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Gold strategy in the current economy

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Would have expected gold to be a bit more enthusiastic on the inevitable QE.......perhaps it will react when the deal is done.

Certainly Equities are still responding.

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QE, is not money printing per se because it doesn't go directly into the real world. It just increases Base money used for overnight settlement between banks and never leaves the system (cash excepted). That is why velocity drops at the same time.

They just want free money to suck up assets in order to drive yields lower and free up money at the banks/improve liquidity...in theory to increase private credit creation.

In our case it was used to pick up the assets our banks held because their lenders disappeared. It was simply to stop everything going bust in an instant.

But just because there is more Base money will result in more private lending and inflation is laughable. Where is the evidence? You need a certain amount in order to carry out its settlement function. Too little is bad, too much is immaterial.

As I said above, the plausible story for holding gold is really to do with the holding costs and risks of fiat and bonds right now.

It's not immaterial, it pushes down borrowing costs, allowing bubbles to blow. People say it's just "pushing on a string" but Facebook has a market cap of over $200 billion on profits massaged to $791 million and a highly risky future. Where's the inflation? Here:

nasdaq_10_year.png

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USD rising against EUR, JPY, GBP today.

Gold rising against USD.

US Commerce secretary starting to moan about 'strong dollar'.

NO WAY Fed will raise rates this year, and Gold knows it.

When the hedge funds & investment lemmings / public at large get it, gold will rise thru $1400.

Then the bear will be slain.

Ok, I've had a few to drink.

:D

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So the europeeps go for money creation. As the Swiss have already dropped their peg, and gold has gained a 100 GBP in a month, it does smell as if everybody gambled correctly that Draghi was going to win........or it was the worst kept secret in history.

The other aspect could be one hell of a currency war in the offing, and the forex peeps want gold in their armoury. Inflationary fears are not going to drive anybody to gold, especially as there is no price inflation, and the revived boom still has not gone pop.

We will have to wait some time for the World Gold Council stats to see where the demand is coming from in this quarter.

As to the excitement around here.......remember, we still need about a 50% increase in price of gold to get back to highs of September 2011.

Digger mansions will still feel a whole lot happier post 900GBP

..._

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Gold has gone from below EUR 920 in November to EUR 1,145 just now. As a EUR-earner, I know why I have my eggs in the golden basket.

Sterling is toast too.

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So the europeeps go for money creation. As the Swiss have already dropped their peg, and gold has gained a 100 GBP in a month, it does smell as if everybody gambled correctly that Draghi was going to win........or it was the worst kept secret in history.

The other aspect could be one hell of a currency war in the offing, and the forex peeps want gold in their armoury. Inflationary fears are not going to drive anybody to gold, especially as there is no price inflation, and the revived boom still has not gone pop.

We will have to wait some time for the World Gold Council stats to see where the demand is coming from in this quarter.

As to the excitement around here.......remember, we still need about a 50% increase in price of gold to get back to highs of September 2011.

Digger mansions will still feel a whole lot happier post 900GBP

..._

I'll start getting excited when gold is gaining £100 a day! :D

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Today is but one day. It needs at least tomorrow to settle and probably next week too.

When Japan did most recent QE stocks jumped 5% OVERNIGHT. And then higher. Pulled back since and been flat for weeks.

And JGBs soared...

Gold up strongly this month in most currencies... NOT down even though $ soaring. What happens when $ corrects?

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Swiss gold reserves = 1040 tonnes

1 ton of gold = £35 million

1040 tonnes = 36,400 million or £ 36 billion

Total spend defending the Swiss currency = 174 billion EUROS

So if Switzerland had been spending their gold reserves (instead of $) to defend the CHF, they would theoretically have spent their entire gold reserves 5 times over.

Also 174 Billion EUR is around £16,000 for every man, woman and child in Switzerland - quite a lot to be gambling on the currency markets on their behalf.

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So if Switzerland had been spending their gold reserves (instead of $) to defend the CHF, they would theoretically have spent their entire gold reserves 5 times over.

But they did not, they simply printed some CHF. No problemo.

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I agree totally that it is being driven into assets raising their value. It is true that one day it could leak out.

I think it's leaking out already. The facebook billionaires buy mansions in the US. Facebook uses it's capitalisation to buy monoidics - the directors of which buy a house in London. There's only so much petrol the recipients of money printing can fit in their cars, so the oil price is unaffected.

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I think it's leaking out already. The facebook billionaires buy mansions in the US. Facebook uses it's capitalisation to buy monoidics - the directors of which buy a house in London. There's only so much petrol the recipients of money printing can fit in their cars, so the oil price is unaffected.

Still contained within "assets" rather than retail goods. It'll only really emerge as a problem when there's a shortage of some basic goods.

