Gold Price - Where is it heading?

[Joules MM1]

http://www.sprott.com/market-insights/gold-alerts/gold-alert-june-8,-2012/

By Eric Sprott & Shree Kargutkar

June 8, 2012

excerpts

The Chinese gold imports from Hong Kong in April, 2012 surged almost 1300% on a YoY basis. Total gross imports for the month of April were 103.6 tonnes and the net imports were 66.3 tonnes1....This represents an increase of 640%.

Japanese pension funds have finally discovered the value of investing in gold. The $500M Okayama Metal and Machinery pension fund placed 1.5% of its assets into gold bullion-backed ETFs in April in order to "escape sovereign risk"4.

When buyers representing 140 tonnes of new demand enter a market which only has 175 tonnes of monthly supply, we are left wondering ....

 

[Smurf1976]

Regardless you can't claim to have run out of gold simply because your currency is worthless, gold will have a price and will be available, you will simply have to pay the price to obtain it, whatever it is... peanuts or kryptonite, there will be something to trade and we will not "run out".

I don't think anyone is saying that gold will "run out" as such. Just that those with gold may not be willing to accept any amount of fiat currency in return for it.

It's a bit like saying that in 1985 you could have swapped a dozen 68cm remote control stereo TV's for a reasonable car. In 2012 few would accept them as payment for anything at all and they are essentially worthless. You can still buy a car and you can still buy gold - but nobody is likely to accept any number of 27 year old TV's as payment.

Likewise I'm sure you'll still be able to buy gold (or a car) in the future. But it's possible that sellers may cease accepting AUD, USD etc as payment if value of those starts declining rapidly enough.

 

[Mr Z]

Yeah, I get that Smurf and what I said stands, IMO this market will always clear at a price and if it for some reason doesn't you own a shiny block of uselessness!

 

[Mr Z]

Predictions Anyone?

Greece goes OK, Ben disappoints and we sell off to "the low"...

What is your guess?

 

[Uncle Festivus]

Re: Predictions Anyone?

Greece goes OK, Ben disappoints and we sell off to "the low"...

What is your guess?

Equities - I think 'the market' is several guesses ahead of itself? It was falling on reality, which would eventually trigger the next round of QE, both US & Euro, but then the market started to second guess this outcome and has risen for several days now, which would negate further QE??? QE is fundamentally a program to support share prices?? After-all, this is what the market is conditioned to now, not what the economy is actually doing ie going by the data from the last week the US is well on it's way to a double dipper, even if it won't be officially sanctioned by the NBER till next year....

And the latest data has shown that China too has hit a Great Wall.......they can push liquidity all they like but they will find out, just like the rest, that even 'free' money can't create demand in the face of falling asset prices bought with old liquidity/debt.

The problem with the Euro zone is that the creditors are now the debtors themselves - there just isn't enough to go around.......even Germany is politely saying it doesn't have any more appetite to bail out everyone?

If anything it might just be getting a bit easier - short the Dow at any level and long gold at any level.......just depends how deep your pockets are?

 

[blue0810]

Re: Predictions Anyone?

....
.......just depends how deep your pockets are?

No sure. I’ll have to check on monday morning

 

[Mr Z]

Calling all goldbugs...

Listen

Bron Suchecki: The Role of Arbitrage in Precious Metals Markets

I mean really listen and learn... remember that more than half the shills are on YOUR SIDE OF THE FENCE!

 

[Joules MM1]

cupla spankin wot-tha's

first, yeah yeah yeah !
http://www.businessinsider.com/socg...tton&utm_medium=social&utm_campaign=moneygame

excerpt

if gold catches up with the increase in the monetary base since 1920 (as it did in the early 80s), its price would rise to USD 8500/Oz," adding that just "to close the gap with the monetary base increase since July 2007, gold would have to rise to $1,900/oz, assuming full transmission from the monetary base increase to the gold price.

then, nah mate, nah !

