Jump to content
drbubb

Gold comments - for the first half of 2008

Recommended Posts

I've got to watch gold in more that US$s.

I thought you'd like to see how they compare recently. It makes life very much more interesting if you have Yen, as it's rising quite fast.

 

In US$, which most people seem to watch:

 

GoldUS_080122.gif

 

In GBP, which I watch a lot:

 

GoldGBP_080122.gif

 

And a rather different picture in JPY:

 

GoldJPY_080122.gif

 

The bottom blue line marks the start of the recent rise.

The top line the peak.

The middle line the half way point.

 

And all on a day when the US are on holiday.

Share this post


Link to post
Share on other sites

Gold $850- we've seen it now !

 

The gold low could be in place, but ideally, a retest down to $845 would

be even better

 

I expect a big climatic gap down in the US today for gold stocks.

But there is a great chance that woudl set up a V bottom today or within

this week.

 

(BTW: no guarantee on this!)

 

- -

(Let's see what Jim Sinclair has to say):

 

Dear CIGAs,

 

"This is it.

 

The DJII futures are down over 500 points.

 

If the Federal Reserve fails to take emergency action before the US opening tomorrow, you will see the DJII open down 1000 points as the public joins this professional panic.

 

Everything you see happening is contained in the Formula, which will be the catalyst that takes gold again above $887.50 and to $1650.

 

As long as you have followed my plea to have NO MARGIN on anything gold I see no problems.

 

If you have margin the rule is never meet a margin call, but sell whatever is needed to meet the call or more, never less.

 

It is a better wager that the Fed will immediately drop rates by 1 full percentage point.

 

It is a slam dunk that all Western central banks will cut loose and flood the world with more liquidity than ever seen before.

 

If central banks fail to cause a torrent of liquidity from their unending check books then $450 trillion of derivatives will take us to the world of Mad Max."

 

/see: http://www.JSmineset.com

Share this post


Link to post
Share on other sites
Gold : $860 now

 

Beautiful set-up here for a "kiss it goodbye" touch of $845/850- the old, old highs

 

I'm buying a long list of Juniors today in one of my accounts

 

Looks like you were right on the money Dr Bubb. A hefty rise today (almost 5%) and more on silver.

Share this post


Link to post
Share on other sites

FEARS about GLD -the Gold etf:

 

http://www.financialsense.com/fsu/editoria.../2008/0122.html

 

So... You want to sell your gold stocks

and buy the gold and silver etf's?

by Richard J. Greene | January 22, 2008

 

The following example a second grader should be able to follow. Yesterday GLD traded at a price of $87.05 while gold futures were $882.00 and spot gold was at $881.00. I called my best sources and the best quote I could get for purchasing one ounce of physical gold was $897.00. So here is the question: If you were buying ownership of gold at an effective price of $870.50 for an ounce of gold by buying the gold ETF at $87.05, how does the gold ETF turn around and purchase real physical gold for you when the spot price is $11.00 higher, the futures price is $12.00 higher and the physical price is $27.00 higher? That is a neat trick. I wonder how they do it. YOU SHOULD START WONDERING TOO! Do you really believe the GLD ETF can survive loosing $27.00 for every ounce of gold that they buy for you? Now you know why the custodian and sub-custodian’s agreements for these ETFs are so complicated and un-auditable. It would make sense that the GLD would have to trade at least $4-$5 higher than the price of gold if they were actually buying it, insuring it, guarding it, and delivering it. They say there is a sucker born every minute. This should help to prove that point.

Share this post


Link to post
Share on other sites

(from GEI):

 

energyi - 23 Jan'08 - 10:05 - 33211

 

Betty,

"Money is not now going where it is treated "best" but where it is deemed safest"

That is a great point !

