# The gold bubble: when will they bust it?



## metric (23 February 2009)

how high before the manipulators decide to bust it and make billions more?

in 2006 gold was about $500 usd an oz. its now about double that....

reinhardt is suggesting sell gold at or before $1250 per oz. or close to $2000 per oz aud.

my idea is he is right. if gold was purely at the mercy of m,arket forces i would say it should be, and would go higher.....much higher. but we know it IS manipulated. knowing that makes you realise that the gold price, and gold bubble is manufactured. manufactured so that tptb can bust that bubble and make a lot of money.....

what we have to do is sell before tptb busts the bubble.

im out at $1900 aud. doubled my money and happy with that. i will hold my silver......


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## moXJO (23 February 2009)

metric said:


> how high before the manipulators decide to bust it and make billions more?
> 
> in 2006 gold was about $500 usd an oz. its now about double that....
> 
> ...




I'm thinking along those lines as well. Sell off half my holdings at that price and make back my initial purchase, plus some. Then ride the rest to where ever it goes. If it moves much higher then that, I will be out with a pick and detector as a full time job.


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## rederob (23 February 2009)

Until there is a better option than gold, the gold price will continue higher.
That is, investors have very lean pickings at the moment, so until rotating out of gold into another assett class becomes more viable, gold will remain strong.
Time-wise it's difficult to see any improvement in global markets within 6 months, so selling early is not what I would be considering.


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## moXJO (23 February 2009)

rederob said:


> Until there is a better option than gold, the gold price will continue higher.
> That is, investors have very lean pickings at the moment, so until rotating out of gold into another assett class becomes more viable, gold will remain strong.
> Time-wise it's difficult to see any improvement in global markets within 6 months, so selling early is not what I would be considering.




You don't think there will be a short term correction around those price levels? These stimulus packages might take some of the gleam off gold(S/T) given the massive amount of money being spent and things appear to return to normal.


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## Glen48 (23 February 2009)

The last  bailout is costing USA $1M a second $548 Million a day the Dow is crashing and will go lower where are people gong to put their money?.....Gold is all that is left.


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## nizar (23 February 2009)

LOL a bubble?!
Its only up about 5% year-on-year in USD terms.

Rederob, long time no speak bro i hope things are well.


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## sinner (23 February 2009)

Unfortunately, I think metric is right. We are at the mercy of the big banks.

They can take out a large amount of shorts at will from leased gold and forward-leased gold (not produced yet) and I don't think they can really sustain losses from doing this.

Check out Bill Lundeens step sum indicator for gold which shows net short position by the banks. 
The guy from Perth Mint who was posting in the Perth Mint thread also has a blog which I checked out and he makes some valid points as to why it is reasonable for banks to do this I guess.

http://goldchat.blogspot.com/2009/02/i-liked-this-reply-by-tom-szabo-to-some.html

Whether you call this manipulation or not is largely irrelevant, the banks (actually only JP Morgan now I believe) will and can take out huge short positions (on top of their huge short positions already) whenever they see fit and we will be holding the bag.

I am not sure it is manipulation, the banks have held the gold market net short position for over a decade and the price kept going up.
However, estimates are that if these shorts by the banks were to exit the markets then we would be looking at $2300 or so.

As another "however", some of the buggier goldbugs I have heard grumbles about the truth of the SPDR gold holdings. According to their net tonnage they must be the 5th or 6th largest gold holder in the world but this would put a noticeable dent even in the supposedly "free flowing" 400oz LBMA market.

Couldn't dig up a link but think it was Ted Butler or someone saying how speculative leveraged longs from the futures market could be the cause, and as the price rises a little they pile in more leveraged longs. If this is the case, whenever that person decides to cash out by selling into some strength then we could be left with very little to hold us up.

These are hard-core GATA type goldbugs saying this, which makes me nervous, and this is why I dislike these jumpy moves upwards without a lead from the gold miners. What was wrong with that consolidation channel we were in?

Also, has anyone considered that if the stock market gets bad enough, several large players will be forced to liquidate their holdings in gold miners to meet other commitments?


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## Temjin (23 February 2009)

Remember the old wisdom, it's impossible to identify a bubble until it burst. 

