It's looking grim again. Is gold the would-be saviour?

It's looking grim again. Is gold the would-be saviour?

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Discussion

jshell

11,006 posts

204 months

Wednesday 26th June 2013
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DonkeyApple said:
It doesn't matter as retail purchases have insufficient weight.

Govt buying and fund buying are the only two forward drivers of note and the latter is only going to happen if govts, esp US, start printing currency again.

From a retail perspective buying in a falling market is always foolhardy. Gold is in a clear bear trend and so you would never go long or increase your exposure if you were aiming for direct returns on the position.
Your earlier posts saved me buying in at the wrong time. Cheers for that!

tom2019

770 posts

194 months

Wednesday 26th June 2013
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once China and other nations take action against U.S QE everyone will be looking for an safe anchor.

U.S looks good at the moment but its being propped up by QE and low interest rates - when that stops - and it will have to at some point people will realize that everything isn't all it seems, and will be looking to protect their capital.

The lower the price of gold get the more tempted I am to invest in it as a 5-10 Year investment.

DonkeyApple

54,923 posts

168 months

Wednesday 26th June 2013
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hornet said:
DonkeyApple said:
From a retail perspective buying in a falling market is always foolhardy. Gold is in a clear bear trend and so you would never go long or increase your exposure if you were aiming for direct returns on the position.
Was thinking more along the lines of a slow and steady campaign of buying coins for personal enjoyment rather than in/out for a quick buck. There's a small part of me that likes the "fight the power!" aspect of squirreling away a little bit of wealth outside the system. Plus I just like coins generally. Probably didn't make that clear smile
Sure but why buy today when they will be cheaper tomorrow?

It's not squirrelling away wealth but throwing it away until the bear market ends.

It would make more sense to work less and benefit that way rather than work hard and give your money away.

DonkeyApple

54,923 posts

168 months

Wednesday 26th June 2013
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hornet said:
DonkeyApple said:
Sure but why buy today when they will be cheaper tomorrow?

It's not squirrelling away wealth but throwing it away until the bear market ends.

It would make more sense to work less and benefit that way rather than work hard and give your money away.
Depends what you want to measure the worth of gold in. Another discussion perhaps smile
Very true, it does depend on the currency your other assets is denominated in, but as gold is falling against the USD then you'd do better to hold USD as a wealth hedge not gold. Again, this is part of why gold is falling and USD rising as the asset switch by overseas investors continues.

pork911

7,086 posts

182 months

Thursday 27th June 2013
quotequote all
DonkeyApple said:
hornet said:
DonkeyApple said:
Sure but why buy today when they will be cheaper tomorrow?

It's not squirrelling away wealth but throwing it away until the bear market ends.

It would make more sense to work less and benefit that way rather than work hard and give your money away.
Depends what you want to measure the worth of gold in. Another discussion perhaps smile
Very true, it does depend on the currency your other assets is denominated in, but as gold is falling against the USD then you'd do better to hold USD as a wealth hedge not gold. Again, this is part of why gold is falling and USD rising as the asset switch by overseas investors continues.
are they making 85 billion dollars worth of new gold every month?

DonkeyApple

54,923 posts

168 months

Thursday 27th June 2013
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pork911 said:
DonkeyApple said:
hornet said:
DonkeyApple said:
Sure but why buy today when they will be cheaper tomorrow?

It's not squirrelling away wealth but throwing it away until the bear market ends.

It would make more sense to work less and benefit that way rather than work hard and give your money away.
Depends what you want to measure the worth of gold in. Another discussion perhaps smile
Very true, it does depend on the currency your other assets is denominated in, but as gold is falling against the USD then you'd do better to hold USD as a wealth hedge not gold. Again, this is part of why gold is falling and USD rising as the asset switch by overseas investors continues.
are they making 85 billion dollars worth of new gold every month?
What triggered the recent fall in gold and the trip into a bear phase? wink

Besides which, what is the difference between $85bn as a percentage of total USD and the monthly extraction of gold as a percentage of total gold? wink

Edited by DonkeyApple on Thursday 27th June 08:57

Digga

40,206 posts

282 months

Thursday 27th June 2013
quotequote all
DonkeyApple said:
hornet said:
DonkeyApple said:
Sure but why buy today when they will be cheaper tomorrow?

It's not squirrelling away wealth but throwing it away until the bear market ends.

It would make more sense to work less and benefit that way rather than work hard and give your money away.
Depends what you want to measure the worth of gold in. Another discussion perhaps smile
Very true, it does depend on the currency your other assets is denominated in, but as gold is falling against the USD then you'd do better to hold USD as a wealth hedge not gold. Again, this is part of why gold is falling and USD rising as the asset switch by overseas investors continues.
There are other ways to value it though.

There is somthing to be said for having 'some' gold as part of a long term store of wealth. Selling at the bottom of a bear market doesn't really fit with that. Then there is the issue of 'portability' of wealth. With what has happened with QE and with deposit raids, people rightly question the security of their savings.

DonkeyApple

54,923 posts

168 months

Thursday 27th June 2013
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Digga said:
There are other ways to value it though.

