Thursday, July 23, 2009

OK- Panic Over, Sell Gold

Gold rush over as demand slows

"The gold price increased modestly in the second quarter, supported by ongoing inflation fears but demand for gold from private investors has slowed after its record start to the year, according to World Gold Council's latest Gold Investment Digest". Iterestingly, " The recent study, which examined the relative performance of four traditional inflation hedges (gold, real estate, Treasury Inflation-Protected Securities (TIPS) and general commodities), found that in two of the three historical scenarios gold would likely outperform other traditional inflation hedges". (Does anyone think House Prices will perform better than Gold by Christmas?)

Posted by alan @ 09:05 AM (2078 views)
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52 thoughts on “OK- Panic Over, Sell Gold

  • Following the contrary rule, does that mean we all have to buy gold?

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  • “Gold rush over as demand slows”

    Wow, looking slightly further out than 6 month period, gold has gone nowhere in twelve months. This is despite all the talk of hyperinflation, safe haven, equities slumping.

    “Does anyone think that House Prices will perform better than gold by Christmas?”

    I think house prices may perform less poorly than gold between now and Christmas but I’m not investing in either as they both look bubble-like. Houses potentially don’t look quite as bubble-like as gold.

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  • “Gold rush over as demand slows” – don’t remember any headlines that read “Gold rush as demand soars”.

    Don’t bother buying gold if you believe that all (no exceptions) of the following scenarios are non-starters:

    Increased money supply
    Inflation
    Currency depreciation
    Protectionism
    Food shortages
    Civil unrest
    War

    It’s easy to see why the gold rush is ‘over’. People are selling it to buy more practicle items. Pitchforks, guillotines, rope.

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  • Have people noticed how the banner ads that appear at the top of these comment blogs seem to be reacting to key words in the subject title – mention gold and we get an ad about gold, mention property and we get an ad about property.

    Maybe we should try putting ‘sex’ into the subject title – and see what turns up..;)

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  • Paris Hilton MILF 🙂

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  • euughh!!

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  • mountain goat says:

    If you look at a 10 or 20 year chart of gold in dollars you will see that today’s price is pretty much exactly where it should be on the multi-year upward trend. The price got ahead of itself in 2008 when all commodities spiked prior to the autumn crash. The volatility since then has been recovery from this price spike. Of course the upward trend wont go on forever, but clearly the uptrend is still in place, despite the last 12 month volatility in prices. In fact the price could pull back to $800 soon and still not affect this trend, just part of the wedge price formation of the past 12 months.

    Does anyone think House Prices will perform better than Gold by Christmas? – possibly if gold stays stuck in this wedge pattern. Wedge triangle patterns apparently resolve violently one way or the other when the tip is formed. Since more stimulus packages and QE are likely as debt deflation continues, I think the upward trend will continue.

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  • I’m not a great graph analyst, but a parabolic rise, followed by instability, is much more likely to be followed by a sharp decline than a further rise.

    Moreover, if one looks at the supply, demand and social elements of gold investment, there is no obvious reason for the price to take off – if the financial crisis was to have caused a ‘super-spike’, that would have happened already.

    So to those who have been in gold for a few years now, I would suggest that this is a good time to bank your profits.

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  • general congreve says:

    Just like Goldman Sachs hyped the price of oil a couple of years ago, by spreading fear about peak oil, thereby getting investors to go long on oil futures (paper that had no relation to the adequate supply/demand at the time – hence the eventual violent price drop), they and other VI’s (US government etc.) are also manipulating the gold price through the gold futures market (again paper that bears little relation to actual supply/demand).

    The difference here is that they are short selling paper gold en masse to suppress the price of gold, while spreading nonsense rumours of gold peaking and economic ‘green shoots’ that show everything is ok.

    What is happening now with gold and the dollar is the end game of what started when the dollar decoupled from the gold standard in 1971 and the printing presses started running wild.

    Anyone who sells their gold now will regret it in months/years to come.

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  • general congreve-san, you are a reliable sage. I would like to thank you for your rational thoughts.