Anti-Silver Bets Keep Rising Into Price Inflection Point

http://247wallst.com/2012/06/21/ant...to-price-inflection-point-slv-sil-agq-hl-gld/

excerpts

The real interest was in the PUT options, implying that investors are putting on more and more bets against the devil’s metal. We saw more than 100,000 Put options trade hands this Thursday with about 40,000 of those taking place in the front-month July expiration. That is almost triple the normal volume in options and it is interesting that it is happening this close to 52-week lows.

With silver now close to a 52-week low and with the bets growing for even more weakness, we would note that this is usually the sign of a key inflection point being very near. That does not necessarily mean that silver is going to bounce, but if it trades much lower from here then it may take the hot air out of the devil’s metal for quite some time.

 

[Uncle Festivus]

Well then I guess you either have to believe that PM's (and any other market for that matter?) are in fact just a by-product of the likes of Lava Girl types and are in fact manipulated or it's all fair and a zero sum game??

If you believe the first option then they would (and do) use critical technical junctures to placate the chartists into a certain position, usually bearish.

On the monetary bit, you would also have to subtract all that has been vaporised but kept off the ledger also I would assume, to get the balanced view of whether or not the money supply has truly expanded at all?? Which sorta puts a dent in the gold-for-inflation angle?

Right now it's all about money velocity I would think - those who used to have money & got burned in the 'GFC' but still have the IOU's have a net negative effect against those who have new money from the Fed but only park it in 'safe' temporary lodgings ie bonds?? This is showing up as crashing consumption, which in a system based on ever growing consumption means death!

Only a matter of timing...........but getting closer by the day.........although tempting to buy some more G at these prices

 

[challenger123]

Gold Price to Break $2000/Oz in 2013 - QE by Central Banks, Chinese and Indian Buying

Hey Gold Investors

As economists, we need to continually look at the current economic situation, then see where the market is headed, invest now and profit from it ahead of the curve.

While we wait for the markets to begin to lift, we need to be looking at the gold market and seeing how demand will lift the price of gold in the next 12-18 months.

We are still sitting near decade year highs at $1590/oz last night.



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I Hold: IndoChine Mining {ASX:IDC}

The world's Central Banks are accumulating as much gold as they can, we Central Banks are continually Quantitative Easing, we have CHina accelerating their gold purchases to record highs each month, and now we will begin to see India, the world's biggest gold consumer re enter the market over coming months.

The reason demand has fallen off from Indian consumers in the last 12 months, softening the price of the yellow metal, which in affect has created a bullish wedge pattern is the depreciation of the Rupee against the $US has made it more expensive for them to buy gold.

This is set to reverse in the coming months, with new govt and central bank measures aimed at lifting the Rupee against the $US back to its long term average.

Then watch the price of gold lift significantly over the next 12 months, and with it, gold shares.

Cheers Challenger

India Prepares to Counter Rupee’s Slide
By Kartik Goyal and Unni Krishnan - Jun 25, 2012 9:33 PM ET

India boosted the amount of government bonds foreign investors can purchase by $5 billion, seeking to bolster demand for the rupee after it tumbled to a record low against the dollar.

Foreign institutional investors can now purchase $20 billion worth of government securities, up from $15 billion, the Reserve Bank of India said in a statement today. Long-term overseas buyers such as sovereign wealth funds, central banks and pension funds will be allowed to invest in the debt directly to broaden the base of investors, the Reserve Bank also said.
Enlarge image India Said to Consider 12 Rupee Measures Including Debt Limit

The rupee pared gains after the statement as expectations of wider steps, spurred by Finance Minister Pranab Mukherjee’s comments two days ago that officials will announce measures to stabilize the currency, were disappointed. The rupee is Asia’s worst performer of the past year, having tumbled 21 percent versus the dollar, and its decline has contributed to an inflation rate that the central bank deemed last week too high to allow an interest-rate cut.

More: http://www.bloomberg.com/news/2012-...to-curb-rupee-s-slide-finance-chief-says.html

 

[Tysonboss1]

 

[Joules MM1]

video

have to agree......gold is a great trade, a garbage investment

 

[numbercruncher]

have to agree......gold is a great trade, a garbage investment

Garbage is a pretty harsh word -

Had you "invested" in some shiny stuff 10 years ago for example how much would your investment be worth now I wonder? Perhaps compare that to some non-garbage investments ?