There is somthing to be said for having 'some' gold as part of a long term store of wealth. Selling at the bottom of a bear market doesn't really fit with that. Then there is the issue of 'portability' of wealth. With what has happened with QE and with deposit raids, people rightly question the security of their savings.
Certainly. But are we at the bottom of a bear phase? We won't know until it breaks back up and the news flow changes from funds selling out to Govts stocking up etc. until then any new longs are the wrong side of the risk.

Portability is a very good argument. Not so much in the West but certainly in other economies. However we can see from India that such demand is insufficient to contra real momentum.

As a safe haven from bank default, again very good but as we can see reflected in the current trend the decline in fear over bank defaults in the West is contributing to the sell side. In smaller economies there is less money to have an over all impact.

There are also other portable stores of wealth which actually have more use in the debt market such as classic cars, fine art and super yachts. Plus, the ultimate portable wealth is always going to be precious stones not metal as its easier to transport and the value isn't pegged by a currency but by a single cartel.


jshell

11,006 posts

204 months

Thursday 27th June 2013
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DonkeyApple said:
the ultimate portable wealth is always going to be precious stones not metal as its easier to transport and the value isn't pegged by a currency but by a single cartel.
Maybe, but the tales of De Beers stashing away mountains of diamonds in order to control global demand and prices scares me far, far more than the oscillating gold price!

Digga

40,206 posts

282 months

Thursday 27th June 2013
quotequote all
jshell said:
DonkeyApple said:
the ultimate portable wealth is always going to be precious stones not metal as its easier to transport and the value isn't pegged by a currency but by a single cartel.
Maybe, but the tales of De Beers stashing away mountains of diamonds in order to control global demand and prices scares me far, far more than the oscillating gold price!
Also, to a layman who has once shopped for diamonds (wife's engagement ring - hopefully a one in a lifetime experience) I found it extremely difficult to judge the value of rocks. I am quite convinced that 'fakes' or low grade 'genuines' could be sold to unsuspecting punters and only an expert would know. I present you with the curious case of our customer that went bust, Wrekin Construction, and the gem of Tanzania. biggrin

With gold it is a bit easier to know the value of what your holding.

pork911

7,086 posts

182 months

Thursday 27th June 2013
quotequote all
DonkeyApple said:
pork911 said:
DonkeyApple said:
hornet said:
DonkeyApple said:
Sure but why buy today when they will be cheaper tomorrow?

It's not squirrelling away wealth but throwing it away until the bear market ends.

It would make more sense to work less and benefit that way rather than work hard and give your money away.
Depends what you want to measure the worth of gold in. Another discussion perhaps smile
Very true, it does depend on the currency your other assets is denominated in, but as gold is falling against the USD then you'd do better to hold USD as a wealth hedge not gold. Again, this is part of why gold is falling and USD rising as the asset switch by overseas investors continues.
are they making 85 billion dollars worth of new gold every month?
What triggered the recent fall in gold and the trip into a bear phase? wink

Besides which, what is the difference between $85bn as a percentage of total USD and the monthly extraction of gold as a percentage of total gold? wink

Edited by DonkeyApple on Thursday 27th June 08:57
both bopping corks, neither a saviour, there isn't one, just ride the waves or drink the punch

DonkeyApple

54,923 posts

168 months

Thursday 27th June 2013
quotequote all
Digga said:
jshell said:
DonkeyApple said:
the ultimate portable wealth is always going to be precious stones not metal as its easier to transport and the value isn't pegged by a currency but by a single cartel.
Maybe, but the tales of De Beers stashing away mountains of diamonds in order to control global demand and prices scares me far, far more than the oscillating gold price!
Also, to a layman who has once shopped for diamonds (wife's engagement ring - hopefully a one in a lifetime experience) I found it extremely difficult to judge the value of rocks. I am quite convinced that 'fakes' or low grade 'genuines' could be sold to unsuspecting punters and only an expert would know. I present you with the curious case of our customer that went bust, Wrekin Construction, and the gem of Tanzania. biggrin

With gold it is a bit easier to know the value of what your holding.
But that would be an ABC retail purchase which you would do for investment purposes. You'd go to the more appropriate vendors. You would also probably buy uncut.

As for gold being easier to value, indeed, once the price ticks below a certain level there will be a large number of 'investors' who learn that the value of their holding is zero as it either never existed, has been 'transferred' or is tungsten. wink

Certainly several incidents where entire govt assets have transpired to be fake. It's actually harder to create fake diamonds. But we, as punters, seem to think we know more about gold than diamonds and think it is safer. You can't blend diamonds, nor slice them, nor re-stamp them, or coat them, or shave them etc etc.

If buying cut then all you need to do is match the inclusions you can see with your own eye with those marked on the certificate.

Edited by DonkeyApple on Thursday 27th June 13:48

Digga

40,206 posts

282 months

Thursday 27th June 2013
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DA, I'm afraid I would not want to bet much on either my ability to judge rocks or precious metals!

