aliveandkicking

^^ Thanks for those links, Warpig.

No notifications here in Europe so far. I would guess most leveraged speculation in Gold would be

coming from countries who have a history of the allure of gold such as Asian countries.

But there are wider things going on at the moment in for example China and India which have high

inflation and where in China although they have very high reserve requirements, such reserve

requirements with an interest rate target are regarded as totally ineffective in influencing bank

lending. So unless it is different in China then China needs to tighten up monetary policy.

The feds are apparently not going to be doing more QE. The USA situation is such that they will be

obliged to implement some kind of austerity sooner rather than later.

Fundamentally you need people with money who are buyers of commodities. In so many countries now

you have gloom or are going to get gloom like in China when they do tighten up. QE has apparently

been exported to other places who have not yet tightened sufficiently given the exstraordinary impact

of QE. Evidently the fed thinks this is these other countries problems and not the feds.

The feds could be totally in control. Whatever you believe, the feds are doing everything they said they would do.

There have been a number of articles in Alphaville about this. I'll try and find them if I have time at work tomorrow.

Thanks. I quickly located a few of those articles on copper purchases to enable access to cheap finance which was bypassing chinese central bank loan tightening, which PBOC say they have recently tightened up on to give supposedly a copper surplus at the moment behind recent price weakness.

http://ftalphaville.ft.com/blog/2011/05/16/569436/chinas-copper-collateral-and-covert-credit/

Well I guess that's the risk a^K - copper has been falling steadily to below 144 and other importnat MA's but if we get a short term bounce from the current oversold conditions then the play should still work as a short term trade. Copper picking up today though.

Do you know anything about the chinese using copper as collateral for construction loans? I dont follow the logic but i saw it mentioned in the comments on a reasonably sound NZ finance board called interest.co.nz

Silver touched 34.30 earlier. 144 day moving average is at 33.71. Must be a good probability of it bouncing off this in the next day or two. Might have a small punt at silver long.

The fundamentals are in play too. Copper is not strong and could fall a relatively massive amount and where copper goes silver is likely to go too?

The only asset I see falling in price will be property. Otherwise, energy and all commodities will inflate driving up labour costs. Interestingly, some sectors are prospering (Farming,mining) where others are struggling (Retail and services) and I would expect that to be reflected in stock prices.

there is also massive demand for products coming out of emerging markets. That could easily be

unsustainable unless they can develope their own consumer economies and trade amongst each

other which is pretty unlikely given their current dependance upon western consumption.

At the moment we see conditions changing in China. It could easily ripple into other emerging

nations and developed economies who have been largely saved from recessionary forces by for

example massive chinese demand. And of course the chinese like to gamble and own gold.

Copper looks very likely to fall considerably in price as the western recession deepens

and the situation changes in China. Silver

will follow and gold with it. People will simply move to the best commodity opportunity.

Congratulations, you must have made an absolute killing. And now you have just started to rinse and repeat. Retirement in the Carribean getting very close now, I presume?

Mock all you want, i have made a few tens of thousands of euro by having a house and touch wood it will continue to work out well.

was DR. Bubb advocating a core position then?

 

also i took a short position at $45 & $49 for your info

 

i seem to recall your opinion a few years ago was that it would fall back to under $10, is that still the case?

 

edit - short pos. now closed

 

i think we are within 10% of the pull-back bottom

I can try and dig out what i said. What i think i said was that it was likely to or could fall

back to around 9.50 and in the conversation that ensued i committed myself to buying at that price.

My view at the time was that the prices of all things would rise so that holding silver was not likely to be a better position than holding copper or tin, baked beans, if you could store them or ammo, or even a house as i have done. In that kind of view you would have to be able to get out of silver to buy what you wanted to buy while silver prices were at a high, since it is known that these metals suffer from volatility, due in part to the numbers of buys who do not buy silver to use it but rather to sell it for a profit or as an inflation hedge or whatever you want to call it.

Louise Yamada KWN

 

 

 

 

but hey, it's just speculators pushing the price up isn't it?

