Gold Price - Where is it heading?

[Mr Z]

Nice strength out of the lows today. This could just become a high level consolidation! Are we building a 'bonfire of the shorts' ? Could be fun!

 

[explod]

SO WHAT?

This is not a 2008, this is not a credit crunch driven market.

I cannot believe you said that Z.

It is all credit and has been for decades.

People down my way cannot fathom why big vacant blocks of land are selling like hot cakes. The same as for the gold price, land will preserve wealth. Money is nothing but credit and as Robert Kyosaki repeats, "cash it trash"

 

[notting]

"cash it trash"

Yes but you can use it to blow your nose with, or wipe your mouth after a big feed!

 

[Mr Z]

I cannot believe you said that Z.

It is all credit and has been for decades.

People down my way cannot fathom why big vacant blocks of land are selling like hot cakes. The same as for the gold price, land will preserve wealth. Money is nothing but credit and as Robert Kyosaki repeats, "cash it trash"

Kyosaki is a real estate guy who walked into the RE crash in the US and has only just recently worked out the value of PM's, he is no one to quote as any sort of expert, he is about five years behind the curve!!!!

The fact is that this market correction/event is not being driven by the same forces that drove 2008. I did predict 2008 and harped on publicly about the MASSIVE carry trade risk from around 2005 so YES I do get it BUT that is not what is going on here, at least not yet. When the risk lay in the sovereign area and related parts of the private system the destination for capital seeking protection will be very different to 2008. In 2008 we saw a liquidity drain from private to sovereign ("flight to safety" ??!!) in a market that contained massive leverage. Today that dynamic has altered... yes it is all credit BUT who's credit? Expecting a simple repeat of 2008 shows that no attempt has been made to understand the current situation. This is a market that is in transition and is moving away from sovereigns to the stronger parts of the private sector, many companies today have strong earnings, sound balance sheets, money in the bank and pricing power in an inflationary environment. Trashing them "because it is all about credit" is just mindlessly panicking.

This is not a 2008, this is possibly around mid transition in the broader investment mindset. IMO we will have more of these panics and they are opportunities IF you understand what the right thing to buy is!

You are over simplifying it!

As for vacant land selling like hot cakes on the Mornington Peninsula OH man, what can I say?.... in what is still effectively a private credit bubble in Australia... LOL "Dead men walking" is all I can say! Go where the leverage has been shaken out not where it still exists!

 

[explod]

Mr Z;651755]Kyosaki is a real estate guy who walked into the RE crash in the US and has only just recently worked out the value of PM's, he is no one to quote as any sort of expert, he is about five years behind the curve!!!!

We do not have to be experts to see where paper money is going. Rivkin who was a crook and went to gaol said "Sell in boom and buy in Gloom" merely cliches that can be expressed to say how it is. However for newcomers flaying around for some simple introductions to the concepts of finance he is usefull and has been for my Grandkids. Like the carbon tax, its got a lot of problems and will have to be changed, but at least it is a start.

The fact is that this market correction/event is not being driven by the same forces that drove 2008. I did predict 2008 and harped on publicly about the MASSIVE carry trade risk from around 2005 so YES I do get it BUT that is not what is going on here, at least not yet.

Yes you are very good.

Who can succinctly encompass what defines this turn? And I welcome a clearer explanation.

When the risk lay in the sovereign area and related parts of the private system the destination for capital seeking protection will be very different to 2008. In 2008 we saw a liquidity drain from private to sovereign ("flight to safety" ??!!) in a market that contained massive leverage. Today that dynamic has altered... yes it is all credit BUT who's credit? Expecting a simple repeat of 2008 shows that no attempt has been made to understand the current situation. This is a market that is in transition and is moving away from sovereigns to the stronger parts of the private sector, many companies today have strong earnings, sound balance sheets, money in the bank and pricing power in an inflationary environment. Trashing them "because it is all about credit" is just mindlessly panicking.

It is was the collapse of a lot of private sector that required the public sector to prop which set the scene for a lot (not all) of what is now occuring in my view

This is not a 2008, this is possibly around mid transition in the broader investment mindset. IMO we will have more of these panics and they are opportunities IF you understand what the right thing to buy is!

You are over simplifying it!

I am not interested in trading opportunities but in what is happening to the capitalist system and the debauching of the wealth and earnings of ordinary people. And personaly I do know what to be in for for my own protection but not my concern in this discussion

As for vacant land selling like hot cakes on the Mornington Peninsula OH man, what can I say?.... in what is still effectively a private credit bubble in Australia... LOL "Dead men walking" is all I can say! Go where the leverage has been shaken out not where it still exists!

