GOLD

[wrongmove]

Hi notanewmember - yes, I gave it a listen. I found his fundamentalist christian bible-bashing too off-putting really, but I did listen to the end. I find it hard to listen to someone (even if they are correct) given their stated belief in magic moonbeams. He claims strict application of terms to his search for the truth about money and yet is able to swallow the contradictory drivel written in the bible.

 

Shame really as I quite enjoyed it apart from that

 

There does seem to be a bit of a correlation emerging between fundamentalist views on reality and [funda]mentalist views on gold.

 

People's religion is their own business, but like you, I find it hard to take seriously people who can just swallow a story whole like that, and I have to question their analytical ability in other areas.

 

 

[kernull]

gold broke out of its 4 day down trend started from 820 area. high probability of a bottom in place.

now waiting for oil to close above 102.50

[wrongmove]

gold broke out of its 4 day down trend started from 820 area. high probability of a bottom in place.

now waiting for oil to close above 102.50

 

I posted the following on one of the "backwater" threads this morning. Ker and other traders - do you see this a temproray bottom (i.e. a good entrance point for traders) or as a potential long term bottom? I would still be a bit nervous, bearing in mind that the next support under $736 is about $100 lower.

 

Would $750 be regarded as resistance? (I know it was a support level, and it looked like resistance until it broke).

 

If so, this must be the first "break though to the upside" for a while......

 

And gold has fallen to the cost of production at some mines, according to: Hope glitters amid cost pressures

 

"...........AngloGold Ashanti's Australian-born chief executive, Mark Cutifani, said the gold price had to climb if mines were to remain open. "Thirty per cent of the industry is cash negative when gold is somewhere between $US700 and $US800 an ounce," he said. "If the gold price trades around $US800, I see a continuing slide in Australia's gold production."..........."

 

 

So even to me, who can only understand the "fundamentals" of physical demand (80-90% of which is for jewelry in a 'normal' market) gold has reached something like a "fair price", but not a "bargain price".

 

I'm not calling a bottom - if "investors" continue to shed gold, especially after the jewelry buying season is over, then the price can still fall (for a while), and some mines produce gold more cheaply than the Australian ones - they have stricter pollution and employment laws than most - but even I would be able to 'sleep at night', at these levels. I wouldn't be expecting to get rich any time soon though, but as "insurance", this price doesn't look too far off right, based on my rather 'idiosyncratic' view of things.

 

ps. yes - I am now a 'neither'!! Look out below!

 

 

[GoldSchatzchen]

This thread makes very interesting reading, as ever!

Thank you to all the knowledgable contributors, great work alround!!

 

Personally, I am sitting tight and feeling very relaxed about my gold investment.

 

It's a hedge against a financial system that is out of control

and unlikely to be fixed without some major pain.

 

If the recent drops in the gold price mean that everything is fine

(or going to be fine), well, I would be delighted.

I don't buy that story, though. The fundamentals tell us something

very different.

 

 

[Pixel8r]

Dollar is down. OIH is up, and Oil/USO is up on decent volume.

I think Gold will soon bounceback, after filling the gap

 

Ideally, I would have wanted to see more upside volume in OIH.

That's the main disappointment so far

 

Juniors seem to be having a good day as well. Think you could be right on calling the turn around.

[hotairmail]

 

As I said earlier, I agree with Dr Bubb's view that there is really strong support for oil coming in at $100 and this could, as he says, provide the platform for a bounce. However, we need to be aware of the risks too...

 

Crude hasn't really moved that much today (currently 100.26) esp. since Hurricane Ike is about to hit. Also the dollar could strengthen if the Lehman issue is resolved this weekend.

 

I think there is a reasonably high risk that oil could drop sharply through the $100 mark next week (poss. as early as Monday).

[LauraB]

If the recent drops in the gold price mean that everything is fine

(or going to be fine), well, I would be delighted.

I don't buy that story, though. The fundamentals tell us something

very different.

 

Like what?

 

..... she asked, noting the April 1st joining date of the quoted poster.............

 

[Ret45]

Re-Inflation About to Send Gold and other Commodities Soaring

Commodities / Resources Investing Sep 11, 2008 - 09:18 AM

 

By: Money_and_Markets

http://www.marketoracle.co.uk/Article6224.html

 

Larry Edelson writes....

 

In relation to the whole infaltion/deflation debate, what is the conventional wisdom regarding mortgages - is it better to have a fixed mortgage in anticipation of hyperinflation or is it better to be tracking ECB rate in anticipation that rates will have to be cut to stimulate economy.

 

And yes, i know the real answer is to have no mortgage but that's not possible until gold starts behaving itself

[GTG]

For any PM's doubters please listen to Peter Schiff's latest weekly radio show.

 

http://www.europac.net/radioshow_archives.asp#

 

His interpretation of things and analogies are awsome e.g. his comment on the conservatorship of F&F "everbody (in the USA) who buys a house is in affect issuing a treasury bond" I never thought of it that way before, or the fact that every single mortgage lender is creating a potential liability for the treasury. He goes on to mention how lax standards in lending will result in a similar manner to that which occurred in the securitisation of mortgages.

