Gold Price - Where is it heading?

[Value Collector]

Sinner,

I wouldn't call gold risk free,

1, you are at the risk of it dropping in value for perhaps most of you life (look at the last big crash)

2, as you rightly mentioned, it exists in the physical plain, and there for somebody can walk away with it, theft is a risk.

3, If you decide to hold paper gold, or lock it in a bank volt to prevent risk, then you do have counter party risk and you also lose consistently on the fees for the space your renting.

4, you could also end up buying phony bars.


Gold is an apple, that the gold bugs keep calling an orange hence why I am comparing apples and oranges.

Yes other assets may have some risks that your non reactive, physical plain existing gold does not have, But diversification will minimise those and the income and growth from the others can hide the impact of the investments that did poorly,

 

[So_Cynical]

Well my comment was in response to explode, who said it is a great long term investment, so you will have to take it with him.

You posted

Gold is a terrible long term investment.

And regardless who it was in response to, you said it...so i attempted to enlighten you along the same lines as Sinner has.

I don't consider gold a currency, you would be stretching the concept to make it fit, It certainly wouldn't be a practical one. It does fit the definition of asset though and it is most certainly a commodity.

Its irrelevant what you consider gold to be or not be, again i was attempting to enlighten you about why the price of Gold does what it does, and as i was taught on this very forum many years ago, to really understand what's going on with Gold you have to look at it as a currency.

Another thing i learnt on this forum a long time ago was that nothing or at least very little to to be gained from talking, enlightenment can only come from listening (reading) and getting the message...seeing from a different perspective.

 

[Value Collector]

You posted



And regardless who it was in response to, you said it...so i attempted to enlighten you along the same lines as Sinner has.



Its irrelevant what you consider gold to be or not be, again i was attempting to enlighten you about why the price of Gold does what it does, and as i was taught on this very forum many years ago, to really understand what's going on with Gold you have to look at it as a currency.

Another thing i learnt on this forum a long time ago was that nothing or at least very little to to be gained from talking, enlightenment can only come from listening (reading) and getting the message...seeing from a different perspective.

I have been reading through this thread and the asf in general for a long time before i started putting my 2cents in recently, while I totally agree more is learned from listening, you have to be careful of who you listen too, not everyone here knows their stuff, for example explod predicting gold would be $3900 by now.

What is wrong with me bringing up my opinion into the discussion, it sounds like your trying to make out I should just sit and be quite and not enter the discussion.

 

[Uncle Festivus]

And I was enjoying retirement so much............

Originally Posted by Value Collector

I don't consider gold a currency, you would be stretching the concept to make it fit, It certainly wouldn't be a practical one. It does fit the definition of asset though and it is most certainly a commodity.

Apparently most central banks do consider it a currency......

Originally Posted by Value Collector

Sinner,

I wouldn't call gold risk free,

1, you are at the risk of it dropping in value for perhaps most of you life (look at the last big crash)

2, as you rightly mentioned, it exists in the physical plain, and there for somebody can walk away with it, theft is a risk.

3, If you decide to hold paper gold, or lock it in a bank volt to prevent risk, then you do have counter party risk and you also lose consistently on the fees for the space your renting.

4, you could also end up buying phony bars.

Substitute references to gold for <fiat cash> & you have the same points?

So here we are 5 years since the start of the GFC with over $10Trillion of fresh new fiat either just sitting in banks reserves so they can buy back shares or pay huge bonuses with their other free cash flows and yet the global GDP is barely hobbling along at a positive rate. That is, debt is buying less growth.

The problem with the reduced free float of equities, and the recession cycle getting ever closer, is that when the equity selling starts in earnest there won't be any buyers.......and at the end of the day trillions in phony fiat equity wealth will be simply evaporated literally overnight, setting of a domino effect through the other so called stores of value like housing etc.

The 3 parts of the GFC -

1 - the 'crisis' - the tipping point of leveraged counter party risk at the end of several central bank induced bull cycles ie property
2 - the bail-out - by the money printers and the apperance of normality and calm
3 - the crash - the absense of real growth and broad based prosperity paid for by debt/printing facilitates the collapse of the bubble created by (2)

Do your best while the sun shines for fiat but have a plan to keep it when the bubbles burst.........