The future of gold price is at the mercy of the market players and the will of the politicans to mess up the economy even more. Maybe one day comes a perfectly sane politican and decide to up the interest rate to 10%+, bankrupt everything and fast-track a great depression II that would set up a recovery in a much faster time. And then we will have commentators citing how gold was in a bubble because of that and that and now it has burst, and how clever they were in identifying it, blah blah blah.


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## Sean K (23 February 2009)

metric said:


> reinhardt is suggesting sell gold at or before $1250 per oz. or close to $2000 per oz aud.



Why should listen to this guy? He said the world would crash, probably tech related, on 9 Feb, and it didn't. If anything it's a sure sign gold will keep going higher.


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## jonojpsg (23 February 2009)

moXJO said:


> You don't think there will be a short term correction around those price levels? These stimulus packages might take some of the gleam off gold(S/T) given the massive amount of money being spent and things appear to return to normal.




Chris Vermeulen (Gold&OilGuy) reckons the technicals point to a correction before the next leg up.  Have taken his advice (on silver tho, not gold) and shorted silver aiming for around $13.50 with a stop at $14.90.


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## metric (23 February 2009)

kennas...check chart..http://www.enterprisecorruption.com/


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## BentRod (23 February 2009)

> If anything it's a sure sign gold will keep going higher.




Spot on Kennas.

The fact that gold has barely broken out of its range of the last couple of years and it's already being called a bubble is a signal to get long IMO.



> kennas...check chart..http://www.enterprisecorruption.com/




Bluddy hell.....I can't believe anyone would sign up to that Amateur Hour Site...LOL

I wonder how many subscribers signed up after viewing this pic


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## Sean K (23 February 2009)

BentRod said:


> Bluddy hell.....I can't believe anyone would sign up to that Amateur Hour Site...LOL
> 
> I wonder how many subscribers signed up after viewing this pic



You've got to be kidding! Surely that is not on the site? 

Obviously marketing to the appropriate crowd.


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## BentRod (23 February 2009)

> You've got to be kidding! Surely that is not on the site?




Have a look down the bottom, the pic is there.

Backyard Bandits Unite:screwy::screwy:


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## metric (23 February 2009)

yes i know......

a flawed genius is reinhardt. i havent subscribed to his pay site for various reasons.....


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## numbercruncher (23 February 2009)

What gold bubble ? 

Its just dodgy fiat currencies returning to fair value isnt it ?


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## Ageo (23 February 2009)

Not sure about a bubble but a $2-300 correction is definately on the cards (as it has been doing for these last few months). And from a selling point of view the price atm is top notch so anything from here and upwards is premium price (which means your getting top dollar). Even if you sold now and waited 1 month or so for this correction to kick in you can play it safer.

1 little edge i notice is when refiners pay me less than usual, that usually means they are factoring in a correction and ever since i have been buying scrap it always happens. For instance they have been paying me below spot now for around 3-4 weeks which is unusually long so im expecting (as they are) a nice correction (minimum $200 drop).

The refiners are connected with refineries overseas and mining companies, so any information that comes from them obviously is worth a hearing.


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## MR. (23 February 2009)

metric said:


> a flawed genius is reinhardt. i havent subscribed to his pay site for various reasons.....
> 
> .




Like?

Now I get it.....  You have just been taking the mickey out of reinhardt.  
I actually thought you believed!

Jokes on me........ too!  

I see why we need to send him money, he's a genius alright!


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## nunthewiser (23 February 2009)

BentRod said:


> I wonder how many subscribers signed up after viewing this pic




do we get one of those if we sign up?


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## IFocus (23 February 2009)

nunthewiser said:


> do we get one of those if we sign up?




I was thinking the same...........................


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## Bushman (24 February 2009)

There are five threads on gold going on the ASF at the moment. 

This for an asset that does not produce any income (trading it excepted) and relies on some other mug to pay more for it than you bought it at to lock in capital growth. 

Then again the market is never wrong 

Good luck if you are buying (& holding) the 'barbarous relic' on the way up militia men. 

My 2c (readies himself to be beaten around the head by an 'end is nigh' placard).


