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Is Gold A Dirty Word?


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From the FT again.

http://www.ft.com/cms/s/1a0466f6-3ffd-11dc...00779fd2ac.html

Professor Pianta also said that "The very idea of having gold reserves is left over from the 19th century. In practice a currency as strong as the Euro has no need for gold reserves, which could be better used as investments to further strengthen Europe's economy."
In addition, a pact by 15 European nations sets a total limit of 500 tonnes of gold which can be sold in any one year. For 2008, the sale of 345 tonnes has already been reserved by other central banks. This would leave only 155 tonnes for Italy to sell, the equivalent of about €2,500m.

It seems as if they're queuing up to ditch gold.

It is stories like this that really make me think long and hard before even thinking about buying gold. The article states that Italy has about 38bln on gold reserves, and this sale is only about 2bln - so this scramble to sell-off could go on for a while.

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From the FT again.

http://www.ft.com/cms/s/1a0466f6-3ffd-11dc...00779fd2ac.html

It seems as if they're queuing up to ditch gold.

It is stories like this that really make me think long and hard before even thinking about buying gold. The article states that Italy has about 38bln on gold reserves, and this sale is only about 2bln - so this scramble to sell-off could go on for a while.

That is the point of these stories.

Suppse you were about to off load an enormous amount (enough to move the market significantly) of something. And suppose again the purpose is to raise the maximum possible from the proceeds. Do you

1) Do it quietly over a period of time so as to obtain the very best price you can. Or

2) Announce it to the world and collapse the price ahead of the sale.

?

Just how ******ing stupid are you?

Edited by Far Out Bear
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The article states that Italy has about 38bln on gold reserves, and this sale is only about 2bln - so this scramble to sell-off could go on for a while.

I wonder whether they really have these almost 1,800 tonnes. Supposedly, they lost quite a bit in the LTCM debacle.

EDIT: That Italy and Spain dump their gold shows only how desperate they are since the EUR is so strong. They will brake, and selling the gold will look like the most stupid thing since Gordon sold.

Edited by Goldfinger
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In addition, a pact by 15 European nations sets a total limit of 500 tonnes of gold which can be sold in any one year.

The London Bullion Marketing Association trades over 1200 tonnes of gold a day. A 500 tonne annual sale by European Central Banks is no more than a large nugget - wouldn't do anything except spook a few ill informed day traders.

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The London Bullion Marketing Association trades over 1200 tonnes of gold a day. A 500 tonne annual sale by European Central Banks is no more than a large nugget - wouldn't do anything except spook a few ill informed day traders.

In addition, I'd rather buy as long as they're dumping. Once it stops, the party can really start and my boat shall be filled to the max.

EDIT: Anyone who wants to buy stuff that only goes up, I advise to buy property. :lol:

Edited by Goldfinger
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That is the point of these stories.

Suppse you were about to off load an enormous amount (enough to move the market significantly) of something. And suppose again the purpose is to raise the maximum possible from the proceeds. Do you

1) Do it quietly over a period of time so as to obtain the very best price you can. Or

2) Announce it to the world and collapse the price ahead of the sale.

?

Just how ******ing stupid are you?

You're not making sense. You appear to be contradicting yourself.

What they are doing is selling gold over a long period of time (due to the 500 tonne annual limit)

Yet thay are also openly announcing their intent to continue the sell off in future years.

Depending on how you view it, they are doing both, some or none of the above things you mention.

The amount of gold to be traded won't be enough to move the markets significantly as you say, but it was more their attitude about not needing gold reserves which made me curious.

Did you actually read the article?

So what is the point of it these stories exactly? In your expert opinion.

My original post was aimed at the gold bugs on here.

As someone who has a very diverse portfolio, I was hoping to get sensible comment. Thankfully others have obliged where you have failed

Cheers!

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You're not making sense. You appear to be contradicting yourself.

What they are doing is selling gold over a long period of time (due to the 500 tonne annual limit)

Yet thay are also openly announcing their intent to continue the sell off in future years.

Depending on how you view it, they are doing both, some or none of the above things you mention.

The amount of gold to be traded won't be enough to move the markets significantly as you say, but it was more their attitude about not needing gold reserves which made me curious.

Did you actually read the article?

So what is the point of it these stories exactly? In your expert opinion.

My original post was aimed at the gold bugs on here.

As someone who has a very diverse portfolio, I was hoping to get sensible comment. Thankfully others have obliged where you have failed

Cheers!