 

 

http://www.mining.com/2011/01/19/miners-challenged-to-meet-growing-demand-for-industrial-silver/

 

 

 

 

Silver ink? whatever next?

 

self-cleaning suits?

 

silver deodorants?

 

 

crazy, crazy, crazy, time to sell silver for sure

The question raised by Dr Bubb is about buy and hold as a thought about strategy, when it would

seem better, to have a core position and sell a little after strong rises and then be continually adding back in from earnings, where large pull packs from strong rises are normal and expected because there will always be speculative activity supporting the price in strong bull markets.

Ramping buy and hold in a strong pull back is to my way of thinking a bit daft. If it works for some people then fine but there are other ways of approaching this investment and money making strategy.

You also have to wonder to what extent the market is ignorant of federal reserve activities and likely outcomes.

All those base money electronic reserves for example could dissapear enormously quickly as the banks swap into higher interest paying bonds in exchange for uselessly huge amounts of base money that they are currently holding.

All my attempts and other peoples attempts to engage silver and gold investors about this are met

with mostly hate talk and contempt of a highly personal kind. Why is that?

For example if there are huge opportunities in silver based products in the future then there must

be huge opportunities for a sustainable recovery over the next years. That is not talk we hear

much about here where the future is full of collapse and doom.

So what is to be? Feds restoring their balance sheet to normal levels in an inflationary period or a difficult economic

environment for years to come where new products have a hugely difficult time in getting sold

and prices are struggling?

It cannot be just this one eyed view of prices to the moon without large pull backs

Silver has still risen from around 5 and most enthusiasts here are adding from their earnt income.

At best a fall from 50 to 20 or 8 , or whatever it goes to, is just a bit dissapointing and does provide an

opportunity to get more at a cheaper price.

As people have pointed out before, many people here are not sophisticated traders. Silver holders

have done nothing wrong as far as i can see providing at some point in the future they do realise

that they will need to exit there position when prices are high, before others are also heading

for the same exit, where their only buyer is likely to be some gnarly old metal trader offering

them a pretty unattractive price for metal he cannot sell and does not want to hold.

What if that multi-million pound house has one old lady living in it about 70 and then the poxy terrace house has about 10 people living in it which include a few children going to school.

 

Who is using more of the services being provided by the local council?

 

No doubt about it,any fairer council tax would take account of amount of people in the residence.

if the council is obligated in law to provide housing to the homeless it seems reasonable to encourage people to give up having too much house they do not need to enable families and so forth to benefit.

Generally speaking little old ladies leave their large houses to their children who benefit from all of the advantages that having a house brings to the owner.

Generally speaking little old ladies can benefit from moving out of a large house into something easier for them to manage

Doubt it.

For the next few months i can easily believe we will get language like 'uncertainty in the global environment suggests we should promote growth rather than restrict it till more information is available'

The ECB can easily point to the rise in Euribor by one percent in the last year and throw that in as well for reasons to stay on hold.

The pattern we have seen in the gold price over the last month or so tells us that it is preparing for a massive move. Whether up or down ... time will tell.

The Feds are signalling they are going to normalise the balance sheet prior to small interest rate rises, where they say QE was only an extension of interest rate policy once zero was reached.

They have already announced they will sell off the less than 300B of agency mortgage backed securities still on the books and presumably buy treasuries to replace.

Possibly QE2 will be cut short and after a short period maturing treasuries will result in reserve 'distruction' as banks use reserves, and via customers use reserves, to buy new US treasuries where the reserves return to the fed via maturities and the balance sheet reduces.

There is no economic purpose served by the trillions of reserves in the banking system and there removal with have little economic purpose other than to raise the federal funds rate.

This change in policy could be well in place by the end of this year.

Do they never learn?

You friend is operating in an area beyond "foolish".

Think of him as one of the last fools - who will learn to regret his recklessness

You said the same thing of me, more or less, back in 2009, but i am now living in my home and having babies and very glad I am not still renting.

As it happens i seem to have bought at a low point but even if prices fall i will still be living in my home and raising a family.

Not everybody wants to wait for their life to be what they want it to be - I was too old to wait anyway.

