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Gold Is Going To Suffer A Serious Correction In Dollar Terms

By Derek Blain on November 5, 2009

 

Gold is going to suffer a serious correction in dollar terms. Greater than the one that occurred last fall, as this positive sentiment must be wound out. Dare I call these new highs in gold “malinvestment” as I would real estate? I certainly will, though even I cringe as I type the word. Malinvestment has to do with expectation and intent - those buying gold now have the same expectations of gold they did of real estate in 2006, that it will continue to go up.

 

But we will be watching our dear metals. I am no gold-bull, but a gold-bug. And when gold really IS the best store of value you can bet the farm that I will be a buyer. Today, though, it is not - too many speculators have sucked the value out of it. Once they are gone my bull-flag will be back up, and up long-term.

 

Until then, stay the course and protect your hard-earned savings, dear readers. The time to be bullish on the metals is not far at hand. It is just not today.

 

http://www.dailymarkets.com/contributor/20...n-dollar-terms/

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Gold Is Going To Suffer A Serious Correction In Dollar Terms

By Derek Blain on November 5, 2009

 

Gold is going to suffer a serious correction in dollar terms. Greater than the one that occurred last fall, as this positive sentiment must be wound out. Dare I call these new highs in gold “malinvestment” as I would real estate? I certainly will, though even I cringe as I type the word. Malinvestment has to do with expectation and intent - those buying gold now have the same expectations of gold they did of real estate in 2006, that it will continue to go up.

 

But we will be watching our dear metals. I am no gold-bull, but a gold-bug. And when gold really IS the best store of value you can bet the farm that I will be a buyer. Today, though, it is not - too many speculators have sucked the value out of it. Once they are gone my bull-flag will be back up, and up long-term.

 

Until then, stay the course and protect your hard-earned savings, dear readers. The time to be bullish on the metals is not far at hand. It is just not today.

 

http://www.dailymarkets.com/contributor/20...n-dollar-terms/

 

Thanks for posting and before I give my response yes i do think it is important to hear range of opinions and no i do not necessarily think you hold the same opinion as the writer in the article...

 

So lets dissect the writers thinking a little. He thinks gold is overdue a correction. At some point in the future he will most likely be a buyer of gold when he reckons it is the best store of value. So we have yet another gold bottom picker who will wait and wait till we get a correction before buying. But what if we shoot off to 1350 USD from here. A healthy 10% pull back brings us to 1215 USD a clear 10% + higher than where we are today! As our dear Hugh Hendry said "monkeys pick bottoms" :lol:

 

I don't think it is too much of a stretch to say he thinks ultimately gold will go higher in nominal terms than it is today. Is it really malinvestment to buy gold today then? I dont think so certainly if you have no gold exposure yet. As i keep saying ad nauseam average small investors should really start building a core position NOW if they haven't done so already. Once a core position is built and someone feels they want to play the market fine by me. I just think it is way too risky to try and time this thing thinking you can get your core at rock bottom prices. Average in and then you might be able to take advantage of such an opportunity.

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No. I think it is quite possible for a calm rational person to come to the same conclusion as Bill Bonner and think anything other than gold seems risky including other currencies due to government policy risk. Fair play to them.

 

I know some who were "waiting for the dip" that was "just around the corner" when gold was at 565 GBP a few months back. At some point you have to acknowledge the dip and get in otherwise you are a "perma gold dip waiter" :lol:

 

A lot of people will be 100% in GBP right now. Does that make them perma GBP bulls?

Yes, I think the more rational commentators on gold are advocating having a good position in gold without going in 100%.

 

Does Bill Bonner advocate "all in"? That would surprise me.

 

If someone was in 100% GBP, they should consider that any currency can buckle under debt loads and capital flight [even if they are not concerned about inflation]. If they had no gold, they shouldn't be waiting for a dip... or be a "perma gold dip waiter" but should buy [a percentage] as the risk for them is the gold price could just keep going up.

 

If somebody else had say one solid foot in gold but was not "all in", perhaps it would be best to convert some pounds to dollars of Yen to cover the risk of a dip [the idea here is to eventually be in 100% - hat tip to Bill Bonner - but only at the best price.... the obvious risk here is that gold continues to the upside and doesn't dip[unlikely but possible imo].... which is why you should already have a very solid position in gold.

 

I trust you can appreciate that I am not bearish on gold but am saying that whether or not one buys here depends on the position they currently have, or do not have. It also depends, to some extent, on the macro beliefs one is persuaded by.

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Yes, I think the more rational commentators on gold are advocating having a good position in gold without going in 100%.

 

Does Bill Bonner advocate "all in". That would surprise me.

 

If someone was in 100% GBP, they should consider that any currency can buckle under debt loads and capital flight [even if they are not concerned about inflation]. If they had no gold, they shouldn't be waiting for a dip... or be a "perma gold dip waiter" but should buy as the risk for them is the gold price could just keep going up.