The low oil price may, ironically, bring it on ironically if it leads to catastrophic political problems in the middle east and excessive shuttering of high cost oil projects elsewhere (and throw in another banking crisis).

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Still contained within "assets" rather than retail goods. It'll only really emerge as a problem when there's a shortage of some basic goods.

........

Reduced demand trends prices down, low supply trends prices up in general. But as we can see, there are ample supplies of most goods, including gold. Until QE leaks out on to the high street, price inflation of everyday goods is unlikely.

But who is buying gold in force and pushing up the price?....... there are a lot of credible arguments that a currency war is in the offing.

..._

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It is simply massive that Oil and Gold are not absolutely collapsing with a hugely strong $.

This points to the $ is in blow off and these markets know it.

If - if - if $ reverses these markets are likely to fly.

NB. I've said for years $ in multi year bull and that remains the case. Until it doesn't.

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as this rather crowded looking trade for falling real yields dissipates gold will embark on its next lurch lower.

Oil looks to have started to stabilise.....

ECB QE may be the catalyst (counter intuitive)

Enjoy the current bounce .....it may not last long.

Edited by R K

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Does looked to have climed extremely sharply, I can see it falling back.

Long term gold looks to have bottomed, appears we are entering a currency war so future is quite bright and shiny for the yellow stuff.

interesting to see the fall-out over the next week with the EU QE. can see the stock market falling back again and resuming its recent downtrend.

This will lead to much more extreme distruction of purchasing power of fiat. which is where the inflation comes from, where all stocks gold and houses rise in book value. We will have housing fall hugely in value, but against gold not fiat.

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It is simply massive that Oil and Gold are not absolutely collapsing with a hugely strong $.

This points to the $ is in blow off and these markets know it.

If - if - if $ reverses these markets are likely to fly.

NB. I've said for years $ in multi year bull and that remains the case. Until it doesn't.

Oil had already collapsed in price though. The strengthening of the dollar effectively marks a bit of a recovery for it's price in non-dollar terms.

It's very telling that Gold has gone up even as the conventional wisdom is that we are entering deflationary times indicated by the oil price crash over the last weeks. I would guess that a minimum of 1.1Trn of Euro printing should provide plenty of fuel for supporting asset prices - don't forget that BoJ is printing like crazy and I wouldn't be surprised to see more QE from the BoE in the mid term.

It's like the central banks are just passing the money printing baton around between them. How much new currency (Dollars, Euro, Pounds, Yen) will have been created by the end of this all, I wonder?

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QE doesn't go into commodities.

Oil not collapsing further as $ soars speaks volumes. Same for gold.

And look. A reversal in $ thie afternoon into the evening brewing. I'll wager (Duke & Duke wagered $1) the reversal of the $ is upon us. (Not long term. Weeks, maybe months.)

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QE doesn't go into commodities.

Oil not collapsing further as $ soars speaks volumes. Same for gold.

And look. A reversal in $ thie afternoon into the evening brewing. I'll wager (Duke & Duke wagered $1) the reversal of the $ is upon us. (Not long term. Weeks, maybe months.)

4 to 5 week decline in the USD before it continues back up and higher.

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£ in a state of collapse v $. The rise of Summer 13 to 14 was a fake.

The fall since is real and the trend is down but not ina straight line. Said previously pullback in $ suggests st rally in £.

The only game in town is the $, medium to LT. Deflationary.

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Has anybody used sovereigninvestments.co.uk. Prices seem good. Seen one recommendation.

..._

EDIT

Help us out here peeps, I'm a wee bit concerned.

Over on MSE a poster called Mr. & Mrs. posted and mentioned sovinvest. Now in the gold forum Tom321 has also mentioned them.

Both started posting this month, both mention sovinvest..........am I getting worked up over nothing, or is anybody else concerned.

..._

Edited by DiggerUK

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Has anybody used sovereigninvestments.co.uk. Prices seem good. Seen one recommendation.

..._

EDIT

Help us out here peeps, I'm a wee bit concerned.

Over on MSE a poster called Mr. & Mrs. posted and mentioned sovinvest. Now in the gold forum Tom321 has also mentioned them.

Both started posting this month, both mention sovinvest..........am I getting worked up over nothing, or is anybody else concerned.

..._

Well they have a truly shit web site and frankly that's always a bad sign unless you are going to a physical premises to purchase.

My 8 year old son could knock up a more convincing site than that.

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just musing on gold and Russia...

a lot of people think that the sharp decline in the oil price is an attack on Russia

given that Russia is accumulating gold, is there a way that a similar attack could be made on Russia through a sharp decline in the gold price?

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  • 397 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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