Yes, as has been pointed out several times, there is not a single market here in the UK (or probably anywhere). Different types of housing and different areas are behaving differently. The only time that there appeared to be a uniform movement was during the credit crunch when even the London properties fell in line (practically) with the rest of the country.

 

This could happen again, but it would need a massive spike up in IR's. Until then, the nice areas and nice houses will fair far better than the rest. It's the small pokey new flats in the not-so-nice areas will likely suffer most.

Agreed. The future seems all about interest rates where many posters here think it is mathematically and politically impossible they will ever rise again.

Rises are likely to be pretty small for the next few years at least.

It seems an opportunity for some cheaper gold is coming up.

And maybe an opportunity to capitalise on Golds rise to help in rebuilding a nation??

How easy would it be to arrange methods of selling a large amount of gold as a one off that did not depress the price while the sale was in progress? Can it be done?

The thing with all these internet naysayers and goaders is they are never around when reality bites them on the bum.

 

Either that or mysteriously the deflationistas seem to have had a collective loss of internet service

How about you leave out the baiting and focus on saying something interesting??

This place always goes very quiet when gold even has a small decline and as far as i am aware nobody starts dancing around gloating like you lot do about deflation.

Roman holiday might be helping his brother out in NZ.

Nope I dont think it has magic powers.

 

But I do believe you come here to wind people up.

 

Go get a life and post on a thread you actually believe in.

Evidently i have been labouring under the illusion this is an investors discussion group rather than something you have to believe in.

Do you really want a group where everybody thinks everything you say is totally true as if you know the future and anybody who does not agree is some kind of heretic?

I suppose i already know the answer though.

If you think like that why come on a gold thread if it isn't to wind people up?

 

149 posts on a gold thread

So you actually think gold has magic powers!??

Come on dont be so daft

Oh, why don't you just look it up yourself?

 

http://en.wikipedia.org/wiki/Gold_standard

The gold specie standard ended in the United Kingdom and the rest of the British Empire at the outbreak of World War I. Treasury notes replaced the circulation of the gold sovereigns and gold half sovereigns.

??

When i went to school a sovereign was 21 shillings and bread would have been a few pennies a loaf in 1914.

Edit: oops. That was a guinea.

Bread was priced in pennies and shillings and pounds

And further, Bank Reserves have been used by UK banks which were a claim on UK government gold since about 1874 so deposits were essentially only backed by the promise of the british government. Pounds were essentially government promises

Correct, that is why the slippery beach ball (gold) that has been held under water for many years and is slipping through the fingers of a dying Empire, is a good buy.

 

Glad you understand at last

Gold is just stuff. It has no magic powers. There is plenty of desirable stuff.

In the gold standard all items are priced IN GOLD.

 

The "price" of gold is then dictated by how many $$$ there are.

 

If you allow Gold to back $$$, then yes, you artificially alter the ability of everyone who owns gold to buy other things. I.e. most gold holders get a massive increase in their purchasing power in terms of "ounces for stuff".

 

Never mind if you don't have any though.

You seem to be mixing things up?

When was the last time in history a major country priced bread in gold?? In the west that must be hundreds of years ago

I don't quite understand your point - are you saying that gold has some kind of intrinsic value that limits its use as money above a certain valuation?

The intrinsic value of gold, whatever that is, has nothing to do with it. A paper dollar has no intrinsic value at all yet is accepted as money. Why do not people swap their valueless paper dollars, which you can't eat etc etc for some paper that is less expensive and overvalued...?

 

Gold functions as money because it is durable, very difficult to fake, rare and hence unprintable except generally the supply increases from mines ~2.5%/annum, also it is divisible and all gold refined to the same standard is identical. These properties all make for a suitability for money. Diamonds are rare and expensive plus difficult to fake but are not divisible and all are slightly different from each other - not good as money.