Bubble coming or not, good (and I mean from wealthy money) landbanking is taking place in special areas. Martha Cove for example, built round a great harbour will soon be serviced by a new freeway opening up to make Melbourne City only 30 minutes away.

And I do believe that cash will be trash and that those sitting on full freehold of tangibles will ride anything out in the long term.

On gold and the Dow, it is worth noting on the 15 year chart we have two dips and the beginning of a third. A slight forrunner occured in late 1998 when gold was at its very bottom, the first dip was in 01/02 when gold awoke from its sleep. (the dot.com) the second we know well (because we all sat up that time), played out in 08/09 when gold dipped down but has not looked back since. However the Dow has only recovered 60% and languishing 2,500 points below that previous high. In point of fact the larger view of the Dow shows that it has been moving sideways since 1998 whilst gold has risen some 600%.

We all in my view have out differing takes and sure this dust off may be driven differently but overall things are looking pretty sick in my view and there seems to be no solid solutions being put forward, just statements like "it will be much improved in 2013" without one word of qualification.

Anyway just my too.

 

[Mr Z]

Martha Cove has already hit the wall once hasn't it ? I'm not into marine ghettos, leave them in QLD for my money. Take a drive around it, it is not hard to spot the projects that have run out of money! At least is wasn't hard the last time I took a look.

2008 was not about the collapse of the private sector, it was about a government induced credit bubble collapsing. The private sector was largely a victim of the fallout. Now we have the safe haven sovereigns, that where the destination for capital in that event, coming under a cloud. On top of that the setup is very different, liquidity in the system is not the current problem here. As I said things like the Libor rate tell you that much!

No I am not very good, I pay very good money for advice from people who are very good.

We don't have a 'capitalist system', that is a large part of the issue here. To call what we have capitalism is to misunderstand what capitalism is. We have a government problem, it is all about the money supply and how it is controlled in the end.

Bubble coming? Domestic real estate in Australia is in a fully mature bubble. There is no coming about it, this is not the right point in the cycle to get into anything domestic.

Tangibles yes BUT not tangibles that are priced on very extended credit, domestic RE fails on this point.

Gold bottomed August 1999 from memory.

The DOW is an index? Since when do you buy the entire index? The stock portfolio that I own is near double its 2007 highs. You can't work out what is going on with the RIGHT companies from the DOW. Again a gross over simplification!

IMO 2013 will be a very dangerous year... but that is all I am saying on that.

Anyway... again... I say that this is not "a 2008"! This is a different setup and the outcome will be different. Why you have taken umbrage with that I cannot understand!

 

[joea]

Gold 100 oz.
$2000 has been mention by experts!!!!!

 

[Kauri]

Gold on the 60 mins ... Is it on the verge of an ABC ??

Cheers
............. Kauri

 

[Mr Z]

This is looking like a high level consolidation, so far it has been surprisingly strong given other indications. I am starting to doubt that a full correction will play out. Odds now seem to me that we have seen it --> very bullish so far. Up over 1800 again and it would seem to be over for the bears. Yes, 2K this year I would say, 2+ in the New Year but beware any hot moves in the New Year.

 

[explod]

I know everyone is frantically busy with other things but golds up a bit more today.

Fairly predictable really.

 

[Uncle Festivus]

I recall when gold was about $1400 it was noted that 'some large player' had taken out a large position with $1800 calls - well his/her play came true last week....

Of interest is that there are now more large 'players' taking big bets with Dec 2011 $3000 calls, even Dec 2012 calls @ $5000.....

Venezuelan president Hugo Chavez nationalized the country’s gold mines Wednesday....

Chavez is repatriating much of Venezuela’s gold held overseas, about $11 billion worth.
The Bank of England, JPMorgan Chase, Barclays, Standard Chartered, the Bank of Nova Scotia, all of them recently got a request from Chavez asking that the gold he has stored with them be shipped home.

“We’ve held 99 tons of gold at the Bank of England since 1980,” declared Chavez. “It’s a healthy decision” to bring it back.

That's if the BOE even has that much gold after Brown sold most of it way back at the bottom.....

And so, we have some economists who ponder why gold is surging, even contemplating the idea that gold may in fact be an alternative currency, and not a hedge against inflation anymore - a little late to the party....

Meanwhile, the equity markets have just blown the $600B or so in QE2 money ie back to where they were this time last year....

But still gold is still not at an inflation adjusted record high - not this week anyway....

 

[skcots]

Interesting. I wonder what exactly are Chavez's motives.

 

[disarray]

Interesting. I wonder what exactly are Chavez's motives.

he's an anti-imperialist socialist whackjob. i like the guy

 

[lioness]

When will gold stocks take off?