 

On a different note, it looks like all the ducks are linning up for a bottom in the PM's, oil and their stocks and a top in the dollar. Probability is that it's a great time to go long PM's, Oil and short the dollar, I'll be looking at the indicators on Monday. As DrBubb pointed out, OIH being an important one.

 

[wrongmove]

 

Gold ($) has just made a "double top" followed by a "lower high" followed by a "lower low".

 

It's still not exactly a textbook chartist's wet dream.

 

edit: though I guess it depends which text book you read!

[GTG]

In relation to the whole infaltion/deflation debate, what is the conventional wisdom regarding mortgages - is it better to have a fixed mortgage in anticipation of hyperinflation or is it better to be tracking ECB rate in anticipation that rates will have to be cut to stimulate economy.

 

And yes, i know the real answer is to have no mortgage but that's not possible until gold starts behaving itself

 

Depends which argument you subscribe too.

 

If it's inflation then I would say a fixed rate mortgage to protect you from the increases in interest rates to purge the inflation from the economy and a variable rate for deflation. Remember, inflation will devalue your debt as well as your money, which is beneficial if what your buying is not depreciating at the same or a greater rate than your money.

 

[G0ldfinger]

...

edit: though I guess it depends which text book you read!

Depends on who is writing that textbook. Thanks Hank, thanks Ben. But I don't buy it.

[wrongmove]

Quite amusing - this is "a gold is money" guy, who uses a money supply model, but he also reckons gold is now fair value!

 

Paul Van Eeden and the Fair Market Value of Gold

 

 

[G0ldfinger]

Quite amusing - this is "a gold is money" guy, who uses a money supply model, but he also reckons gold is now fair value!

 

Paul Van Eeden and the Fair Market Value of Gold

So what? Is van Eeden claiming here that M3 is growing slowlier than above ground gold stock? I don't understand where he gets his numbers from.

EDIT: Also, several years ago his 'fair value' was $1,200. What happened to that? Has M3 suddenly shrunk, or what?

[drbubb]

It does seem to be creeping up steadily tonight. Gold at $765 now.

 

Yes. That's more that a "creep", it is a nice bounceback into that $763-772 range

 

 

That's a sort of short term OTP

== ==

 

Van Eaden uses phony inflation data, I believe

[Compounded]

http://www.theinternationalforecaster.com/...d_Silver_Buying

 

 

We, the taxpayers, through the advice of our peerless leaders in Washington, have just nationalized Fannie and Freddie. In doing so, we have created the perfect fraud machine, thereby extending the life of one of the biggest Ponzi-schemes of all time, and giving it a lifetime warranty to boot, courtesy of the sheople................The current debt-based, fiat-money global economy is in the process of collapse. This monetary abomination and its accompanying manipulation will soon come to an end. No fiat currency has ever survived and when it does it will be catastrophic.

 

 

[Ret45]

http://www.theinternationalforecaster.com/...d_Silver_Buying

 

 

We, the taxpayers, through the advice of our peerless leaders in Washington, have just nationalized Fannie and Freddie. In doing so, we have created the perfect fraud machine, thereby extending the life of one of the biggest Ponzi-schemes of all time, and giving it a lifetime warranty to boot, courtesy of the sheople................The current debt-based, fiat-money global economy is in the process of collapse. This monetary abomination and its accompanying manipulation will soon come to an end. No fiat currency has ever survived and when it does it will be catastrophic.

 

What's the good news?

[drbubb]

"No fiat currency has ever survived and when it does it will be catastrophic."

 

???

Sterling has survived for 1,000 years. What do you need; 2,000? 5,000?

[kernull]

I posted the following on one of the "backwater" threads this morning. Ker and other traders - do you see this a temproray bottom (i.e. a good entrance point for traders) or as a potential long term bottom? I would still be a bit nervous, bearing in mind that the next support under $736 is about $100 lower.

 

if you mean by long term, a run to +1000 , then it is not the bottom, the bottom for that run will likely to be after elections.

right now you can try to run it from tuesday, if (and only if) it confirms the recent bottom , to around 850 , after that i expect it to be bashed/manipulated/deflated/whatever to drop again to 7XX and paint a triangle reversal. and then the huge, long term, non-stop run.

if nothing unexpected happens with Lehman stuff on weekend, they probably will start dumping gold ahead of fed's meeting, so tuesday i think will be the retest of the 737, if it breaks 752 again, then you probably can buy it.

p.s.

i recommend to buy a small position so you could support a drop to 300 gold, then you can buy any low you want and make some money on coming consolidation / sideways movement, check out the waves from april to june 2008, this is very probable thing to happen again imho

 

 

[Steve Netwriter]

"No fiat currency has ever survived and when it does it will be catastrophic."

 

???

Sterling has survived for 1,000 years. What do you need; 2,000? 5,000?

 

I think we need to distinguish between the name of a currency and its reality.