 

[Value Collector]

1, Apparently most central banks do consider it a currency......


2, Substitute references to gold for <fiat cash> & you have the same points?

3, So here we are 5 years since the start of the GFC with over $10Trillion of fresh new fiat either just sitting in banks reserves so they can buy back shares or pay huge bonuses with their other free cash flows and yet the global GDP is barely hobbling along at a positive rate. That is, debt is buying less growth.

The problem with the reduced free float of equities, and the recession cycle getting ever closer, is that when the equity selling starts in earnest there won't be any buyers.......and at the end of the day trillions in phony fiat equity wealth will be simply evaporated literally overnight, setting of a domino effect through the other so called stores of value like housing etc.

The 3 parts of the GFC -

1 - the 'crisis' - the tipping point of leveraged counter party risk at the end of several central bank induced bull cycles ie property
2 - the bail-out - by the money printers and the apperance of normality and calm
3 - the crash - the absense of real growth and broad based prosperity paid for by debt/printing facilitates the collapse of the bubble created by (2)

Do your best while the sun shines for fiat but have a plan to keep it when the bubbles burst.........

1, Well the Fed doesn't,





2, I don't believe I ever said cash was risk free, It was Sinner who brought up the topic of gold being risk free, I was just pointing out that it is not.


3, this is a really interesting lecture series if you want to learn a about the feds response to the gfc, I think you will find it more informative than the conspiracy pages.

 

[Uncle Festivus]

1, Well the Fed doesn't,

2, I don't believe I ever said cash was risk free, It was Sinner who brought up the topic of gold being risk free, I was just pointing out that it is not.

3, this is a really interesting lecture series if you want to learn a about the feds response to the gfc, I think you will find it more informative than the conspiracy pages.

The Fed doesn't have a clue about the economy let alone gold, as can be seen with their pump, bail-out & now dump policies over the years.

We all know what the Fed's response was - pump/print up reserves and buy up all the crap from those who took advantage of the Feds policies and legislation changes. The problem now is that the Fed is the market, compounded by the ever reducing free-float of equites......

It's a pity those uni students are wasting their time doing a degree in economics when all you have to know is how much the central bank is buying and or printing every week, then buy equities and other risk-on junk regardless?

Looks like risk off today though, gold up to $1264..........Germany still wants their gold back......who will be the last holding fiat at crunch-time.............China banking system comes under pressure, Chinese prefer gold.....

 

[Value Collector]

The Fed doesn't have a clue about the economy let alone gold, as can be seen with their pump, bail-out & now dump policies over the years.

We all know what the Fed's response was - pump/print up reserves and buy up all the crap from those who took advantage of the Feds policies and legislation changes. The problem now is that the Fed is the market, compounded by the ever reducing free-float of equites......

It's a pity those uni students are wasting their time doing a degree in economics when all you have to know is how much the central bank is buying and or printing every week, then buy equities and other risk-on junk regardless?

Looks like risk off today though, gold up to $1264..........Germany still wants their gold back......who will be the last holding fiat at crunch-time.............China banking system comes under pressure, Chinese prefer gold.....

Ok, so the fed don't have a clue, the world economy is going down the toilet and Germany wants their gold back


Good luck with that

By reading through this thread I can see you have held the same view for a number of years, How long till you admit your wrong, the world economy is doing a lot better than you give it credit for.

 

[>Apocalypto<]

The Fed doesn't have a clue about the economy let alone gold, as can be seen with their pump, bail-out & now dump policies over the years.

I would love to see you run the US ecconomy any better. it's so easy to call the shots from a key board whole diffent thing when your at the helm.

back to gold.

based off the daily and weekly Gold looks good for a rally IMO. I have bought a small position. looking for higher lows and highs to continue.

 

[Uncle Festivus]

Ok, so the fed don't have a clue, the world economy is going down the toilet and Germany wants their gold back


Good luck with that

By reading through this thread I can see you have held the same view for a number of years, How long till you admit your wrong, the world economy is doing a lot better than you give it credit for.

