The Gold thread

gonk said:
"just dumped" is a little misleading. It sold this gold throughout May, after sales of 40 tonnes each in March and April. Presumably these sales have already had whatever effect they're going to on the market.
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Gold market has absorbed 170 tonnes of ECB bank sales in the last three months with only a very small contraction in price. This is pretty bullish imo.
 
But adjusted for real-life inflation, it's doing horribly. It's a genuinely scarce asset, at a time when pent-up inflation looks set to overwhelm the world, and the shorts are in charge of the market. The US$ has halved in value since the early 80's but gold has yet to double from that period.

I read somewhere that it needs to go to $1200 simply to catch up with its 1981-1984 average price, adjusted.

The fact that it's failing to break $700 right now, given that background, is a major blow to the medium and short term gold bull's case.

Eventually, something will break and gold will re-adjust, but that could be 5 years from now, as the status quo is not sustainable in the long term. It could easily spend the intervening years below its current level. Especially if central banks keep selling.

Never underestimate the power of markets to remain illogically over or undersold for very protracted periods.
 
liquidity crunch not hurting gold, its holding up alot better than i thought, although many analysts are wondering why gold is not shooting up in this environment, however throughout its ascent since 2001 it has continuosly outwitted the analysts. The interst rate cut by the Fed can only benefit gold as it shows the fed will do the same as 2001
 
The problem with gold is that it acts like a currency but one receives no rent or dividend.It`s like putting your wad in a drawer and coming back in a few years...your money is worth a whole lot less due to inflation.
None of the major currencies is backed by gold.
The major central banks orchestrate the value of their currencies against each other,with no consideration of the price of gold.
Thus gold has been a bad investment for the past 20 years or more .
I don`t see why this should change,especially as it doesn`t benefit from the commodities metals boom.
 
sunrock said:
I don`t see why this should change,especially as it doesn`t benefit from the commodities metals boom.
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According to Wikipedia:
"...the annual gold supply is around 3,500 tonnes.

About 3,000 tonnes goes into jewelry or industrial/dental production, and around 500 tonnes goes to retail investors and exchange traded gold funds.

According to the World Gold Council, gold demand rose 29% in the first half of 2005. The increase came mainly from the launch of a gold exchange-traded fund, but also from jewelry. Gold demand was at an all time record. Demand from the electronics industry is rising by 11% a year, jewelry by 19%, and industrial and dental by 21%."

What is interesting is that the recent rise in gold prices could be seen as a result of gold as a commodity (as 6/7ths of annual gold supplies go into commodities).

Which would suggest that in an economic downturn gold prices will fall with everything else as commodity demand eases.
 
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sunrock said:
The problem with gold is that it acts like a currency but one receives no rent or dividend.It`s like putting your wad in a drawer and coming back in a few years...your money is worth a whole lot less due to inflation.
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This is a major misunderstanding of how gold works. You don't need any dividend because gold is a true store of value. Put your cash in a sock drawer and in forty years it'll have depreciated considerably or even no longer be in use. An ounce of gold will still be an ounce of gold - the only thing you'll have lost in those forty years is the opportunity to gain a return on your capital through investment.

sunrock said:
None of the major currencies is backed by gold.
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Which will lead to their eventual demise. Every single fiat currency in the history of mankind has eventually been reduced to worthlessness.

sunrock said:
The major central banks orchestrate the value of their currencies against each other,with no consideration of the price of gold.
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Themarket decides on the value of currencies relative to one another not the central banks. If they gave no consideration to the price of gold, they wouldn't sell so much of it.

sunrock said:
Thus gold has been a bad investment for the past 20 years or more .
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Yes and no. Gold does well at extremes - hyper-inflation, high inflation, stagflation, deflation, collapse of an economy or political system. These times you want to own gold. However, it is best to buy it before you need it.

sunrock said:
I don`t see why this should change,especially as it doesn`t benefit from the commodities metals boom.
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It's not a commodity it's a currency. Sure, a large portion of annual production goes into jewellery and some into industrial usage but this in itself is only a fraction of the total amount ever mined - the bulk of which is still above ground.
 
yoganmahew said:
Which would suggest that in an economic downturn gold prices will fall with everything else as commodity demand eases.
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Possibly in the initial stages of a downturn as leveraged speculators rush for the exits. However, I think this would be a temporary phenomenon. Anyone seeking to protect their existing wealth during a downturn, will prefer to hold gold. It is the only money not beholden to anyone. This cannot be said of the dollar, the Euro or any other store of wealth.
 
I was listening to pat kenny the other day and he had some commentator talking about the market turmoil and what people should do. Basically he said people should hold firm he plugged the irish banks but shied away from saying people should buy (probably afraid they might fall more). He mentioned gold as part of a diversified portfolio. But interestingly it was the only investment he put a negative spin on saying it peaked in 1980 and still has not topped that. Basically the financial establishment does not want people buying gold and does not want money flowing into gold because it is something they have no control over. Therefore if the financial establishment is so afraid of it, it is something people should hold. Above all i think people should ignore irish commentators and focus on what international commentators are saying, no irish analyst advised investors to sell the banks over the last few months
 
I've no affiliation with Gold and Silver Investments except as a happy customer but I was interested to see their director interviewed on CNBC. The company has posted previously on this thread as www.gold.ie. Quite a coup I should think. He looked slightly nervous but I thought he made some excellent points and seemed comfortable mentioning $2,500 an ounce as a possible target for gold.
 
Do you think with the price of gold rising that the US government are happy and could possibly sell off their gold reserve´s and thus slashing their trillion foreign deficit before Bush leaves office and that would put loads more gold on the market and prices would drop in gold

you would have to think this could happen early next year before Bush leaves office

just a though!!
 
abakan said:
Do you think with the price of gold rising that the US government are happy and could possibly sell off their gold reserve´s and thus slashing their trillion foreign deficit before Bush leaves office and that would put loads more gold on the market and prices would drop in gold

you would have to think this could happen early next year before Bush leaves office

just a though!!
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One conspiracy theory advanced is that Greenspan's deliberate bubble and dollar destroying policies were part of an Ayn Rand style (Greenspan is a huge fan) solution to destroy all fiat currencies and force a conversion back to the gold standard.

Note how the US has not sold any of its gold holdings unlike many Eurozone central banks.
 
I think the strategy is to allow gold rise slowly and keep it under the radar. The Fed etc don't want it rising fast because then it would attract to much attention from the general public and could cause a loss of confidence in fiat money. It is interesting that gold has been rising steadily since 2001 and still has not attracted popular attention except for a brief spell in may 2006 when it rose spectacularly but then dropped equally so frightening off popular attention.
 
Noticed this here at end of RTE news report on PRSAs:

"Separately, the Irish Revenue Commissioners have approved gold bullion as an investment option for pension funds"
 
could the fed let gold go to 2500 dollars,

gold will go up next before the end of this year and maybe some of next year,

the dollar will get worse and with the "looming" credit card crisis about to hit the states and dollar will take a futher blow = good for gold

also citibank had to be bailed out during the week by the US treasary, times are bad in the states and the look ahead would be good for gold
 
abakan said:
could the fed let gold go to 2500 dollars
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How or why would the Fed have any say in the matter whatsoever? Never mind whether the Fed decides to "let" gold reach $2,500 an ounce. If that's the price the market is willing to pay, then that's the price it will be, regardless of what the Fed thinks of the matter.
 
Do you think that it will lead to a global recession - I hope not as it will be very bad news for everyone.
 
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