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  • mountain goat says:

    I should have qualified my post 7 that short term prediction of prices is not my forte (but obviously doesn’t stop me trying!). Recently, I read these 3 possible scenarios for the economy and gold price.

    ” 1. Reflationary policies of the Fed and the government will return the economy to real growth of over 2.5%. The Fed will be able to pinpoint the exact moment of when monetary tightening will need to take place and carefully begin raising short term rates, sell government bonds and agencies’ notes. Perfect, precise and proactive monetary policy will ensure price stability and relieve the threat of escalation in inflation.

    In this scenario, a V-shaped recovery declared by the bulls will become reality. Stock market will soar and gold, after an initial attempt to rally, will likely fall below $700 per ounce.

    2. In a huge deleveraging cycle, deflationary forces experienced by the banks, businesses and consumers will continue to prevail for the next several years. World economy will largely remain in a state of stagnation – Japanese style. Pockets of growth in the world will be insufficient to turn the rest of the world economy around.

    In this scenario, it is likely that gold will remain in a wide trading range – $700 to $1000. Stock market will fall below the current bear market low targeting 400-500 on the S&P 500. Gold will grow in real terms (Gold against the S&P 500) but not in nominal terms. Profits will be good for existing low-cost gold producers but it will, nevertheless, be a tough environment for PM investors.

    3. Central banks and governments will continue to inject borrowed money into the unhealthy and unproductive sectors of the economy. This will undoubtedly lead to an increased role of lobbyism and a diminished role of the private sector and market competition – the main forces of capitalism. The result is easily predictable: very low economic growth for an extended period of time. Rising government debt and falling tax receipts, the growing role of the government and increased regulation will make political pressure on the Fed inevitable and overwhelming. Debt monetization, a crucial but only a “temporarily” measure, will become an overused practice.

    Consequences of such a monetary policy will be downward pressure on the U.S. dollar, inevitable rise in inflation expectations and an upward pressure on long term yields with growing concerns for fiscal sustainability.

    With such an outcome of events, the stock market will remain at a depressed level, but the price of real assets – energy, food, metals – will rise. The main beneficiary will clearly be gold, which will begin a new phase of its bull market.”

    source

    With Scenario 1 gold falls, sell now. Scenario 2 more volatility, stockpile cash. Scenario 3 buy gold now.
    I have always tended towards the 3rd scenario and everything that has happened since Lehman hasn’t change this. I was surprised by the determination of governments to prop things up, but in the end it has propped up the gold price as well I suspect.

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  • I sort of miss S2R1’s gold predictions ……. like this one from February :-

    6. sold 2 rent 1 said…

    ‘…..Right now for the serious analysis.

    There have been 2 articles this week linking gold with Martin Armstrong�s 8.6 year cycle and his recently announced 8.6 monthly cycle

    http://www.kitco.com/ind/Aden/aden_feb232009.html
    The 3rd graph says it all, even if the author isn’t aware of the 8.6 year PI cycle.
    It shows a potential big bottom in gold in August 2009

    The 2nd article is on safehaven which is down at the mo but the link is
    http://www.safehaven.com/article-12699.htm

    I read this article last night and it shows how gold is following an 8.6 monthly cycle.
    We can expect a small correction going into March and then a 4 month bull ending in August 2009.

    There are buying ops in late March / early April, again in September 2009 and lastly in December 2009

    Gold stocks� resonance with Calleman�s model is also stunning. Barron�s gold mining index (BGMI) (adjusted for the commodity (CRB) index) topped in early 1939 (maps to top in March 2008). The BGMI (CRB adjusted) bottomed in June 1951 (maps to late October 2008 which was also a major bottom (70pc correction from peak in both cases)

    Gold stocks look set to start Elliott wave 1 in April 2009 that will complete wave 5 next April 2010. The intermediate peaks should be mid-late August and late December 2009.

    For me the Calleman and Armstrong models are now aligned…….’

