The Gold thread

walk2dewater said:
Which is why I’d advocate ‘averaging into’ a position. I like investing in mutual funds cos my broker allows me to add small, automatic amounts weekly to my position for same price as a lump-sum trade. I end up getting an average price over the course of time rather than an “all or nothing” approach. At an absolute minimum you should invest your targeted % in three tranches 1/3 now, 1/3 later and 1/3 much later.
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Thanks for the advice, investing in gold by averaging in as you suggest seems like the sensible way to go about it.

I just came across this quote which I like...

You have to choose [as a voter] between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold." George Bernard Shaw
 
Though gold is at a 26-year high at the moment (heading for $600 an ounce) I read that in terms of today's dollar value gold reached $2,176 per ounce in 1980 which would seem to indicate that gold is still undervalued in real terms today.

Anybody (walk2dewater?) have any opinions?
 
Gold is in a bull market, but bull markets are not straight lines sloping upwards from left to right. My gut says the party needs a breather for some profit taking.

So gold bulls should either (a) average in with regular automatic amounts - weekly if possible - and ride thru with an average price, or (b) wait for a correction before lump-summing in.

Problem with (b) is there's no technical resistance point I can detect. Any technicians here who want to elucidate and illuminate us?

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"We're seeing price swings that we haven't seen in decades. We used to see a $6 range in gold over a week, and now we see it in a single day," said Quinn. "The gold market is really going to be in play over the course of the year."
For investors, that means that they should be prepared for the possibility of major short-term losses.
"Not everybody could handle losing 40 percent in one year," said Wallace. "Most people probably don't need an investment in precious metal funds."

http://money.cnn.com/2006/04/06/pf/gold_investing/index.htm?source=yahoo_quote
 
walk2 - that CNN link is the first negative item I've seen you post about gold. You're obviously sold on it.

I'm no expert, but going on the kind of doomsday scenarios you've painted, where stock markets and whole economies crash - how would you feel secure your 'paper' gold shares are any safer than any other stock? You don't have the physical commodity in your sweaty hands - which is surely the whole point in the scenario you describe!

Holding the metal is difficult, risky, and potentially expensive.

Also, those heady days of $2,000 per ounce gold prices (1980's) were in a period when countries held huge national reserves of gold in their treasuries.
Many countries - e.g. the UK - sold off large proportions of their gold reserves in the late 90's and said they didn't need physical reserves to back stong currencies any longer. That devalued the gold market at the time of the sell-off. Will it ever be as scarce or as valuable again while the treasuries aren't buying?

Lots of questions - its a bit of a minefield and I think the hard sell on here is a bit obvious.
 
i have a gold 50 peso coin mounted as a pendant, and id be afraid to wear it now its solid gold oro puro marked
 
Meccano said:
doomsday scenarios you've painted, where stock markets and whole economies crash
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Im suggesting recession not the end of the world

Meccano said:
Also, those heady days of $2,000 per ounce gold prices (1980's)
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In todays money gold was about US$1700oz, all time high, I believe 1980?
good chart on pg1 of this [broken link removed]

Anyway, gold has to take a breather sooner or later. Im not adding to my positions at these prices, but not selling either.
 
Yea I read Jim rogers book on commodities investing. He is not a big fan of gold. While he thinks that it will continue to rise in the next few years he thinks that it will not go to the heights of other commodities. The reason he is not a fan of it is because of the huge stores of gold around the world and that so little of it is actually used by industry. I read that 50% of the total gold ever mined in the world has been mined since 1950. That means that there is twice as much gold around today than 50 years ago. I think silver is a much better bet.
 
JoeSod,
IMHO the move to gold has merely started. Supply remains extremely scarce relative to potential demand. The cost of mining just about anything these days is sky-rocketing-- IMF says there's 20%-40% cost inflation in mining/extraction industry last year. After years of run down, production of gold amounts to a 2.5% annual increase in stock. Do you think there'll be enough gold to go around when the Irish Times discontinues its Property Section and replaces it with the Commodities Section
:)

I am worried about preserving what I have. Therefore I am converting between 20-30% of my net worth into gold backed securities, (prec metal mutual funds, ETFs and yes even a little of the actual hard stuff). Currently at about 20%, from virtually 0% 2yrs ago. I've slowed down the process somewhat in recent weeks cos my gut says gold has run up a bit too fast lately. Nothing technical, just my gut feel.
 
http://www.rte.ie/business/2006/0509/gold.html

"Investors have ploughed their cash into gold and platinum because both precious metals are seen as a safe store of value in times of geo-political uncertainty, such as the current Iranian nuclear energy crisis"

wrong, iran is a small part of the picture. people are buying gold because the Fed won't raise rates high enough and quickly enough to reign in US dollar creation.