Diggers or used mountain bikes perhaps... hehe

DonkeyApple

54,923 posts

168 months

Thursday 27th June 2013
quotequote all
Digga said:
DA, I'm afraid I would not want to bet much on either my ability to judge rocks or precious metals!

Diggers or used mountain bikes perhaps... hehe
Now diggers, there's a solution. Being big and yellow you're going to struggle to evade being spotted but who's going to stop you crossing the border? biggrin

jeff m2

2,060 posts

150 months

Thursday 27th June 2013
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I think too many people view Gold as an investment that they may profit from. I'm sure those who purchased at 1,600 and up have been somewhat cured.

To use Gold one must look at the complete financial mess we are currently in.
Maybe best described as a "nowhere to hide" scenario.
Gilts/Treasuries anything over five years is not appealing (for non professionals)
Emerging Market Bonds just got hit.
E.M stocks were already down (and sitting at fair valuations)
High yield mimics stocks not bonds !
Established Markets stocks have been virtually the only place to go, and have in many cases become fully valued.
Gold still fell......
With all that scariness and uncertainty about how is it still possible to view gold as a "would be savior".

There is of course a bottom, at which any commodity will cease to drop usually dictated by rainfall, wars and new uses, in the case of gold it's cost of extraction and pregnant Indians.

Can anyone give a reason why it should be above 850? (apart from: you would like it to besmile)


Maybe 40 or 50 years ago Gold would have been the place to hide, but until the speculative component in the price is gone (or drastically reduced) it may as well be a pork belly.

ETA read this news item....in days of old this report of discontent would have spiked the gold price,
Today it quietly drops below 1,200

http://www.bloomberg.com/news/2013-06-27/the-messa...

Edited by jeff m2 on Thursday 27th June 21:23

DonkeyApple

54,923 posts

168 months

Friday 28th June 2013
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jeff m2 said:
There is of course a bottom, at which any commodity will cease to drop usually dictated by rainfall, wars and new uses, in the case of gold it's cost of extraction and pregnant Indians.

Can anyone give a reason why it should be above 850? (apart from: you would like it to besmile)
Interestingly, the 'Indian' effect is massively out weighed by the 'fund' effect or 'state' effect. At the moment the volumes of paper gold being put back onto the market by funds is far out weighing anything Indians can buy. Plus, the Indian Govt just put curbs on gold imports in place to negate this effect further. They don't want their population putting their money into a declining asset when it could be spent inside the economy and taxed. It will also spike local prices and trigger the release of money from existing holders.

The floor for gold is often stated by simple journos as being the cost of extraction. But these people do not look beyond the basics and fail to realise that the cost of extraction will not remain at its current level.

It's only around the $850 mark because gold has been so high for so long that extremely costly mines have been kept open and others opened up. The reality is that at the current market price most of South Africa's deep mines are uneconomical. Once they stop producing, along with all the others that break at $1,200+ then the cost of extraction will fall away from $850.

Ultimately, in a real long term bear market all production outside of placer deposits will halt as will scavenging from electronics etc and the potential floor for the average cost of extraction is well under $300.

The sad fact is that the gold market is riddled with liars and ignoramuses who deceive and distort or omit so as to sell product to punters and if the market does crack through $1,000 then I think many people will learn that their investment wasn't being held in a vault but in someone's Cayman a/c as USD, that most of the sellers are not also buyers in a falling market and that all the talk about gold being finite and the world coming to an end was hysterical hype.

Digga

40,206 posts

282 months

Friday 28th June 2013
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jeff m2 said:
Maybe 40 or 50 years ago Gold would have been the place to hide, but until the speculative component in the price is gone (or drastically reduced) it may as well be a pork belly.
Agreed. This has created a lot of froth. Whether this was intended - by those who have skin in the fiat game - or whether unintended is a topic in itself.

jeff m2 said:
ETA read this news item....in days of old this report of discontent would have spiked the gold price,
Today it quietly drops below 1,200

http://www.bloomberg.com/news/2013-06-27/the-messa...
Yes, so far, gold resolutely ignores the waves of bad news washing through the markets recently.

DonkeyApple

54,923 posts

168 months

Friday 28th June 2013
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There is also the fact that cash yields in the West will at some pint in the medium term future need to be raised by central banks higher than inflation rates.

If gold is a negatively yielding hedge against inflation what happens to its demand when a cheaper asset such as USD yields more than inflation?

While I'm not a convinced bear on gold I am certainly not a bull.

jeff m2

2,060 posts

150 months

Tuesday 2nd July 2013
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DonkeyApple said:
There is also the fact that cash yields in the West will at some pint in the medium term future need to be raised by central banks higher than inflation rates.

If gold is a negatively yielding hedge against inflation what happens to its demand when a cheaper asset such as USD yields more than inflation?
Ignore it and short duration, you can always buy the yellow stuff later biggrin

If things work out..... you'll get a lot more of it too.

superkartracer

8,959 posts

221 months

Tuesday 2nd July 2013
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WOW only just checked prices , last year i sold a load of coins @ £1200 oz and Silver was £30 oz, it's certainly dropped some value eh.