Why announce it?

WHY. The 500 limit is totally arbitrary and means nothing. It is a device to say something along the lines "We have so much gold that we must be careful not to flood the market and waste it..."

It's ******.

The point is to make out that gold is not scarce, can be sold ad infinitum by central banks and that the public should continue to use paper.

Is that clear enough?

Why the hell should I care. When you understand (along with everyone else) I might sell you some of mine for a small fortune - if you have a fortune left.

Edited by Far Out Bear
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Italy is selling its gold reserves because the treasury is skint. Massive national debt which is growing exponentially and all.

oh, and Mr Berlusconi already sold all the national assets he could sell to make the figures looks right. that card can't be played no more

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Why announce it

The point is to make out that gold is not scarce, can be sold ad infinitum by central banks and that the public should continue to use paper.

Is that clear enough?

So, the Euro is worthless, but they need us to keep on using it.

The one thing not worthless is gold, so they sell it off to maintain the pretence that gold is actually worthless and we should use paper Euros instead.

I can understand that in theory this might actually work -

But this would need an endless supply of gold (or at least endless announcements of sales) to continually reinforce this idea. They couldn't pull this trick off for ever.

Plus, 99% of the population doesn't take any interest in this in this so they wouldn't be in position to be take in by this scam. The only people to take any notice would be bankers and goldbugs, who would see through it all (presumably).

It appears that everything that everyone does these days is a big conspiracy.

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From the FT again.

http://www.ft.com/cms/s/1a0466f6-3ffd-11dc...00779fd2ac.html

Professor Pianta also said that "The very idea of having gold reserves is left over from the 19th century. In practice a currency as strong as the Euro has no need for gold reserves, which could be better used as investments to further strengthen Europe's economy."

I can kind of see his point. If the euro does need to be backed by gold reserves, surely they should be held by the ECB rather than by the likes of Banca D'Italia?

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I can kind of see his point. If the euro does need to be backed by gold reserves, surely they should be held by the ECB rather than by the likes of Banca D'Italia?

France and Germany hold approx 7,000 tones of gold. They do this not to back the Euro, but to enable them to back the Franc & Deutchemark in the unlikely event the Euro falls apart. The countries that experienced John Law and the Weimar Republic will not sell all their gold. If it were held by the ECB, it might all be lost protecting the Euro one day. Italy, like Spain, have to sell gold because they can't control the Euro, their currency, and their economies are in trouble.

This random professor from some tinpot university they interviewed clearly doesn't have a clue, since gold has been confiscated by the US government and backed currencies in the 20th century, up to 1972.

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The London Bullion Marketing Association trades over 1200 tonnes of gold a day. A 500 tonne annual sale by European Central Banks is no more than a large nugget - wouldn't do anything except spook a few ill informed day traders.

But if a country were to try and buy 1200 tonnes for physical delivery from the LBMA we would see just what the price of "real" (not paper) gold was.

I would be amazed if more than 1-2 tonnes per day for delivery can acually be bought there.

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I wonder whether they really have these almost 1,800 tonnes. Supposedly, they lost quite a bit in the LTCM debacle.

EDIT: That Italy and Spain dump their gold shows only how desperate they are since the EUR is so strong. They will brake, and selling the gold will look like the most stupid thing since Gordon sold.

I honestly think the central banks are selling the gold because they think they do not need it, and the price is high and they could use the money. It should be a reason to buy gold, since central banks tend to follow the common wisdom.

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But if a country were to try and buy 1200 tonnes for physical delivery from the LBMA we would see just what the price of "real" (not paper) gold was.

I would be amazed if more than 1-2 tonnes per day for delivery can acually be bought there.

I struggle to get my head round this bit as well. If everybody required delivery of the physical gold currently represented on paper it would be impossible I think. The whole thing stinks - I just hold through all the chatter.

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France and Germany hold approx 7,000 tones of gold. They do this not to back the Euro, but to enable them to back the Franc & Deutchemark in the unlikely event the Euro falls apart. The countries that experienced John Law and the Weimar Republic will not sell all their gold. If it were held by the ECB, it might all be lost protecting the Euro one day. Italy, like Spain, have to sell gold because they can't control the Euro, their currency, and their economies are in trouble.

So it would seem that Italy is betting that the euro will not fall apart. They are being no more imprudent in selling their gold than we were in selling our own -- not to mention our oil, telecoms, railways etc).

