Gold Price - Where is it heading?

[sinner]

For me, it's not a time to add to gold as it's still $1490 in AU terms, but yet gold equities got the usual full sell off in response to the US price dip. Gold equities are still way above the last cycle lows, having beaten the rest of the market since the start of the year.

As for the gold price slam, at his stage all roads lead to yet another fat finger from the usual culprits trying to smash CONfidence in gold while trying to elevate CONfidence in fiat, and most importantly, $USD's, while central banks try to extricate themselves from $USD holdings in an orderly manner.

This is the same question I used to ask explod all the time.

How can you logically reconcile your views on gold with holding gold equities that represent the same kind of currency risk as any other equity (so why wouldn't you hold other equities with better prospects?!) and at the same time, any profit derived from a major move in gold is going to be in the paper you seem to believe will crumble and most likely as a result of that crumbling...

So let's follow the "logic". Gold is good, paper money is bad. Therefore, I will buy gold mining stocks, so that when paper collapses, the gold price will go up proportionally, shooting my gold miners through the roof, at which point I will be able to cash out for a nice heft paper profit.

My 2c is that if gold ever did trounce paper in such a fashion, all the gold miners would either be immediately nationalised, or taxed at a huge price per ounce of profitable extraction. Ergo, they might make a good utility stock style investment, at a maximum few % of net portfolio size.

 

[Uncle Festivus]

This is the same question I used to ask explod all the time.

How can you logically reconcile your views on gold with holding gold equities that represent the same kind of currency risk as any other equity (so why wouldn't you hold other equities with better prospects?!) and at the same time, any profit derived from a major move in gold is going to be in the paper you seem to believe will crumble and most likely as a result of that crumbling...

So let's follow the "logic". Gold is good, paper money is bad. Therefore, I will buy gold mining stocks, so that when paper collapses, the gold price will go up proportionally, shooting my gold miners through the roof, at which point I will be able to cash out for a nice heft paper profit.

My 2c is that if gold ever did trounce paper in such a fashion, all the gold miners would either be immediately nationalised, or taxed at a huge price per ounce of profitable extraction. Ergo, they might make a good utility stock style investment, at a maximum few % of net portfolio size.

I was merely comparing the gold price to the performance of gold equities this time round ie they are higher now with the gold price lower than last sell off - relative sentiment. Until & when the time comes, you have to be a part of :The System:? I don't just trade gold and gold stocks.....although at the cycle peak I was up some 20% or so - sell and convert to gold?

It's more about how much fiat you can make and convert to gold before the event?

 

[Uncle Festivus]

Alternatively, "someone" drops 5 tonne of gold into the "market" and the price only drops $20???

"Someone" else just got a bargain???

 

[rimtas]

Don't be fooled, Gold is approaching a bottom

 

[explod]

Alternatively, "someone" drops 5 tonne of gold into the "market" and the price only drops $20???

"Someone" else just got a bargain???

Of paper fluff when there were few traders around.

The stackers day is coming as the spring to reality approaches.

 

[Value Collector]

Of paper fluff when there were few traders around.

The stackers day is coming as the spring to reality approaches.

Gold seems to have failed both the store of value ( it's lost 30%), and the investment (it's produced no income) value in the last few years, it's not even really operating as an independent clarion hedge.

It really has to rocket higher to make back ground it's lost in value and lost income in recent years.

Turns out it is operating much more like a commodity than a currency, and stockpiles of gold continue to increase.

 

[qldfrog]

Sadly, VC, I can only agree with you;
Still puzzled as why in a world where everyone is faking money , real tangible assets such as gold do not go up the roof;
yet real estate does...
I would have thought that any tangible asset such as land , forests, food and mineral stockpile should increase as per fiat currency increase: you double the amount of paper money, these prices should double..
anyway such is the world...
I keep my physical gold not doing so bad lately-> as the AUD is falling.....

 

[Uncle Festivus]

Gold seems to have failed both the store of value ( it's lost 30%), and the investment (it's produced no income) value in the last few years, it's not even really operating as an independent clarion hedge.

It really has to rocket higher to make back ground it's lost in value and lost income in recent years.

Turns out it is operating much more like a commodity than a currency, and stockpiles of gold continue to increase.

Incorrect. It's holding it's value if not gone up. Certainly doing better than the sharemarket. Not sure where you plucked 30% from.

 

[cynic]

Incorrect. It's holding it's value if not gone up. Certainly doing better than the sharemarket. Not sure where you plucked 30% from.

I suspect that the decline from its peak (when measured in USD) may be the justification behind such claims.

As to outperformance of the sharemarket, I think it all depends which sharemarket (and time period) is selected for the comparison.

I'd be very interested to know if gold could be accurately claimed to have historically outperformed all sharemarkets.

 

[sinner]

stockpiles of gold continue to increase.

LOL.

What else would they do?

Congratulations, you win my vote for funniest post on ASF ever.

 

[explod]

I suspect that the decline from its peak (when measured in USD) may be the justification behind such claims.

As to outperformance of the sharemarket, I think it all depends which sharemarket (and time period) is selected for the comparison.

I'd be very interested to know if gold could be accurately claimed to have historically outperformed all sharemarkets.

Indexes can be very misleading. If a company goes broke or drops to a certain level it is no longer in the index.

With the topping of the DJIA looking close and the Chinese market plunging I feel very secure with my bullion.

 

[cynic]

Indexes can be very misleading. If a company goes broke or drops to a certain level it is no longer in the index.

With the topping of the DJIA looking close and the Chinese market plunging I feel very secure with my bullion.

Indexes can be very misleading. If a company goes broke or drops to a certain level it is no longer in the index.

Certainly.

Further to this indices may be price weighted, or alternatively capitalisation weighted. There are even some (total-return indices) that are adjusted to incorporate dividends.