    Friday, February 27, 2009 11:27AM

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  • I for one ain’t buying something that will only become overvalued during periods of fear or manipulation, will not hedge inflation ( yes that’s right folks! ) and is only of any real use to me when fiat currencies fail; it seems futile.~

    I’d prefer to us my paper to take ownership of a roof over my head, as in the same set of scenarios I win:
    during periods of fear I have nothing to fear,
    I am not exposed to the manipulation,
    if inflation comes it eats my debt and if fiat currencies fail I have my debt cleared and I can live somewhere rather than trying to find somewhere to buy or rent with my pot of gold ( assuming I have taken possession of said pot! )

    I really do not understand the obsession.

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  • mountain goat says:

    51ck-6-51x – “I really do not understand the obsession.”

    My excuse is that I was born and raised in South Africa 😉

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  • Mountain goat,

    You miss one important scenario:

    Governments of the developed world, struggling to finance their budget deficits while attempting to keep the lid on inflation, elect to liquidate their gold reserves, flooding the market as they do so.

    It’s a threat that is unique to gold.

    – There are safer investments!

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  • general congreve says:

    MG @ 7 – good summary. My take on the available options are:

    1. Return to balanced growth – I cannot see how this can happen with the debt burden, even with the best manoeuvring by the Fed. Debt has to be paid down before further real growth can take place, anything else is just financial smoke and mirrors.

    2. Deflation is allowed to get the upper hand – It is true that QE so far is not enough to plug the hole left by vapourised credit, so as things are we are likely to end up in a deflationary spiral still. However, that is only if govts. pull the plug on QE. The elephant in the room with this scenario is the record levels of national and consumer debt. Allow deflation to occur and debts will become an even bigger burdern, reinforcing the economic misery and demise of the western economies.

    3. QE is pursued to the extent that inflation occurs – Due to the unthinkable nature of 2 above, it is very likely we will be hearing a lot more about stimulus in the months/years to come. Govts have debts to pay, as do voting consumers, neither want deflation. They’s ideally like regular economic growth, but the situation doesn’t permit that, so the only alternative is to try to keep the printing presses running at a rate that gives a highish level of inflation, say 20%, to erode debts. Of course this will be a stagflationary environment. The degree to which this can be controlled is the question, so we may eventually see hyperinflation.

    So in summary:

    1. A pipe dream, reality check needed!
    2. Could happen, but too many vested interests to let it happen.
    3. The only option, but can it be managed to a safe degree?

    Conclusion:

    Keep your pot of gold. BTW, this story wouldn’t happen to be a reaction to the fact that gold is having a bullish week would it?

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  • Talking of South Africa, whatever happened to ‘Last Days of Disco’ ? Are you still out there ?

    And did S2R1 officially sign off while I was away ?

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  • GC
    – could you please explain your logic to you get from:
    (3) being the only option
    to:
    your conclusion “keep your pot of gold”
    ?

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  • str07
    – S2R1 seems to just have gone silent in the past couple of months.
    There was a post on 12-May but no farewell.
    I suspect a return in late summer.

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  • Before I started reading this site, I hadn’t given gold a second thought for 20 years. I still don’t get what all the fuss is about. Copper, on the other hand…I always look at that

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  • mountain goat says:

    Uncle Tom @14 – IMO it would only make sense to sell off the gold reserves after a currency devaluation. Currently gold reserves would only make a small dent to debt problems. But if under pressure from Russia and China gold regains monetary status, goes ballistic against fiat currencies, then Western Central Bank dumping of gold stocks seems imaginable.

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  • mountain goat says:

    General Congreve @15 if they pull off a V-shaped recovery then Gordon Brown, Bernanke et al deserve a … well… gold medal…

    However, unsustainable debt levels didn’t seem to stop our economies before, so why now? In other words a recovery is not out the question, at least for a few years, before the proper day of reckoning. One thing is for sure, our kids are not going to pay back our debts. In our life time this trend has to turn.

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  • mg: I am a gold novice, so I dont understand all the arguments … but is there enough gold in the world for it to regain monetory status in any significant way? Do you have any reason to believe that China and Russia are pushing for this

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  • Traditionally, gold has been an effective inflation hedge, and as our recent study shows, also performs well during low to medium inflationary environments.”