If there's a true run on the US dollar, these recent moves in gold will look like baby steps...
 
I still cant make up my mind about whether there's a speculative bubble (albeit probably a small one..) in Gold at the moment..

..or is the damn Global property market is making me see bubbles everywhere *lol*
 
Weak dollar = strong gold. The Chinese are supposedly quadrupling their gold reserves, which means fewer T bills being sold which puts more pressure on dollar rates, which squeezes debt holders the US housing market and US consumers. Short term we'll have stagflation followed by deflation in the medium term.
 
Duplex said:
Short term we'll have stagflation followed by deflation in the medium term.
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that's my bet also. Gold will be further supported, and may rally a bit, if Trichet *only* raises rates by 0.25% in June.
 
http://money.cnn.com/2006/05/05/news/newsmakers/buffett_050606/?cnn=yes

Buffett: "I don't think there's a bubble in agricultural commodities like wheat, corn and soybeans. But in metals and oil there's been a terrific [price] move. It's like most trends: At the beginning, it's driven by fundamentals, then speculation takes over. As the old saying goes, what the wise man does in the beginning, fools do in the end. With any asset class that has a big move, first the fundamentals attract speculation, then the speculation becomes dominant.
Once a price history develops, and people hear that their neighbor made a lot of money on something, that impulse takes over, and we're seeing that in commodities and housing...Orgies tend to be wildest toward the end. It's like being Cinderella at the ball. You know that at midnight everything's going to turn back to pumpkins & mice. But you look around and say, 'one more dance,' and so does everyone else. The party does get to be more fun -- and besides, there are no clocks on the wall. And then suddenly the clock strikes 12, and everything turns back to pumpkins and mice."

See that Buffet thinks theres a bubble in oil and metals aswell as housing, although not in agricultural commodities. So everything appears to be getting overvalued. Is it time to stick with cash
 
walk2dewater said:
Got gold?
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I think we all get the point by now, you like gold.

You're starting to sound like a common or garden speculator, simply hyping up the asset. How is this any different to promoting shares which obviously isn't, and shouldn't, be allowed on the site?
 
I'm singlehandedly pumping up the price of gold by posting on this forum? huh? Flattering, but I'm not George Soros.

I'm attempting to promote a discussion about broader issues, and away from the narrow tiresome debate over property ("is it/isnt it, will it/wont it") which dominates the Great Financial Debate board.

My view is that gold is flashing INFLATION, INFLATION, INFLATION. Do you agree or disagree, or not know?

Is this not worthy of debate on the GFD board?

I do feel that Im talking to myself though. If no wants to debate this topic then sure, close the thread.
 
I agree that the situation is worrying, particularly as regards the US. The americans are going to let the dollar go into freefall, then they will be glad to let inflation take off and so help them to reduce the real value of their debts - particularly the mortgage debts.

How this will spill over into the rest of the world isn't as clear to me but undoubtedly it will have an effect - and probably not a good one. Probably the BCE will raise rates to head off this inflation and thus cool off the property and shares values but then again, companies can raise their prices and keep the profits flowing although some sectors will be able to do this better than others.

Should be an interesting few years!
 
walk2dewater said:
My view is that gold is flashing INFLATION, INFLATION, INFLATION. Do you agree or disagree, or not know?
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I don't agree with this. Headline Inflation can and will be controlled by Central banks. I think that it is indicating general uncertainty - particularly uncertainty regarding oil
 
darex said:
I don't agree with this. Headline Inflation can and will be controlled by Central banks. I think that it is indicating general uncertainty - particularly uncertainty regarding oil
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So you believe that the overall purchasing power of those euros in your pocket (assuming) is being eroded by 2-3%p.a?
 
walk2dewater said:
So you believe that the overall purchasing power of those euros in your pocket (assuming) is being eroded by 2-3%p.a?
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When discussing gold we are obviously talking about western economy inflation (rather than irish inflation). So while you are probably right regarding irish inflation I would think that inflation measures in general in Western economies are fairly accurate
 
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