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## moXJO (24 February 2009)

Can't argue with the returns.Doubled my money plus some (so long as gold doesn’t tank next few days), while the share market went the other way. Hmm my next investment might be in canned goods and ammo the way these gold threads are going

For me it was a great investment. Easy to spot the run as well.


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## Bushman (24 February 2009)

moXJO said:


> Can't argue with the returns.




Ain't that the truth .... it was a cracking investment at the top of the bull (even if it is a con-job, a statement which I know is a moot point as you just need some other dude to stump up some more 'worthless' cash for your gold than you paid for it to make a buck ).  

I'm all for corporate bonds to be the 'star' for the next six-months as the solvency issue is clarified.


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## Uncle Festivus (24 February 2009)

Bushman said:


> Ain't that the truth .... it was a cracking investment at the top of the bull (even if it is a con-job, a statement which I know is a moot point as you just need some other dude to stump up some more 'worthless' cash for your gold than you paid for it to make a buck ).
> 
> I'm all for corporate bonds to be the 'star' for the next six-months as the solvency issue is clarified.




"solvency issue is clarified" can you clarify that? You mean wait to see which one's don't go bust? So what do you invest in in the meantime, if not gold?

If you live in another country, like the US, Britain, Iceland, Ireland etc etc and lob up to your bank to withdraw your money, as cash, and they won't let you withdraw it because it's not there any more, you'll understand the dynamics of gold. Are you really _that_ confident that the same won't happen here, or that corporate bonds will be worth zip if the company goes broke? Sounds like you missed the golden boat?


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## sinner (24 February 2009)

Bushman said:


> I'm all for corporate bonds to be the 'star' for the next six-months as the solvency issue is clarified.




USD corporate bond instruments like LQD (NSYE) have performed just as good or in some cases better than gold investments if you went long in Oct/Nov lows. Unless you were purely into gold no miners, but the difference is negligible. Also provided the same USD backing that made gold so great in Oz. 

They did not however, provide this great performance during the bull and have been in a longterm downtrend (and the recent bounce has only been to resume this trend). (Although I recognise this may have been due to rising yields)

There has been some dragging down this month but I continue to keep watch.


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## GumbyLearner (24 February 2009)

sinner said:


> USD corporate bond instruments like LQD (NSYE) have performed just as good or in some cases better than gold investments if you went long in Oct/Nov lows. Unless you were purely into gold no miners, but the difference is negligible. Also provided the same USD backing that made gold so great in Oz.
> 
> They did not however, provide this great performance during the bull and have been in a longterm downtrend (and the recent bounce has only been to resume this trend). (Although I recognise this may have been due to rising yields)
> 
> There has been some dragging down this month but I continue to keep watch.




What's interesting is NCM now pays a better dividend than JP Morgan stock in the States. 

Bubble... well when it hits the headlines at $2000 per oz, similar to the inflationary adjusted terms of 1980 I might decide to join the sceptics in the bubble crowd. Sir Allen Standford -> South & Central America bank runs and now Eastern Europe looking shaky coupled with continual write downs in the banking sectors of Europe and the US. Not to mention the unravelling of the Madeoff scam. 

Just watch the movie The International with Clive Owen. Fact is all Ponzi dudes are not in prison yet! 

I don't believe in the fairy tales or in the lack of self-conciousness of the herd fed by the media outlets.

Gold is the place to be in 2009.

But as always DYOR, by the way I don't categorise listening to the media as Research.


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## Bushman (24 February 2009)

Uncle Festivus said:


> "solvency issue is clarified" can you clarify that? You mean wait to see which one's don't go bust? So what do you invest in in the meantime, if not gold?
> 
> If you live in another country, like the US, Britain, Iceland, Ireland etc etc and lob up to your bank to withdraw your money, as cash, and they won't let you withdraw it because it's not there any more, you'll understand the dynamics of gold. Are you really _that_ confident that the same won't happen here, or that corporate bonds will be worth zip if the company goes broke? Sounds like you missed the golden boat?




Sure I did miss the golden boat in terms of physical gold but it is the current bearish frenzy rather than sour grapes that is sparking my interest. If I had bought into physical gold (rather than listed miners) 18 months ago I would be holding at these levels and riding the crest of the wave.  