    This is simply not true, in fact, it’s absolute BS. Traditionally gold has been good for deflationary periods, its only since 1971 that gold has been seen as a inflationary hedge and even then this doesn’t stand up that well.

    take for example “performs well during low to medium inflationary environments.”

    look at the chart for Annual Inflation UK – http://www.watsonwyatt.com/europe/pubs/statistics/render2.asp?ID=1

    then look at the chart for Gold during the periods of medium inflation since 1980 upto 2000 when gold bottomed. All the time we had meduim inflation, gold was a terrible investment. now we have our first set of deflationary figures, gold is at record highs in sterling.

    Gold rush over ? more like a bull trap.

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  • mountain goat says:

    Str [email protected] No, left South Africa some 20 years ago but go back there to see family and perhaps World Cup footie next year. Forgive my ignorance ‘Last Days of Disco’ ????

    Glad to hear S2R1 may still be expected to re-emerge when it is time….

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  • @ 22 flashman

    The reason I invested in gold is because I belive the dollar will not survive as the world’s reserve currency. If someone said 5 years ago that
    China would be swapping currency for trade deals with south american countries so that no dollars are required, you would have laughed.

    In China some companies are now refusing to accept $ for payment,

    Tourism officials in India have decided to no longer accept the American currency at the site of the Taj Mahal and 120 other Indian historical sites.

    This is just the beginning.

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  • mountain goat says:

    Flashman @22 – I probably have been reading too many gold bug articles! No I don’t think China and Russia have said they want a return to a gold reserve backed currency but they have been slagging off the dollar lately (Medvedev Shows Off Sample Coin of New ‘World Currency’ at G-8 ). I was trying to imagine why Western Central Banks would sell off gold after what Uncle Tom wrote, which at the moment is like a mosquito bothering an elephant of debt. So I think this only makes sense to sell gold if it was worth more ( i.e. after currency devaluation) to someone else who wanted it and weren’t bankrupt, like the Chinese.

    As for how much gold there is. Well nearly all the gold ever mined still exists above ground in vaults. This is a major argument for it losing value in future if the world economy contracts. Now silver on the other hand is a precious metal that is consumed in highly dilute form in many industrial process’. It is consumed, can’t be recycled. The historical reserves are used up, so I actually prefer silver to gold as precious metal and stopped buying gold a few years ago. Silver is also the best conductor of electricity and is important for new solar technologies. Oh dear now I am turning into a silver bore too…

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  • general congreve says:

    Flashman @22 – There is not enough gold for everyone to walking round with few sovereigns in their pocket to pay for anything, however, that does not mean gold is not suitable as currency per se. In today’s world it would be used to back paper and electronic money, just like it used to be i.e. that note in your wallet would be exchangeable for an amount of gold at a bank. It’s feasible in such a monetary envrionment that’d you need the current equivalent of 5000-10000 quid to exchange for 1 ounce of gold, but your paper would still be backed by a tangible asset with value, rather than a printing press run by buffoons and some empty promises.

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  • Thanks debtfree, mg and gc. But what if someone turned around one day and said ” I’m not selling you a fleet of jet aircraft for something backed by a few ounces of that yellow stuff”. Sort of a King’s clothes job. Why gold? Why not diamonds or signed shirts from the 1966 world cup? I’m not being facetious, I think I must have missed something because its been valued by so many people for so long

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  • general congreve says:

    666 @17 – My reasoning is as follows:

    It may surprise you to know that I agree that gold is not the great all round inflation hedge that some goldbugs claim. We have had low inflation since 1980, when gold was at it’s all time peak in real terms, but yet despite it being nominally higher now, if you’d kept gold you’d have watched your money go up in smoke.

    The key here is what other factors are at play. Between 1980-2007, other than a couple of blips, we have had good steady economic growth overall. This means there have been far better places to put your cash for an investment return i.e. the stock market, an ISA, a savings account, commodities, classic cars, antiques, even cherished number plates.

    However, now that isn’t the case, all these things are heading down due to economic contraction. The current stock market cycle is the main bull trap that I see at the moment BTW.