 

Safest - in terms of credit risk

Safest - relative to currency risk

Safest - with least exposure to future inflation

 

YEN seems a great safer harbor, and the Dollar may lose than status

Share this post


Link to post
Share on other sites
FEARS about GLD -the Gold etf:

 

http://www.financialsense.com/fsu/editoria.../2008/0122.html

 

So... You want to sell your gold stocks

and buy the gold and silver etf's?

by Richard J. Greene | January 22, 2008

 

The following example a second grader should be able to follow. Yesterday GLD traded at a price of $87.05 while gold futures were $882.00 and spot gold was at $881.00. I called my best sources and the best quote I could get for purchasing one ounce of physical gold was $897.00. So here is the question: If you were buying ownership of gold at an effective price of $870.50 for an ounce of gold by buying the gold ETF at $87.05, how does the gold ETF turn around and purchase real physical gold for you when the spot price is $11.00 higher, the futures price is $12.00 higher and the physical price is $27.00 higher? That is a neat trick. I wonder how they do it. YOU SHOULD START WONDERING TOO! Do you really believe the GLD ETF can survive loosing $27.00 for every ounce of gold that they buy for you? Now you know why the custodian and sub-custodian’s agreements for these ETFs are so complicated and un-auditable. It would make sense that the GLD would have to trade at least $4-$5 higher than the price of gold if they were actually buying it, insuring it, guarding it, and delivering it. They say there is a sucker born every minute. This should help to prove that point.

 

I did look at a prospectus recently.

 

I noted with great interest that it said "backed by gold" and NOT "backed 100% by gold".

 

Maybe this is why Jim repeatedly discourages the purchase of gold ETFs.

 

Thanks for the info. I will be passing it on.

Share this post


Link to post
Share on other sites

Congatulations on the article Frizzers, I wish the misprint was true!

 

"Gold began 2007 at about £3.15 per ounce and ended the year at about £4.55."

 

:D

Share this post


Link to post
Share on other sites
I did look at a prospectus recently.

 

I noted with great interest that it said "backed by gold" and NOT "backed 100% by gold".

 

Maybe this is why Jim repeatedly discourages the purchase of gold ETFs.

 

Thanks for the info. I will be passing it on.

 

James Turk has done a close analysis and thinks there are a lot of loopholes in the gold and silver ETFs. I certainly would not have any major holding and would look to alternatives for physical. But JP suggests it is more of a trading vehicle and for that it may be OK. I'd certainly sell my ETFs before any other forms of gold holding.

Share this post


Link to post
Share on other sites
James Turk has done a close analysis and thinks there are a lot of loopholes in the gold and silver ETFs. I certainly would not have any major holding and would look to alternatives for physical. But JP suggests it is more of a trading vehicle and for that it may be OK. I'd certainly sell my ETFs before any other forms of gold holding.

 

While buying physical silver in the UK carries a 17.5% VAT charge, the silver ETF is really the only viable place to put the majority of your silver investment.

Share this post


Link to post
Share on other sites

This seems to be a good place to start:

 

THE PAPER GAME

by James Turk

Founder, GoldMoney.com

March 5, 2007

http://www.financialsense.com/editorials/turk/2007/0305.html

 

So view GLD like you would a futures contract. It’s a trading vehicle, and it seems that the World Gold Council has come around to my point of view. The website for StreetTracks Gold Shares starts out with a description of gold’s attributes and advantages and then goes on to say that GLD offers “investors an innovative, relatively cost efficient and secure way to access the gold market.” It does not say that when you own GLD you own physical metal.

 

In conclusion, it is clear that with GLD you own exposure to the gold price. You don't actually own physical gold for several reasons:

 

1. GLD does not prove the gold exists with independent third party audits.

2. The same gold in GLD may be owned by two people because of short selling.

3. Even if GLD were in reality backed by gold, there are too many parties between you and the gold to claim that you really own it. So while you may have “access” to the gold price through GLD, you do not have access to any physical metal that it may be holding.

 

Physical gold is the bedrock asset in your portfolio. Do not take risks with it. Own it, and keep it safe, just in case there comes a day when you may need it.

 

It sounds to me like anyone who owns such a thing is close to being a traitor.

You can't call yourself a goldbug or a CIGA (Comrade In Golden Arms) and own such a thing.

 

Buy REAL gold.

 

Steve :lol:

Share this post


Link to post
Share on other sites

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

QUOTE ===

Soros Says Crisis Is End of Dollar as World's Reserve Currency

 

By Edward Evans and Simon Kennedy

 

Jan. 23 (Bloomberg) -- Billionaire investor George Soros said the fallout from the U.S. subprime crisis will bring about the end of the dollar's status as the world's reserve currency.

 

``The current crisis is not only the bust that follows the housing boom, it's basically the end of a 60-year period of continuing credit expansion based on the dollar as the reserve currency,'' Soros said in a debate today at the World Economic Forum in Davos, Switzerland. ``Now the rest of the world is increasingly unwilling to accumulate dollars.''