'doing a lot better'? It's all about leverage & debt and paying debt back. Leverage is created by the central banks so as long as they can keep the plates spinning while adding new plates everything will appear to be 'doing a lot better'. Eventually the US will be margin called........

Looks like a few margin calls were made today for equities right around the globe? It's all very orderly at the moment, even a 300 point dip in the Dow, but if it get's legs it's going to breathtaking.

Sounds like you've never lived through a recession, part of the Pollyanna sunshine & lollypops generation??

 

[Uncle Festivus]

I would love to see you run the US ecconomy any better. it's so easy to call the shots from a key board whole diffent thing when your at the helm.

back to gold.

based off the daily and weekly Gold looks good for a rally IMO. I have bought a small position. looking for higher lows and highs to continue.

To be fair they (Bernankephiles) are only doing their jobs. It's all theoretical models & numbers to them. If we lived in a beneficial dictatorship without elections or Goldman Sachs lobbyists changing the laws then I would be able to do a better job. But, we don't, so we play the game till it ends and a new one starts all over again. You then need to work out how to keep all the credits from the first game in order to play the next game...... = gold.

 

[Value Collector]

Sounds like you've never lived through a recession, part of the Pollyanna sunshine & lollypops generation??

There will be recessions, so what?

Look at last century, many recessions, a great depression, world wars, oil shocks, rise and fall of communism, pandemics, and probably a thousand other things, But through out all of it, owning good businesses and compounding earnings into more investments absolutely smashed holding gold.

Even if you started your investment program right before the great depression, if you dollar cost averaged into the dow jones, you would have achieved 8% compounded growth.

If the leverage that exists now disappeared the price of everything would collapse because of deflation, including gold, where as fiat currency would go up in relative terms, so your basic premise is wrong when you spout about fiats.

 

[Uncle Festivus]

There will be recessions, so what?

Look at last century, many recessions, a great depression, world wars, oil shocks, rise and fall of communism, pandemics, and probably a thousand other things, But through out all of it, owning good businesses and compounding earnings into more investments absolutely smashed holding gold.

Even if you started your investment program right before the great depression, if you dollar cost averaged into the dow jones, you would have achieved 8% compounded growth.

If the leverage that exists now disappeared the price of everything would collapse because of deflation, including gold, where as fiat currency would go up in relative terms, so your basic premise is wrong when you spout about fiats.

Well if you were Warren Buffett perhaps but the rest of the muppets probably did the usual - sold at the lows then were the last ones back in at the top - a bit like now actually if you look at the market data. A lot of people lost everything back in 2008 and will never recover. Same for shareholders of Kodak etc lot's of household names have come and gone....what was your point?

At this stage of the game a recession would be disastrous because of debt & leverage, and if cycles matter then we are only getting closer to the next one yet the global economy has yet to fully recover from the last one, at least the real economies not stock markets or risk-on 'assets'.

But projections for growth hinge on several assumptions, and the IMF warns of nasty spillovers from policies in some of the world’s biggest economies: like a dangerous government fiscal impasse in America, incomplete reform in Japan, and stagnation and high unemployment across the euro area. Emerging markets, many of which have already seen destabilising capital outflows and sinking asset prices, may struggle to weather the storm.

As those that have gone before you, your points have been discussed ad nauseum here so not about to start all over again, but remember that if you are going to start talking returns then also consider the diminution in 'value' of the unit you are valuing it in?? Of special note is the acceleration in the decline when the Fed is created........



Anyway, we shall all find out if gold is the ultimate temporary store of wealth either way soon by the looks of the global mini correction underway?

 

[Value Collector]

what was your point?

My point is, that owning a portfolio of businesses and other cash generating investments (real estate etc) will over time beat a holding of a fixed asset like gold that doesn't generate earnings or compound, Even through all the market cycles.

Bringing up inflation is pointless as an argument for gold is pointless, Because the assets which I would recommend will also increase in value with inflation like you would expect gold too, but at the same time they generate income.

 

[beachlife]

To see what gold can do during and after a crash go back to 1987 in the charts. Nearly 18 years before it recovered.

To see how holding a portfolio of "good" businesses for income can work open up the monthly charts for AMP, TLS, MQG, and if your data is old enough have a look at OneTel and HIH, all "good" portfolio stocks many moons ago, not so good now for those that retired in 2000.