My guess is they are doing it for much the same reason we did: to pay day-to-day running costs. As you imply, economies in trouble don't necessarily look to the long term...

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The central banks are selling gold to keep the price down,

at an artificially low level.

If the price of gold was allowed to naturally adjust upwards

with the massive accumulated inflation over the years,

it would soon draw a lot of attention to what a poor store of value

fiat currency actually is, and more questions would arise from

this.

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But this would need an endless supply of gold (or at least endless announcements of sales) to continually reinforce this idea. They couldn't pull this trick off for ever.

Exactly - you got the point. This is why buying now could make you insanely rich, or better say, you will maintain your purchasing power while 99.9% won't.

Plus, 99% of the population doesn't take any interest in this in this so they wouldn't be in position to be take in by this scam. The only people to take any notice would be bankers and goldbugs, who would see through it all (presumably).

See what Dr Doom wrote: gold skyrocketing and you think people would just ignore it? Believe me, the American public wouldn't. And then hell would break loose since it would mean adios USD, GBP, and all others with no gold reserves.

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Central Banks are not the least interested in maximizing proceeds from gold sales.

They would only if the intention was to decrease the money supply by that. Since they are not interested in that (rather the opposite), the only reason to sell gold is to make people think fiat is worth something. Because why would a central bank be interested in making money by selling gold? They can just create it! However, I admit that even people in CBs nowadays are so brainwashed they possibly have no idea what they're really doing. Greenspan is exempt. I think he knew exactly what was going on, just read his historic remarks on gold.

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They would only if the intention was to decrease the money supply by that. Since they are not interested in that (rather the opposite), the only reason to sell gold is to make people think fiat is worth something. Because why would a central bank be interested in making money by selling gold? They can just create it! However, I admit that even people in CBs nowadays are so brainwashed they possibly have no idea what they're really doing. Greenspan is exempt. I think he knew exactly what was going on, just read his historic remarks on gold.

Thats the problem that Italy and Spain have got themselves into though - they can't just create more money! They relinquished their ability to do this to join the Euro, so its the ECB, largely controlled by the more fiscally conservative states that controls the money supply, so without the ability to print money like the bad old days of the peseta and the lira, they've got to sell the family jewels (Gold, State Assets etc etc) to pay their bills..

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So, the Euro is worthless, but they need us to keep on using it.

The one thing not worthless is gold, so they sell it off to maintain the pretence that gold is actually worthless and we should use paper Euros instead.

I can understand that in theory this might actually work -

But this would need an endless supply of gold (or at least endless announcements of sales) to continually reinforce this idea. They couldn't pull this trick off for ever.

Plus, 99% of the population doesn't take any interest in this in this so they wouldn't be in position to be take in by this scam. The only people to take any notice would be bankers and goldbugs, who would see through it all (presumably).

It appears that everything that everyone does these days is a big conspiracy.

Okay you win. I'll sell my gold and keep my paper money that keeps its value so much better.

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Thats the problem that Italy and Spain have got themselves into though - they can't just create more money! They relinquished their ability to do this to join the Euro, so its the ECB, largely controlled by the more fiscally conservative states that controls the money supply, so without the ability to print money like the bad old days of the peseta and the lira, they've got to sell the family jewels (Gold, State Assets etc etc) to pay their bills..

Makes sense!

Okay you win. I'll sell my gold and keep my paper money that keeps its value so much better.

The less you will charge, the more the paper money you'll receive will seem to be worth! Oh, isn't it lovely to be a central bank (until it all goes pear shaped, I mean)? :lol:

Edited by Goldfinger
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Okay you win. I'll sell my gold and keep my paper money that keeps its value so much better.

Hmm, so your announcing that you are selling gold because you want to drive the price down, so you can buy back even more at a cheaper price. :blink: Sounds like a risky strategy, I will hold on to my gold and hopefully pick some more up when the price drops, thankyou Italy.

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Hmm, so your announcing that you are selling gold because you want to drive the price down, so you can buy back even more at a cheaper price. :blink: Sounds like a risky strategy, I will hold on to my gold and hopefully pick some more up when the price drops, thankyou Italy.

FOB is a hardcore goldbug. He was being ironic.

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Guest Charlie The Tramp

It would be interesting to know the value of gold held by each individial Forum gold bug.

I get the impression the holdings are considerable anything from £3k up to £100k. :)

Went into Town today and nearly every Jeweller`s shop was advertising 50% off all gold Jewellery. I would have thought with Gold so high they were in a position to get normal prices. :blink:

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