 

The gold standard is a monetary system in which a region's common media of exchange are paper notes which receive substantial premia because they are normally freely convertible into fixed quantities of gold. Under a gold standard, money issuers normally stand willing to redeem their notes, upon demand, for pre-set, intertemporally constant, fixed amounts of gold. The gold standard is not currently used by any government, having been replaced completely by fiat currency, and private currencies backed by gold are rare.

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

 

After the Second World War, a system similar to the Gold Standard was established by the Bretton Woods Agreements. Under this system, many countries fixed their exchange rates relative to the US dollar. The US promised to fix the price of gold at $35 per ounce. Implicitly, then, all currencies pegged to the dollar also had a fixed value in terms of gold. However, under the fiscal strain of the Vietnam War, President Richard Nixon eliminated the fixed gold price in 1971, causing the system to break down.

 

A complicated history, but I think the current system is rather young.

 

Edited to add:

 

The Global History of Currencies (GHOC)

An Exclusive Feature of Global Financial Data

 

United Kingdom

https://www.globalfinancialdata.com/index.p...=United_Kingdom

 

Gold, silver and potin (tin-bronze) coins minted by the Gallo-Belgic tribes were the first coins to circulate in Britain. Rome was incorporated into the Roman Empire after Claudius’s invasion of Britain in AD 43. Roman coins were minted until about 326 AD.

 

The Anglo-Saxons began minting their own coins, copying coins from Merovingian France, around 600. These coins included gold tremisses and silver pennies known today as sceattas.

.

.

.

The Bank of England was created on July 27, 1694 and was given a monopoly on banknote issue in England and Wales in 1708. The United Kingdom left the Gold Standard on February 26, 1797, reinstated it on May 1, 1821, and left it again on August 6, 1914, reintroduced it on April 28, 1925, only to abandon it again on September 21, 1931. Throughout this time period, the rate at which the Bank of England would buy gold remained constant at 3 Pounds, 17 Shillings, 10.5 Pence. The United Kingdom went back on the Gold Standard under Bretton Woods, removed exchange controls on August 15, 1947 and reimposed them on August 20, 1947. The official link to gold was abandoned on June 23, 1972 and exchange controls were fully abolished in 1979.

 

The full history from its start to possibly near its end ?

 

[frizzers]

"No fiat currency has ever survived and when it does it will be catastrophic."

 

???

Sterling has survived for 1,000 years. What do you need; 2,000? 5,000?

 

Sterling has been a fiat currency since WW1. So it's survived about 100 years.

 

Churchill was very anti fiat currency, I believe. He tried to put us back on the gold standard , but at the pre WW1 price , and brought deflationary havoc as a consequence.

 

You could argue that since WW1 sterling has traded against the dollar which was until 1971 on a gold standard thus that we have only been totally fiat since 1971.

 

Since 1971 we have had two major currency crises and devaluations.

[hotairmail]

1. You could argue that since WW1 sterling has traded against the dollar which was until 1971 on a gold standard thus that we have only been totally fiat since 1971.

 

2. Since 1971 we have had two major currency crises and devaluations.

 

1. Excellent point.

 

2. I assume you are referring to the European currency snake and the later ERM exit? These 'earthquakes' were a function of their fixed structure.

 

In terms of value, you could argue that the latest episode for Sterling has been the third. And even starker if you consider oil as a currency of sorts (it has been behaving as one) as opposed to the $.

[id5]

I think we need to distinguish between the name of a currency and its reality.

...

The full history from its start to possibly near its end ?

 

Oh dear Steve! You really are becoming as much of an anorak as me with this numismatic bent of yours

 

The start of Sterling as a currency began in the reign of Henry II. In 1158 he was responsible for setting the weight of a silver penny which was effectively fixed at 22½ troy grains, just less than 1.5 grams. The name comes from either the Easterling district of Germany where they used a similar quality of silver or far more likely from the Old English Steorling which means stars, Norman silver pennies had stars on them and they were the predominat currency until Henry reformed the Mint.

 

Hopefully this it won't be the end of Sterling

[Steve Netwriter]

Oh dear Steve! You really are becoming as much of an anorak as me with this numismatic bent of yours

 

Hopefully this it won't be the end of Sterling

 

I accept the charge. Guilty

 

I'm a little puzzled that it maintains the name "sterling". I would have thought is would be just "pound", or "fiat pound"

 

I think the point Chris Martenson made is relevant here:

 

 

Edited to add: Some argue that all such systems are doomed to fail sometime. If not now, then sometime.

Also, is it compatible with a non-growing system ? DrBubbs signature is relevant also.

 

[HPCsoYESTERDAY]

Sterling has been a fiat currency since WW1. So it's survived about 100 years.

 

'Real' Sterling (i.e. .925 silver in coinage) survived until 1920. But between 1920-1947 we had .5 silver in coinage, so you could say that between the Great Wars we had 'half' sterling.

 

edit: I remember reading somewhere that the .500 silver mix in coins was varied with other metals (nickel, copper etc.) in the early years of .5 silver coinage (i.e. early 20s) until an alloy was found that was most durable and presentable, hence you can get examples of the different 'mixes' in the early years.

 

this is a good site: http://www.tclayton.demon.co.uk/coins.html