    All this means deflation. Which as my point 2 states is too terrible to contemplate for our indebted western societies. So we will continue to sell debt to finance QE to prevent it. It’s just that our creditors aren’t going to play ball much longer if we continue that game. So we are stuck in a corner. If and when the creditors stop funding us, we will have to print our own money, which is already happening now anyway. There isn’t a nation yet, faced with our levels of debt that hasn’t tried to inflate it’s debt away.

    When this happens, regardless of the actual money in the system and if it just stays in a bank vault or feeds through to the high street to create inflation directly, our currencies will still devalue, which is effectively the same thing.

    When that happens, I want to be holding gold, not devalued paper.

    If you’d been living in Iceland and holding gold when its economy and currency crashed, you’d not only have safeguarded your money, you’d have tripled it! Although you have to sneak your gold out to sell in Europe, because the Icelandic government don’t want anyone making out like a bandit.

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  • general congreve says:

    Flashman @22 – Basically because it has been valued for so long and because it is stable as a form of currency. It has industrial uses, like other metals, but relative to the world supply of gold they are small. Many claim this makes it valueless. On the contrary, it makes it a perfect monetary metal, because it’s supply will not be eaten up by other demands. If a form of money starts to disappear, that causes deflation, which we know is bad. Hence gold is relatively deflation proof as money. On the flip side it can only be mined at 2% per year. A 2% yearly inflation in a money supply is about bang on for sustainable economic growth. So gold is a winner in this department too.

    So it’s all very well saying, oil is more useful or whatever, but as those resources are constantly being used and demand for them fluctuates, it doesn’t make them great for use as currency or currency backer.

    Interestingly the diamond industry is a good example of a resource that is not a good one to choose for backing currency, as advances in articifical diamond creation are leaping ahead as we speak. Effectively that will render it about as stable as an unbacked-paper for use as a currency.

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  • general congreve says:

    Flashman @ 22 – The other thing about gold, as per your example, I’m not taking your money backed by that yellow stuff. Why not? Would you rather have payment in paper backed by nothing but Ben Bernanke and his helicoptor?

    Everyone knows what gold is. Show me and adult in the world who doesn’t know it exists and that it has value. Everyone knows you can’t print it or make it out of thing air, so they know its credit is good.

    Who knows, maybe I’m wrong and it is a ‘Barbarous Relic’, but the mess that just been made of world finance by the bankers with all their fancy debt instruments shows me I’m probably not.

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  • Thanks gc: I think the conundrum lies in your comment:
    “The other thing about gold, as per your example, I’m not taking your money backed by that yellow stuff. Why not? Would you rather have payment in paper backed by nothing but Ben Bernanke and his helicoptor?”

    It appears that whatever form money takes, we have to rely on a consensus that whatever backs it, is of some value. People used to believe that the American Government was adequate backing for the Dollar. It appears that some people no longer believe this. What if some social shift took place and people started thinking of Gold as just yellow stuff? In this way, gold appears as illusionary and transitory as paper money backed by Ben. I’ve no axe to grind against gold, just saying

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  • mountain goat says:

    General Congreve @30 great points on gold as reserve currency.

    Flashman & 51ck-6-51x- clearly not everyone experiences gold as inherently valuable! Flashman I like the direction of your argument. IMO money is trust between people. Exchange of value, even simply communication between people. IMO for gold to gain acceptance/continue being money it comes down to trust because we can’t trust Democratic governments who get elected by promising more than they can afford. If society breaks down then one must trust in one’s weapons, heaven forbid. Whereas for society to operate we need trust in law and money. We now rationally? trust paper notes as money which are issued from what seems to be impossibly indebted governments who print them when they can’t raise enough taxes to fund their promises. Not to mention that we store those notes in technically insolvent banks who have lent them out 20 times over to people in negative equity on their homes! Seen this way holding some of ones savings as shiny yellow and silver coins in a safety deposit box, as our grandparents may have, seems rational, despite all the dangers to this strategy pointed out in this thread which I do acknowledge.

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  • MG

    Sorry his tag was written like this last_days_of_disco

    Was a fairly prolific poster a year or so ago, met at an HPC meet with Mark Wadsworth & S2R1 etal, just wondered if he was still reading if not posting.

