow any change in those views. When you see things like Argentina, Greece, Cyprus, Ireland, Italy--you see how fast things go from perfectly stable to completely unstable. In this case I think it will happen more quickly because of the 20 year buildup."

[Guest_FaFa!_*]

Kyle Bass?

"I actually think it's the beginning of the end... When you have 20 years of pro-cyclicality of thought manifesting itself in the way that it has in Japan…I am not naive enough to think I can predict the end of a 70-year debt super cycle with any kind of precision, but looking at the changes in the qualitative perception of the participants is something that I think is key to the situation and we saw a big change on Friday."

"When I started sharing our views more globally it was the middle of 2010 and I said I believe the stress would begin to show itself in the next three years. Pretty much three years in, we're close, and the stress is beginning to show. Maybe that was luck at the time, but now when you ask the timing--look everyone wants the crystal ball and it's really difficult to predict this, but what you can do is follow where I think the stresses are going to show in the marketplace, but more importantly, you have to get into the heads of the participants because they all have a collective sense of fatalism. When you do the quantitative analysis here, you know they are insolvent. Everyone who owns the bonds knows they are insolvent. It's a question of how long they can hang on. What changes their views are a multitude of variables, but it's really important to follow any change in those views. When you see things like Argentina, Greece, Cyprus, Ireland, Italy--you see how fast things go from perfectly stable to completely unstable. In this case I think it will happen more quickly because of the 20 year buildup."

Yes, Kyle Bass

I saw a video you posted on him a while back - he wasn't as bad as I thought. However I am unsure as to why you are such a big fan given he is relatively bullish on the US and any recovery in the US will be catastrophic for gold.

[Errol]

April 9 2012: Bass: I'd Much Rather Own Gold Than Paper

http://www.bloomberg.com/video/perplexed-why-gold-is-as-low-as-it-is-bass-sS3R4rYHTeio5IQDBznJVw.html

I'm not a particularly special fan of Mr. Bass. I read his stuff etc but then I read lots of stuff (and don't always agree). I agree with much of what he says in the above linked video however.

[The Masked Tulip]

Shorting Japanese Government Bonds on the assumption that Japan will lose control of its interest rates is the Widowmaker trade. People making that trade have suffered eye watering losses due to their poor grasp of the monetary system.

Thanks.

There was a chap just now on the BBC who said that the UK was now Japan regarding stagflation and warned that perhaps the UK has 20 years of it ahead of us.

[Guest_FaFa!_*]

Thanks.

There was a chap just now on the BBC who said that the UK was now Japan regarding stagflation and warned that perhaps the UK has 20 years of it ahead of us.

I don't think so, I don't think the countries are meaningfully comparable beyond the highly superficial.

As I have said many times on here Japan's bubble was mainly an infrastructure one. Japanese households entered the bust with low levels of debt in the aggregate, it was private companies that were swimming in it. Stagflation? Japan has had little/no inflation. Taxes are low in Japan (lowest in the OECD, IIRC), infrastructure of high quality, well educated workforce, little visible anti-social behaviour, also a can-do and strong work ethic remains.

What most people miss is that if Japan wanted to balance the budget they could by raising their consumption tax to European levels. The UK does not have this sort of room to maneuver.

But I'd agree that the UK has a good decade plus of stagnation ahead as the government is lowering interest rates to make people pay down the debt rather than default.

Edited April 25, 2013 by FaFa!

[Errol]

While we're on the subject of Bass ...

Kyle Bass Explains Why He Had The University of TX Take Physical Delivery

[R K]

US Mint Gold Sales Surge To Highest Since 2009

US Mint's turn to reports that more gold has been sold month to date than any month since December 2009

http://www.zerohedge...ge-highest-2009

Zero hedge getting pasted on their gold positions?

Oh yeah, so they are.

As dead cat's go this is one of the most anaemic - looking forward to the next lurch down in a few weeks, could be spectacular.