Very disappointing so far.

 

[explod]

When will gold stocks take off?

Very disappointing so far.

It is a considerable story and it is worth doing a bit of research to understand.

Gold and silver are part of an entire industry. We have producers, investors, bullion bankers and paper traders to name a few. They all have to some degree and interest in quite varied ways.

I think most will accept now that gold and silver prices have also been cotrolled to a great degree.

On stocks you will find for example JPMorgan will hold a fairly large percentage of many gold stocks. Other bullion banks will be involved in other gold stocks and so on. These companies or banks are paper traders in the metals going both on the long side at times and on the short side. Of late gold and silver have firmed up a great deal and a lot of the dealings being done on borrowed money is causing the shorts to get margin calls and to meet them they are selling pm. shares and so on. Other holders then lose nerve and you will find the bigger blokes, having a good idea before the rank and file when metals prices are to rise buy back in again.

I am sure others can explain things clearer with many other facits and examples, mine is just a rough take. However I have followed it long enough to know that the best exposure is to hold the physical metal itself and trade the pm. stocks only at strateigic times. Today gold and silver stocks tended to hold their own whilst most of the rest of the market fell, so that in itself is not too bad. A look at the Newcrest chart (ASX NCM) for the last three years shows a rise of about 60% which should be considered as pretty good in my view.

 

[Sdajii]

Any time there are masses of people all getting excited about something, all so sure that it is brilliant, and its price far far exceeds its intrinsic value, the bubble bursts in the end and everyone in retrospect says "Oh, duh! That was so obvious!"

There are so many truisms which come to mind...

"Be fearful when others are greedy and greedy when others are fearful" and all that kind of stuff. Has there ever been a greater case of gold fever in modern times than right now? (I'm actually not sure, maybe there has...)

The whole world seems to be gripped by gold fever. I considered jumping in and riding the bubble before it burst... hey, just imagine how much you could have made on the dot com bubble as long as you got out before it popped... but whether or not the gold bubble bursts soon, I can't see it inflating massively higher than where it is now. I can't see gold getting to anything like $5,000, and being an obvious bubble, why buy in if it's not going to?

I'm sure the gold bugs will hate what I'm saying. Haters welcome

 

[Billyb]

When will gold stocks take off?

Very disappointing so far.

People investing in gold right now are there because they want to get away from unstable markets such as stocks, including gold stocks. So I wouldn't expect them to take off anytime too soon. Wait until the the fear subsides, which is about the time when physical gold prices will start to drop - then you will see the price of gold stocks go up. IMO. This seems to be what happened in the last gold bull market.

but whether or not the gold bubble bursts soon, I can't see it inflating massively higher than where it is now. I can't see gold getting to anything like $5,000, and being an obvious bubble, why buy in if it's not going to?

It can go up more, and chances are it will. People have been claiming the gold bubble story from years back. Those people would have been better holding gold all that time.
I wouldn't be confident enough for it to hit $5000, however IMO Gold is currently one of the few LOW-risk long-term investments right now. Reason being because gold has consistently shown over history that it goes up when people are fearful. Right now there's a lot of things for people to be fearful about. I don't see any reason for that to change anytime soon, considering the state of affairs in the US and Euro.

 

[aclassic]

A question for you gents please.

If you had say 19k in a short term deposit at 5.5% and you thought that you would do better in gold for 4 to max 12 months, what form of investment would you go with?

I.E. :

Perth Mint Certificate Program (PMCP)
Perth Mint Depository Program (PMDP)
or on the ASX - Perth Mint Gold Quoted Product (PMG) PMGOLD.

If none of above, any hints?

Kind Regards.

 

[explod]

A question for you gents please.

If you had say 19k in a short term deposit at 5.5% and you thought that you would do better in gold for 4 to max 12 months, what form of investment would you go with?

I.E. :

Perth Mint Certificate Program (PMCP)
Perth Mint Depository Program (PMDP)
or on the ASX - Perth Mint Gold Quoted Product (PMG) PMGOLD.

If none of above, any hints?

Kind Regards.

If it was me I would only accept physical gold and put it in my own bank vault.

And that is what I have done from 2004. However a couple of years back I sold my gold and increased my silver holdings as the evidence suggested to me that the gold silver ratio will revert back to its histoiric mean average which is 15 to 1. Currently it sits at about 40 to 1.

On paper holdings there are suggestions that there is not full physical backing against certificates issued.

Worth you doing your own reading up on these issues before embarking.

 

[Mr Z]

If you think that gold is in a bubble here you clearly have no idea what a bubble is. A bubble is not just a rising price

You know I have had people telling me we are in a gold bubble since we cracked $300 ! :