Share this post


Link to post
Share on other sites
Another huge day for gold.

 

Yes.

Now that $850 has been "kissed goodbye" as the Fed cut rates, there's not much to hold gold down.

 

We are finally seeing some nice action in CDNX, but only half of the huge gains in GDX:

 

CDNX:

2,494.65 Change +54.31 / High: 2,494.65 Low: 2,476.26 / Volume: 7,600

Percent Change: +2.23%

 

GDX-:

50.20 Change: +2.01 / High: 50.52 Low: 49.93 / Volume: 363,664

Percent Change: +4.17%

Share this post


Link to post
Share on other sites
While buying physical silver in the UK carries a 17.5% VAT charge, the silver ETF is really the only viable place to put the majority of your silver investment.

 

You can buy physical silver thru goldmoney and can also trade between metals if you wish.

 

SN, sorry I have not been on-line today until now but you found the Turk piece anyway. I'm not a goldbug, I just think it is a good asset to be in now - but, of course, a day will come when it isn't. I own some gold etfs but I couldn't give a fig about being a goldbug traitor: just not a way I think about things. Nevertheless, I agree with you it is better to have physical gold.

Share this post


Link to post
Share on other sites

Newbear,

The traitor comment was rather tongue in cheek :P

To be honest, I'm not sure what the definition of a goldbug is.

Like you, I think gold (and silver) are good at the moment. And of course some time that will change.

Steve

Share this post


Link to post
Share on other sites

L,.

"Gold has been too perky - I'm not complaining :P

but it is nice to understand what's going on."

UNQUOTE

 

I think this goes a long way to explain:

idx24_usd_en_2.gif

 

That, plus the fact that the overbought condition was cleaned out on the

drop to $850, and many people who want to be long gold found themselves

holding less than wanted in a world of falling dollar interest rates

Share this post


Link to post
Share on other sites

I’m fairly new to all this but have been building positions in gold and silver for a couple of months. Great commentary on here by the way, keep up the good work!

 

Does anyone have any views on the validity of the points made regarding Indian demand in these articles?

 

Makes me a little concerned I must admit…

 

http://www.ft.com/cms/s/0/ac9bfff2-c49f-11...00779fd2ac.html

 

http://www.hindustantimes.com/StoryPage/St...d%2c+buy+stocks

 

Of course a lots happened to stocks and shares since last week and I also read this week (but I can’t place the article) of a recent annual cultural/religious Indian period of restraint which is coming to an end which I presume could be the cause for this lull in demand???

 

I was originally going to post this prior to Gold’s rise to $924 this week, so the market seems to defy this stuff based on the inflation picture alone. But one other potential bearish aspect I am keen to dispel in my own mind is that the ECB won’t drop rates aggressively enough to push gold to where we want it to go. I know everyone says “they’ll say one thing and do another” but do we really believe that right now? Or will the Fed's drops be plenty ?

Share this post


Link to post
Share on other sites

First post. Welcome :blink:

 

I heard yesterday that the ECB was going to raise rates, but they have now kept them the same. So you could view that as the first 'fall'.

 

Steve

Share this post


Link to post
Share on other sites

Families in India tap their gold reserves

By Jo Johnson in New Delhi

 

Published: January 17 2008 02:00 | Last updated: January 17 2008 02:00

 

Could Indian housewives be calling the top of the gold market? Many are selling unwanted jewellery into a surging recycling market and deferring all but essential purchases of the precious metal, commodity traders, economists and jewellers said yesterday.

 

India is the world's largest consumer of the precious metal and the apparent sell-signal from its value-savvy householders may prove unsettling for global investors hoping that gold will continue to be a safe haven in volatile markets.

 

"Demand for gold is virtually zero," said Suresh Hundia, president of the Bombay Bullion Association. "People are taking profits and selling their gold back to jewellers for 2.5-3 per cent less than international market prices."

 

= =

 

Perhaps they are just selling too early.

 

It seems possible that demand from people fleeing the dollar (SWF's?) is swamping the traditional sellers.

 

American retail hasnt shown up yet as a buyer. When they do (after $1,000 is surpassed?) it will really get exciting.

 

GOLD is a funny commodity, wherre on teh way up, demand INCREASES as the price rises.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

×