Gold Price - Where is it heading?

[explod]

If i were valuing a gold company I would not be using current prices to assess it future earning power, I would use a much more conservative gold price,

You make a lot of asumptions Tysonboss1 that never seem to stand up. A stock I am in, AYN, is factored at a silver price AUS$30. Its production cost is $14 which is underway now and looking forward to the report end of September that they are on target to meet projections. They have met all objectives so far and just await now for the re-rating that will soon come and a top up at that time.

Maybe its time to look past those financial advisers and make all of your own decisions.

 

[Mr Z]

My god...

Status Change: Gold Moves From Investment To Money

Even Forbes Magazine are catching up!

 

[Billyb]

Whats your point Tysonboss? Is yours Bernanke's position?
The most interesting thing is this, from the US constitution:

It is explicitly mentioned that gold and silver is money as far as the US is concerned as of inception. It is important information that the head of the US central bank does not recognize this. Indeed what Bernanke said in this video is an outright lie - the central bank does not hold gold 'out of tradition'. It holds gold because prior to 1971 gold was the monetary base - a situation terminated by their default. The fact that gold is no longer money in the US results from a crime - an outright theft and coercion of peoples gold out of their hands and into the possession of the state (FDR 1933, completed by Nixon 1971), and not from people willingly choosing bits of paper that are irredeemable (US notes) as money.

I guess 'because we stole it from you all' is not as politically palatable as 'its just there because of tradition'.

indeed, central banks are not (completely) stupid , they know that this thing that they create out of thin air is probably not going to last forever as valid currency, not unless it's backed by something.

 

[Mr Z]

How much does gold really cost a Central Bank that can create the money that it is purchased with?

This is why central banks tend to sell into lows and by into highs. It is not about profit or loss in the currency that they can create from nothing. It is about control... these guys will acquire all the gold they need when they really need it, at any price it happens to be. After all what does it cost to tack on a few extra zeros?

People tend to misunderstand central bank actions, they are not economic actors in the sense that the rest of us are.

 

[Tysonboss1]

You make a lot of asumptions Tysonboss1 that never seem to stand up. A stock I am in, AYN, is factored at a silver price AUS$30. Its production cost is $14 which is underway now and looking forward to the report end of September that they are on target to meet projections. They have met all objectives so far and just await now for the re-rating that will soon come and a top up at that time.

Maybe its time to look past those financial advisers and make all of your own decisions.

What assumptions are those, I can't recall saying anything about silver.

At the end of the day a mine is just an earth moving operation, that uncovers a commodity which can be sold. The average cost of moving that earth over the mines life needs to be compared to the average price the commodity can be sold for. All I am saying is you should use a conservative figure,

The is plenty of other commodities with better production cost/sale price dynamics.

 

[explod]

How much does gold really cost a Central Bank that can create the money that it is purchased with?

This is why central banks tend to sell into lows and by into highs. It is not about profit or loss in the currency that they can create from nothing. It is about control... these guys will acquire all the gold they need when they really need it, at any price it happens to be. After all what does it cost to tack on a few extra zeros?

People tend to misunderstand central bank actions, they are not economic actors in the sense that the rest of us are.

True, but do you not think that the demand and increased possession of physical outside of the banking system will not bring about a day of reckoning ?

That the way the popular media obviously hates to even print the word gold is not a sign that it may be a problem ?

 

[Tysonboss1]

Whats your point Tysonboss? Is yours Bernanke's position?
The most interesting thing is this, from the US constitution:

an outright theft and coercion of peoples gold out of their hands and into the possession of the state (FDR 1933, completed by Nixon 1971), and not from people willingly choosing bits of paper that are irredeemable (US notes) as money.

I guess 'because we stole it from you all' is not as politically palatable as 'its just there because of tradition'.

That little piece you posted states the case clearly,

It says the state can not "coin money" so they cannot make money. However, the states can make gold and silver coins, so the constitution clearly distinguishes between "money" and "gold" the states can not print dollars,

 

[Mr Z]

The is plenty of other commodities with better production cost/sale price dynamics.

I doubt it given that the larger part of silver production is byproduct. That is the key to understanding silver, it is relatively supply inelastic.

 

[Mr Z]

True, but do you not think that the demand and increased possession of physical outside of the banking system will not bring about a day of reckoning ?

That the way the popular media obviously hates to even print the word gold is not a sign that it may be a problem ?

I'm not a big fan of the gold bug idea of a "day of reckoning". We are going to have some serious episodes but eventually serious action will be taken to stabilize this monster they have unleashed. Gold will be very popular right around that period! I honestly believe that eventually when things get too far out of control the US will just reissue its currency, taking a leaf out of Hitlers book in dealing with the Weimar Republic's little inflation episode. It will get messy and there is a USD crisis coming but exactly how that plays depends on when it finally arrives.

Lots to keep us entertained!

 

[Tysonboss1]

I doubt it given that the larger part of silver production is byproduct. That is the key to understanding silver, it is relatively supply inelastic.