 

[explod]

Buffet, Gates, blah blah

They never discuss its relevance as a currency. With the printing presses diluting paper currencies gold is holding its value. Though it may appear to be rising in price it is merely reflecting the value dropping out of currencies.

It is a store in which to hold ones wealth, nothing more or less. And is why a lot of banks are now net buyers again, so as to protect equity value.

With all their many other primary responsibilities you can bet Gate's and Buffet would not have the knowledge of those who have made the subject of gold the prime one.

 

[Joules MM1]

Garbage is a pretty harsh word -

Had you "invested" in some shiny stuff 10 years ago for example how much would your investment be worth now I wonder? Perhaps compare that to some non-garbage investments ?

youre doing exactly what is said on the video......you are also defending in hindsight...... and the trade youre alluding to is a trade, as in something traded, not an investment.....tell all the people who bought when gold was above 1800 and assure them have nothing to worry about because youre goingt o provide them with evidence that the metal produces income and yields in excess of what they can get anywhere else.....of course, it needs to remount 1800 and you'll need to provide evidence that that is going to re-occur

gold is a great trading vehicle through which to move liquidity both short and long.....is saying great too much of a good word too?

i'm wondering if all those people whom "invested" in gold during the declining years and finally got out in the early 2000's are scratching their heads and thinking, you know, i was told and became convinced in the mid 1980's that gold was a buy and hold but i got nothing from it for 20 years and finally gave up.....oh well....... i guess some of that inflation-eaten cost was returned after 2000

 

[Joules MM1]

lulz.....as if i care......i just run with it

 

[numbercruncher]

I do agree that gold currently seems better as a trade than buy and hold - great swings for a trader.

But gold and Garbage dont come in the same sentence I would suggest.

 

[Tysonboss1]

It is a store in which to hold ones wealth, nothing more or less.

Yes, But but not a very good one. Any asset can be used for this purpose, and many other assets generate income at the same time, and can currently be purchased at very low prices. Compared to gold which will not produce income and is trading at very high speculative levels.

With all their many other primary responsibilities you can bet Gate's and Buffet would not have the knowledge of those who have made the subject of gold the prime one

I would think that with over 60 years of dedicated study of business, finance and economy, and his record for making sound rational decisions. Buffet is better placed to make rational decisions than the upstart gold bugs whos "investments" depend on getting large numbers to aggree with them and follow them into the purchase.

 

[Tysonboss1]

-

Had you "invested" in some shiny stuff 10 years ago for example how much would your investment be worth now I wonder? Perhaps compare that to some non-garbage investments ?

As it said in the video, any asset came outperform over a short time frame.

But you would probably aggree that the key to any successful longterm investment plan is compounding.

Gold will not compound, An ounce bought today in 100 years will still be an ounce.

An asset that produces income can have that income rolled over to buy more assets that produce more income.



It would be crazy to think buffet would evert believe in buying gold as an investment, Since his entire fortune has been built buying income producing assets.

Buffett started with $10,000 in 1950, If he had placed that money in gold he would not even be a millionaire, So when asked if he would prefer $1M in gold or his current $40Billion of income producing assets and cash, You can bet he will take the $40Billion.

 

[Tysonboss1]

Gold is not currency.

Gold is an asset and a commodity.

Like any Commodity, It's price can flucuate, So Buying it at the top and hoping to use it as a store of value will probably not work out very well, and as already mentioned you can't even enjoy any income while you wait for the price to return to your entry level.

As with any commodity, It is possible to get speculative gains from buying and selling it at the right times, just as you can with oil, iron ore, copper, wheat etc etc. But you also have an equal chance of making a speculative loss, Gold promises no more safety of principle than any other commodity. and as the years from 1980-2000 show, It is not even a good inflation hedge over decent periods of time.

Gold has no floor in it's price once it loses favour, We produce more every year than we consume and massive stock piles exist world wide, we don't rely on it as a commodity in the way we rely on Oil, Ironore, copper or wheat, If we stopped producing those commoditys our stockpiles would be suffering within weeks,

At the rate we consume Gold it would be decades before we would have to reopen the mines.