Hey I am South African by birth and my father-in-law is a gold miner - I am aware of its unique ability to store and create wealth. But at these levels it is a bit 'toppish' for me. Now in the 1980's, the Au price still doubled from these levels but i cannot pick turning points. And we saw what happened to the oil price and the speed with which it unwound!  

Having said all that it is undoubtedly an alternative for cash (with vastly superior performance over time when compared to the various Fiat-based debacles including the USD) and thus it's value is based on psychology and the absolute trust it is afforded by investors. This is a characteristic that investors will pay a significant amount of paper-based money for in a recession.   

In terms if bonds, there are many MF that allow you to diversify (at the cost of a mgt fee) to get rid off the land mines. A good manager (PIMCO etc) is the key. Also steer clear of rust-belt industries that need molto capital to remain competitive when the GFC has curbed their ability to do so and what is left of the purveyors of credit and you won't go wrong. My 2c and musings on a slow day in the office. 

In Oz, the bond market is a bit thin so global would be the way to go. 

My 2c but as an asset class bonds have some good potential in the short-to-medium term.


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## Bushman (24 February 2009)

sinner said:


> USD corporate bond instruments like LQD (NSYE) have performed just as good or in some cases better than gold investments




Cheers for that - I'll check it out.


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## >Apocalypto< (24 February 2009)

tomorrow!


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## explod (24 February 2009)

Bushman said:


> Sure I did miss the golden boat in terms of physical gold .




rubbish,  the boat is still loading.   have a good read up on the financial paper money farce and you will soon realise that physical gold is the only insurance against having nill.  paper is trash and will be nill.

no capitals cause i am in a phone queue to get my grandson a pass for citylink.  his first day at uni tomorrow.    he has some silver in the vault too.


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## Temjin (24 February 2009)

Bushman said:


> Sure I did miss the golden boat in terms of physical gold




heh, maybe, just maybe, when your mum, local taxi drivers and shoe cleaners start giving you advice to buy gold, then it should be about the time to jump boat. 

Gold has started to become more and more "mainstream", but no where near the manic level that usually describe a bubble. Of course, like I said again, it's impossible to identify after it has burst. So ride on until fiat money has restore its confidence again.


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## nunthewiser (24 February 2009)

what bubble?


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## Trembling Hand (25 February 2009)

>Apocalypto< said:


> tomorrow!




Wrong. It was last night


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## MR. (25 February 2009)

*Bernanke optimistic on recession end

*http://compareshares.com.au/show_news.php?id=S-553939

25/02/2009 7:29am  
Federal Reserve Chairman Ben Bernanke has steadied Wall Street by telling Congress the recession might end this year.
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No need for gold now! ........... ?


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## Bushman (25 February 2009)

MR. said:


> *Bernanke optimistic on recession end
> 
> 
> .*



*

Lol; to be fair he also said that subprime was contained! But with all the money being pumped we should have a 'recovery' in 2010. Otherwise what is the faarkkken point of all this fiscal pump priming?  

Now will we have inflation in 2010/2011 to go with our economic 'recovery'? Then I'll buy me into that yellow ponzi too!  *


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## MR. (25 February 2009)

Bushman said:


> Lol; to be fair he also said that subprime was contained! But with all the money being pumped we should have a 'recovery' in 2010. Otherwise what is the faarkkken point of all this fiscal pump priming?
> 
> Now will we have inflation in 2010/2011 to go with our economic 'recovery'? Then I'll buy me into that yellow ponzi too!




Should add......  No need to have this CASH now either. Inflation might now get a grip!  All well that ends well.....  it's all over......  Happy days now...... That's what we want to hear and see.....  It's about time .....


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## Ageo (25 February 2009)

MR. said:


> *Bernanke optimistic on recession end
> 
> *http://compareshares.com.au/show_news.php?id=S-553939
> 
> ...




Bernanke should get the wanker of the year award. At least then he will deserve it.


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## rederob (25 February 2009)

nunthewiser said:


> what bubble?



ditto
The bubble is very much meandering in the swill.
Nowhere near topping in near term: Give it a few months and revisit.


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