I was making a direct comment in relation to explode $14 production cost to $30 sale price.

I was simply saying there is a whole bunch of other commodities will better ratio's.

Was not commenting on supply of silver.

 

[explod]

I was making a direct comment in relation to explode $14 production cost to $30 sale price.

I was simply saying there is a whole bunch of other commodities will better ratio's.

Was not commenting on supply of silver.

Would be pleased if you would state them?

I believe that the AYN situation is conservative, given the current trends, the ratio and rising prices of both pm's. I expect by the end of September that silver will be well past $50 an ounce in both Aus and US. AYN is Australias only pure silver producer. CCU also a pure play will come into production later this year and is another to watch for.

One has to play safe to be sure, but one also has "to speculate to accumulate"

 

[noirua]

An increasing number of countries are buying gold to booster reserves due to the US$ weakness and the dodgy situation in America and Europe. Kazakhstan are the latest to give their central bank an order to buy gold produced in their country.

The move appears to be one that will increase the price of gold and IMHO it will go well past US$2,000 per ounce this year and push on towards US$3,000 per ounce in 2012.

 

[Tysonboss1]

Would be pleased if you would state them?

I believe that the AYN situation is conservative, given the current trends, the ratio and rising prices of both pm's. I expect by the end of September that silver will be well past $50 an ounce in both Aus and US. AYN is Australias only pure silver producer. CCU also a pure play will come into production later this year and is another to watch for.

One has to play safe to be sure, but one also has "to speculate to accumulate"

Onshore oil is usually $8 a barrel it is selling for about $90. Even tar sand oil which is one of the most expensive ways to come by oil is about $40 a barrel which is slightly better than your ratio on silver.

Bhp's iron ore is operating on a 75% profit margin, meaning the cost of production is only 25% of the sale price, and that is a commodity well off it's highs.

Infact most of bhp's commodities a working on far better ratios than the one you mentioned,

 

[Tysonboss1]

One has to play safe to be sure, but one also has "to speculate to accumulate"

I don't believe that at all, if you feel you have to gamble to get ahead, your doing it wrong.

 

[explod]

I don't believe that at all, if you feel you have to gamble to get ahead, your doing it wrong.

Now that is an intersting insight into your take of things.

Speculating is a far cry from gambling. Your idaa to hold a wide variety of assets to my mind is very much closer to gambling than getting onto good trends. Many of your current choices, in spite of yields are going sideways at best. I do not criticise that and respect your way as I am sure you know when to get on or off.

What I do object to is your criticism of others without inputting some good reasons why.

I think it is because some of us may think for ourselves and outside common practice. What has gone before does not always mean those ways will work in the future. Ask any daytrader who uses auto trading methods. As soon as it is out there and everyone is using it the effectiveness of getting an edge over others soon dissipates.

Going with change is the name of the game, and being ahead of the change based on good research is far from gambling; it is good speculation.

I apologise for us going way off topic, but sometimes mutual concerns need to be aired in situ.

 

[Tysonboss1]

Just to clarify, I don't personally subscribe to massive diversification, just a sensible amount so that should i be wrong (we all make mistakes) or some thing not knowable occurs (**** happen) it does not cause a permeant loss of capital.

Between 6 and 20 stocks combined with cash and other assets is enough diversification for the enterprizing investor.

 

[RandR]

I doubt it given that the larger part of silver production is byproduct. That is the key to understanding silver, it is relatively supply inelastic.

Yeah, and yet another key for silver is the fact it is an industrial commodity, not just a precious metal. As an industrial commodity demand can fluctuate pretty wildly, combined with the inelastic supply creates a highly volatile market

 

[tothemax6]

That little piece you posted states the case clearly,

It says the state can not "coin money" so they cannot make money. However, the states can make gold and silver coins, so the constitution clearly distinguishes between "money" and "gold" the states can not print dollars,

I think perhaps you are confused, or you didn't read the piece. 'make any Thing but gold and silver Coin a Tender in Payment of Debts' - no part of this sentence indicates that they may produce the coins themselves (which was done privately or historically foreign coins were used such as Mexican/Spanish dollars). I'm not sure how the 'print dollars' came into this, the novel idea that a piece of paper can be a dollar results from the historical actions I described in my last post.

The constitution clearly calls gold/silver and gold/silver only to be money, logic:
"No State shall ...; coin Money" indicates that Money consists of coins as of the constitution being written.
"No State shall ...; make any Thing but gold and silver Coin a Tender in Payment of Debts;". What does one settle debts with? Money. The constitution states here that debt settlement cannot be forced to be by anything other than gold/silver coin, again indicating that they are money. And what is the purpose of this statement? To safeguard against precisely what has occurred: the declaration of paper tickets as being legal tender. In the end, the US does not follow its constitution.

 

[aclassic]

Gold Price - Where is it heading - Anyone care to speculate now?

Cheers.

 

[explod]

Gold Price - Where is it heading - Anyone care to speculate now?

Cheers.

Care to explain what you are trying to get across there aclassic ?