However, indices do not the "sharemarket" make!

Hence my curiosity (on the matter of comparative performance historically) remains as previously posted.

With the topping of the DJIA looking close and the Chinese market plunging I feel very secure with my bullion.

I've always considered it most important that people are content with all personal decisions and/or actions regarding the various aspects of their lives, especially those pertaining to investment of resources (time, effort, material, money etc.)

I do, however, sometimes question the wisdom of becoming too deeply invested in negative events.

A grandfather of mine (one of many) found a sizeable nugget whilst prospecting at Moliagul. At the time, gold was trading near an all time high. As he was hoping the price would continue its ascent, he held onto it for another six years. During those years the price defied him by steadily declining. At times he opined that an outbreak of war would elevate the price, and, despite stating that he'd not wish for such an such eventuality, I suspected that his deeper desire to profit may have outweighed those expressed sentiments.

 

[explod]

In a sensible portfolio gold is a long term protector.

In 1970 it was $35, today $1,150, up 33 times. A home will show similar results. A home I purchased for $7000 by 33 times equals $231,000, but in fact would be closer to 200 gs, as it is a commission house in the country. So gold wins on this one.

Good paintings are held for the same reason. And of course trading off the swings by astute charting the ultimate. However the price rise of gold reflects the devaluation of money and this is often not factored properly.

 

[Uncle Festivus]

I do, however, sometimes question the wisdom of becoming too deeply invested in negative events.

Insurance is for negative events.

How long will, or can, the rest of the world keep giving the US $500Billion a year to live beyond their means, now that their sugar daddies, as in oil producers, have taken a hit on oil? Or their big consumer goods supplier, China, is converting USD's for gold?

That is the negative event to insure against.

 

[Junior]

In a sensible portfolio gold is a long term protector.

In 1970 it was $35, today $1,150, up 33 times. A home will show similar results. A home I purchased for $7000 by 33 times equals $231,000, but in fact would be closer to 200 gs, as it is a commission house in the country. So gold wins on this one.

Good paintings are held for the same reason. And of course trading off the swings by astute charting the ultimate. However the price rise of gold reflects the devaluation of money and this is often not factored properly.

What would the multiple be if you purchased your gold and property in 1980?

 

[explod]

What would the multiple be if you purchased your gold and property in 1980?

Agree, we can cherry pick for all sorts of scenarios. . 1970 was chosen because that is when the US removed the gold standard which kept currencies orderly knowing the money had sound intrinsic value.

Incidently the home purchased in 1970 had jumped to $25,000 and the gold high only lasted about 4 days in which time it rose nearly 30% then collapsed.

 

[Wysiwyg]

In a sensible portfolio gold is a long term protector.

In 1970 it was $35, today $1,150, up 33 times. A home will show similar results. A home I purchased for $7000 by 33 times equals $231,000, but in fact would be closer to 200 gs, as it is a commission house in the country. So gold wins on this one.

This is exactly what I don't get with buying gold. If you bought an ounce at say age 30 in 1970 it would have cost you half a weeks wages. Now that person is 75 y.o. and holding a weeks wages worth of gold. 45 years of sitting there doing absolutely nothing. Buy low sell higher, buy high sell higher but holding it to the grave is a definite sentimental wank.

 

[Value Collector]

.

In 1970 it was $35, today $1,150, up 33 times. A home will show similar results. A home I purchased for $7000 by 33 times equals $231,000, but in fact would be closer to 200 gs, as it is a commission house in the country. So gold wins on this one.



.

Gold loses on that one.

Gold paid no interest, rent or dividends for all those years.

The house would have paid you rent, the rent left over after costs would have compounded, you could have ended up with two or three houses by reinvesting the rent received in more property.

In a sensible portfolio gold is a long term protector.

Why not just have other assets with the same hedging profile as gold that also generate income?

However the price rise of gold reflects the devaluation of money and this is often not factored properly

Yes, but a lot of "real" physical assets offer the same inflation hedge, while also producing income.

Do you understanding compounding? If you do, why recommend gold which does not compound.

 

[Value Collector]

This is exactly what I don't get with buying gold. If you bought an ounce at say age 30 in 1970 it would have cost you half a weeks wages. Now that person is 75 y.o. and holding a weeks wages worth of gold. 45 years of sitting there doing absolutely nothing. Buy low sell higher, buy high sell higher but holding it to the grave is a definite sentimental wank.

Yes the gold bugs like gold because they hate paper money, they are right to mistrust paper money, but they are wrong to assume the answer is gold.

Assets that will maintain value as the paper money devalues, while also throwing off income in the currency of the day provides a far better long term return.

I mean good farmland in Greece currently produces euro dollars, next year it might produce Drachmas, if the year after that the Drachma halves in value, the farmland will produce twice as many Drachmas and be worth twice as many Drachma's, If we went bit coin, the farm will earn bit coin.

The farm will continue throwing of income in whatever currency is the currency of the day, and along the way it can be used to buy more farmland, producing compounded returns for you.

 

[Value Collector]

Certainly doing better than the sharemarket. Not sure where you plucked 30% from.

It is down from $1800, which is more than 30% decline.

Not sure where you pluck a return better than the share market?

It seems gold has been trending down from it peak for years, while paying no dividends, the value of the share market + dividends has gone up dramatically.

Congratulations, you win my vote for funniest post on ASF ever

Does it not bother any gold bugs that the gold stock piles increase every year?

I mean we have a metal that apart from jewellery has almost no industrial use that comes anywhere near using the annual production rate of gold mines, so it is stock piled year after year.

I can't see anything that really offers price support if the large number of people who currently hold it, decide to get back into more productive assets.

It's not like oil or iron ore where the stockpiles will get used up.