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  • We live in an age when everything has a pretty clear value – be it pieces of paper, metals, oil, widgets – everything has a price, and every currency has a value compared to other currencies. And whether that currency bears the image of a living monarch or a dead president, you can find out what it is worth at the click of a mouse.

    It wasn’t always that way. People who lived in one country often had virtually no idea what was going on in other countries; and in ages past it was considered prudent to back your national currency against a specific commodity, almost invariably gold.

    The present crisis does not make a cogent argument for a return to the gold standard, or any other narrow definition of a currency’s worth, and one should not interpret the rumblings from China and Russia as signalling that they have any wish to move in that direction.

    For the Russians, gently baiting Uncle Sam is a national pastime; while the Chinese are testing the water to see if the world is ready to trade in Yuan.

    Gold’s role as a currency is history now, and will remain so.

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  • @35 uncle tom,

    Gold’s role as a currency is history now, and will remain so.

    Ha ha, you gotta laugh at that one UT.

    Gold is Money. No 1.

    If it’s not a currency or store of value, then why has it broken through record highs during a ‘Finanical’ crisis?

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  • “Gold is Money. No 1”

    Gold is lustrous unreactive chemical element, formerly used as a currency. Despite having no ongoing practical use for it, much of the world’s stock of gold is still held by central banks, most of whom are seriously challenged by the current financial crisis.

    Gold is currently trading at an historically high price, having been heavily touted by opportunist snake oil salesmen and sold to the gullible.

    For any of the central banks holding stocks of gold, this would therefore be an entirely prudent time to dispose of their assets, although they would have to anticipate a sharp price fall as they did so..

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  • @37 UT

    For any of the central banks holding stocks of gold, this would therefore be an entirely prudent time to dispose of their assets, although they would have to anticipate a sharp price fall as they did so..

    Which is why China have quietly doubled their gold reserves… hmmm

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  • general congreve says:

    UT @ 37 – What do you suggest we exchange our gold for? Dollars? Sterling? Euro? Volatile Oil? Sorry, but got is the last chair in the financial game of musical chairs the world is playing.

    Why would people be inclined to go back to it as currency (in the form of a gold-backed or weighted currency of course)? Because it fulfils all the following role:

    1. Is a solid stable material, does not rust, burn or disappear up it’s own backside and is difficult to steal in significant amounts due to its weight.
    2. It is universally known about, making it’s value unquestionable in terms of trading.
    3. It cannot be deflated or inflated easily.

    But even so, why use it? Because money makes the world go round and has done for as far back as anyone can remember. Barter is so last millennia, “I’ll give you a barrel of oil, a chicken and 3 bushels of my corn for your iPod good Sir”. Get the picture. So money is here to stay, we need a universal means of exchange in a multi-threaded market with limitless types of goods and services that people wish to exchange in ever more complex ways.

    So, now we’ve established that money is here to stay it follows that the best type of money is ‘sound money’, money that fulfils the 3 criteria I listed above. Nothing in the world IMO, does this better than gold (as the test of time shows), hence it’s value and the reason why we continue to see it’s value rise as this crisis unfolds.

    Remember it is only 40 years since the US went off the gold-standard, not quite in my life time, but near enough. What is more likely to best, a 40-year old flailing unbacked dollar or a currency that has been around since man first started trading.

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  • general congreve says:

    EDIT @39 Typo – Gold is the last chair in the financial game of musical chairs the world is playing!

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  • uncle tom , gullible hey ? Tell that to those who hold gold in iceland. They must be over the noon to be so stupid.

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  • GC
    – Ah, a hedge against sterling! Makes sense, but wouldn’t a position in a basket of other currencies & raw materials ( commodities that are actually used in production processes ) be a more reliable hedge in that case? ( aside: the best hedges against a collapse of society are non-perishable / long-duration foodstuffs, storable energy, weapons & ammo, construction skills and agricultural knowledge [ and for the ultra-sly, low-down & dirty, religious propaganda a skills ;p ] ).

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  • general congreve says:

    Flashman @32 – I understand your concerns that people could one day see gold as transitory as paper, however, please see my latest answer to UT @39 to see why that will not be the case. Plus thousands of years of gold being a valued commodity would support the fact it is anything but transitory, unlike all fiat currencies thus far.