 

[CanOz]

This Gold Platinum spread could present another opportunity to enter a short if the retest works...

These are April contracts....the 15 minute looks bullish yet so just watching this one...

 

[Value Collector]

To see what gold can do during and after a crash go back to 1987 in the charts. Nearly 18 years before it recovered.

To see how holding a portfolio of "good" businesses for income can work open up the monthly charts for AMP, TLS, MQG, and if your data is old enough have a look at OneTel and HIH, all "good" portfolio stocks many moons ago, not so good now for those that retired in 2000.

The key word is good businesses, if you don't have the skill set required to build a quality portfolio of businesses and property like I suggest, simply buy the index and you will still smash gold long term.

 

[sinner]

...if you don't have the skill set required to build a quality portfolio of businesses and property like I suggest, simply buy the index and you will still smash gold long term.

Although, you haven't bothered to actually check the data to verify your claims that the index will smash gold in the long term, have you?

I already posted one chart to show that this has been a patently false statement for some time with the ESY00/GCY00 ratio. Considering the S&P500 is the *exemplar* of stock indices and pretty much all others have underperformed it in the long term, it still hasn't managed to "smash gold", and I wonder just how long it will take people who bought the index in say, 1999 or any of the ~15 years since to even match golds relative performance, let alone "smash".

Here's a longer term chart (FTSE100), that in quantitative analysis, fits the definition for "long term stationarity" otherwise known as your unsubstantiated claim is simply incorrect.



But somehow I doubt that real data from the real world will highlight the recency bias you suffer from, or stop you from trolling this thread with the party line. :frown:

Anyway, for anyone watching the XAUAUD chart (this being ASF and all, you'd think that people would stop looking at the XAUUSD chart and talking about things that never happened when priced in AUD -- my guess it's beyond the ability of most posters here to actually consider the idea of XAUAUD) here is my :



The early rise in 2014 has cemented 1278-1280 as serious support, which is now starting to approach a similar magnitude to the resistance at 1837. With the rejection of intermediate resistance (prior support) at ~1507 and the prices current position in the lower half of this range gives a bearish tendency to the consolidation.

I have heard some discussing gold as a potential "value" play (have a read of the "Value and Momentum everywhere" paper which explains what this means) but with 3,4 and 5y returns still at the high end of the historical range for gold I would personally say we aren't there yet with more falls required to match the historical value cases.

Regardless of the TA, I just buy physical gold with a portion of my monthly surplus which implicitly provides me with a price sensitive basis.

I think most of the argument is just intellectual masturbation, especially for those that will never purchase physical gold.

 

[Value Collector]

Although, you haven't bothered to actually check the data to verify your claims that the index will smash gold in the long term, have you?

I already posted one chart to show that this has been a patently false statement for some time with the ESY00/GCY00 ratio.

Yes, I have actually checked my data and yes you can "smash" gold by simply using as index. If you read my comments, you will see one of my biggest arguments for other investments rather than gold is that they compound, They generate earnings which over time can be used to purchase more investments.

Simply comparing the price appreciation of an index against the price appreciation of gold is not really addressing my point fairly, the price appreciation of gold over a period of 20 years does not come close to the total return of an index's price + compounded earnings.

 

[notting]

Yellen has reiterated that tapering will continue.
Gold went up after a short blip down.
Seems significant at this moment in time.
Ausi $ did the same.
Priced in I guess.
Or was it the comment on the abandonment of the Taylor rule for the moment and how we are in extraordinary times (still as she sees it - dovish there)
"This economy has severe headwinds left over from the GFC."
Really?
What?
As in - What is so extraordinary now? - especially if employment is a lagging indicator?
Seems normal to me.
Perhaps Gold is being driven by Chinese govt buying and not global fear any more.
The globe aint seeing what the Chinese are seeing, till now!

 

[notting]

I missed the critical comment, that 'tapering is not on a preset course and is still subject to employment and inflation data.'
That's a loosener.
A kind of preparation and face saving statement if they decide to indeed taper the taper which I, never the less, think is unlikely.