 

Gold would, if used as a 100% backing for the money supply, take on the value dictated by the amount of currency in the system, be that M2 or whatever, without reference to any value dictated by the cost of digging it out of the ground. I don't expect it would form a 100% backing so I don't expect it to rise to $50,000 but we're not so far off 10% of that for a fractional gold system. You could swap your paper for gold should you so wish, it may keep the pollies and bankers a little more hamstrung than they are now as they would need a minimum amount of gold to cover requests for specie instead of paper (De Gaulle requested payment from the US in gold instead of dollars in the late 60's as it became clear the dollar was overvalued relative to gold. Of course Nixon had to stop that so he 'closed the gold window').

I am saying, in the gold standard all items are priced relative to the price of Gold where the price of gold is related to the perception by humans of the value of Gold. Therefore if you artificially alter the price of gold you artificially alter the price of everything.

Why do not people swap their valueless paper dollars, which you can't eat etc etc for some paper that is less expensive and overvalued...?

Does that have a typo?

Gold standard credit money is essentially the same as fiat credit money. Both rely on the bank having sound accounts and functioning in a sound regulation system. In both systems people can hold gold if they wish.

The only difference is with a gold standard you hope to get metal from your bank rather than hoping to get metal from your metal dealer.

Price is not the point under a gold standard. The 'price' is decided by how many dollars are in circulation and how much of them you want to back with gold. Gold is money.

 

 

Not a natural relationship btw gold and jumbo jet: a jumbo might have better fuel economy or different instruments all costing more or less gold.

 

 

There are so many dollars in the world today that if just the External Debt were to be backed by gold 100%, it would mean the 'price' of gold would have to be approx. $50,000 an ounce, iirc.

I get the impression you could not understand what i was saying. We all know there are perhaps hundreds of different versions of a jumbo jet but if we take one jumbo jet it has a value to humans and a price that is relative to the value of gold.

Gold today is 1400 an ounze because there are more dollars today and more people today than 40 years ago. If you artificially raise the price of gold then the price of everything is relative to gold and artificially raised in price.

Instead of relying on what somebody has told you about what the price of gold will be under a gold standard how about you think about it yourself?

If people think the price of gold is too high they are likely to trust banks that for example use platinum or copper to back their money because they will know the gold standard bank can pay them out in base gold money that is of little value compared to what they buy with the banks credit money. Paper money that is transferable to another banks system would also be more valueable than the gold. If you took gold of little value to another bank they could easily refuse to create the credits you want to buy platinum. Gold will have to have a natural price which the market creates. For gold to be supremely valueable it will have to have supreme value to humans. But today humans have other supremely valueable objects also.

Great article! What a PLONKER.... no... it's just the current price of gold is too low, stupid! You can support any size of money supply with any amount of gold, it's just the price which has to vary.

But who decides the price? If the price is too high when you take your money out of a bank you only get a small amount of gold but get the benefit of more money when you put the gold in the bank. So i am assuming therefore that gold has to have a market value versus other objects for this system to work?

So presumably you would have a natural relationship between the value of a jumbo jet and some gold. If Gold became very very valueable just because it was used as money it would be no different to paper that is valueable just because it has a strip of metal and a hologram on it or whatever they use today.

Have any of the gold bug community thought this through to show it is a workable system?

Maybe Bernanke is right? There are now so many items of value in the world today that when other items of value are created and the amount of money flowing around is related to the amount of wealth in the world that there would have to be more gold for the system to work?

For example if billions of people become wealthier and move from the possession of almost nothing beyond a knife and a tent to having a car and home it seems you need more money in the world but would this mean that you get deflation in the rest of the world that was not becoming wealthier as all of their money dissapeared??

You tell me if you have thought about it in depth before.

There should be no examples at all.

 

Benefits folk in middle class homes is pure madness. There must be an incentive to work. Not incentive to sponge.

And the nature of your work is what exactly? You seem to me to have an amazing ability to live in a world of total denial.

Do you produce anything? Do you not suck from the productive economy?

Most of us here on this board are somewhat like parasites. In our defense i repair the houses i am hoping to get some profit from and you do some community organising, but the nature of our way of life is to be sponges on the backs of people who actually produce things.

No doubt you can ban me again for mentioning this while others talk about the social good provided by speculation.

Why do the poor have to live in shit holes so we can do what we do??

Stop kidding yourself man!