    The only way I can see gold being seen as nothing more than a yellow thing is if we end up in an apocalyptic third world war and we’re end up being subsistence farmers who only want to trade food, clothing and livestock for survival. If it gets to that point, it’s not going to be worth worrying about.

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  • str 2007
    – last_days_of_disco last posted on the 25th of June, see Google

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  • general congreve says:

    666 @42 – I’m not saying just own gold, but it should be a decent part of any ones liquid assets, 45% of mine by the way. It always pays to be diversified, but as things are now it looks like the only way is down for most stocks and raw material commodities due to global demand falling off a cliff. With currencies some will fair better than others, but gold is the ultimate currency backstop and I think all currencies, whatever they do relative to each other, will fall against gold as the reliability of fiat is shaken to the core by what is happening to the world’s current reserve currency.

    As for the food, carpentry skills etc. as I said @43, if it gets to that then don’t worry. Let’s face it, we’ve been through 2 world wars and times were tough then, but we weren’t running around building our own hovels and living a subsistence lifestyle even with bombs raining down on us during the battle of Britain. This crisis is financial (so far at least), hence why gold is best. If you did have a load of oil (for example) and a proper war started I think it’s be requestioned pretty sharp by the powers that be.

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  • Debtfree said:

    “uncle tom , gullible hey ? Tell that to those who hold gold in iceland. They must be over the noon to be so stupid.”

    It is not that long ago that many posters on this site had savings accounts with Icesave.

    – And who was it who warned them that the Icelandic banking system was in imminent danger of collapse??

    If you must buy precious metals, consider this – what has gold got that platinum hasn’t?

    Answer: – a ramped price, and hundreds of tons waiting to be dumped on the market.

    Platinum is twenty times scarcer, yet only 20% more expensive than gold at present. It is currently at just half of its historic high.

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  • general congreve says:

    UT @ 46 – Interestingly I had all my savings in Icesave, as did my dad, gran and sister. I was right on the money though, pulled it all out (including persuading the relatives to do the same) the Thursday before the Monday it all went t1ts. So I milked them for all they were worth and then did my bit to help their crappy ponzi scheme come crashing down 😉

    Joking aside though, there is a vast difference between a ponzi scheme banking system and a a physical resource like gold. Platinum may be a good bet (huge drop in demand for catalytic converters aside) I don’t know, not a bad idea to own as part of a balanced portfolio perhaps, but I still think gold is the trump metal.

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  • Gold is being pushed up by worries about fiat currencies. I own some but I don’t look upon it as a sure fire thing. Here’s a good example of the problem that is driving people into precious metals:

    http://market-ticker.denninger.net/archives/1256-HOLY-!!!-Treasury-Auction-Schedule.html

    @Uncle Tom
    “Platinum is twenty times scarcer, yet only 20% more expensive than gold at present.”

    Interesting idea. Thanks for sharing.

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  • paranoia blue says:

    QG Re: Link – That is the nail on its head, mate!

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  • [email protected] This is over my head but that link scares the [email protected]#! out of me. How can they sell that stuff . . .

    . . . unless the banks and pension funds buy them only to be bought back by the treasury under their QE scheme.

    But then what happens? Doesn’t work does it? So who does buy the bonds? Presumably yields have to keep going up to encourage would be purchasers.

    Why is this being done instead of QE?

    Most importantly of all how will it impact on me? I’m just moving savings from short term deposit bond to short term deposit bond waiting for the right moment to buy a house.

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  • general congreve says:

    Nomad @50 – Yes that link is reason to be worried and why some of us one here are backing gold not fiat. If you’re worried now too, perhaps diversifying into a little gold yourself might be a good idea?

    Your money, your choice. Diversifying is the key, but I would have a decent gold component in your portfolio given the current situation. Personally I am one house with full equity (many thanks to lady luck), and liquid assets 45% in gold, 5% in silver and 50% sterling. Probably not a great idea that last one, but not too keen on paying through the nose to change into other currencies, swings and roundabouts and all that.

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