 

If they had say one solid foot in, perhaps it would be best to convert some pounds to dollars of Yen to cover the risk of a dip [the idea here is to eventually be in 100% but only at the best price.... the obvious risk here is that gold continues to the upside and doesn't [unlikely but possible imo].

 

I hope you can appreciate that I am not beraish on gold but am saying that whether or not one buys here depends on the position they currenntly have, or do not have. It also depends on the macro beliefs one is persuaded by.

 

I think we are basically on the same page here RH. I can see the rationale behind your approach and fair play to you.

 

The main difference between our two approaches I can see is I decided not to diversify in to other currencies and eventually be in 100% but only at the best price. I decided to build a position by buying each and every week with GBP regardless of price. Both valid approaches. Would be interesting to see which approach would have netted the most gold today starting from May.

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At what % do you say - I have enough, I will wait for a dip to add? 10, 20, 30% Or do you view it from the other perspective - what % of a given currency do I need to diversify?

 

By the way, would it be good idea to have a separate thread on the major international gold miners?

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At what % do you say - I have enough, I will wait for a dip to add? 10, 20, 30% Or do you view it from the other perspective - what % of a given currency do I need to diversify?

 

By the way, would it be good idea to have a separate thread on the major international gold miners?

One wants to be liquid and not "invested" in a contractionary period where wealth is slowly evaporating.

 

I see gold as my core currency... and have 40% of my worth in it. I have another 30% in silver at the moment but I consider this a commodity currency and a lot more speculative. Which leaves something like 30% as a hedge in reserve "risk averse" currencies such as the Yen and dollar. The hedge is against lower prices in gold/ silver where I'd buy silver on the dip and swap silver for both gold and cash at the top [in order to rebuild a hedging cash reserve].

 

This strategy is based on the idea that currencies will continue to be volatile as capital flows between risk trade currencies [peripheral/ commodity ones] and risk averse currencies. Neither does this hedging involve trying to chase or time markets, or trade them, but waits for the markets to come to previously staked positions where currencies were bought cheaply, and look likely to strengthen at a later date due to reversed capital flows.

 

I like the idea of a thread on international gold miners [i have no gold equities yet]. I am thinking of starting a thread focusing on Gold and how it might perform in deflation.

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Aplogies if this has been posted before...

 

Gold over $1000 and still no gold bubble - Eric Janszen, itulip

 

http://www.itulip.com/forums/showthread.ph...0303#post130303

 

"Over the past ten years, thousands of Ivy League university trained money mangers, schooled in the “science” of modern portfolio theory, spent in aggregate hundreds of thousands of hours analyzing the stock market, rotating holdings from one sector to another, carefully selecting entry and exit points to maximize returns, costing tens of billions in fees, all to try to beat the horrid -8% nominal return of the S&P index over that period. Still few were able to mimic the 260% return on gold they could have earned if they bought gold at the start of each year since 1998 and then did nothing at all."

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Interview with Pierre Lassonde (Ex CEO of Newmont Mining) by Eric King

 

He explains that investment has now overtaken jewellery as the primary demand for gold. Previously it was 80% jewellery, 10% industrial & 10% investment, now there is over 50% investment demand. He talks about how important the recent Indian buying of gold is, saying central banks will now be net buyers rather than sellers. Also that the Dow/Gold ratio is going to 1:1, but is unsure as to what price that will be, it depends on how much money the CB's print.

 

http://kingworldnews.com/kingworldnews/Bro...e_Lassonde.html

 

 

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Gold Is Going To Suffer A Serious Correction In Dollar Terms

By Derek Blain on November 5, 2009

 

Gold is going to suffer a serious correction in dollar terms. Greater than the one that occurred last fall, as this positive sentiment must be wound out. Dare I call these new highs in gold “malinvestment” as I would real estate? I certainly will, though even I cringe as I type the word. Malinvestment has to do with expectation and intent - those buying gold now have the same expectations of gold they did of real estate in 2006, that it will continue to go up.

 

But we will be watching our dear metals. I am no gold-bull, but a gold-bug. And when gold really IS the best store of value you can bet the farm that I will be a buyer. Today, though, it is not - too many speculators have sucked the value out of it. Once they are gone my bull-flag will be back up, and up long-term.

 

Until then, stay the course and protect your hard-earned savings, dear readers. The time to be bullish on the metals is not far at hand. It is just not today.

 

http://www.dailymarkets.com/contributor/20...n-dollar-terms/

 

I have no quibbles with this line of thought. BUT what I have trouble with is the sheer scarcity of gold. Will it simply be there for the buyers waiting for a fall? Perhaps it will or perhaps it won't. The gold mkt is very small really esp if everyone wants a piece of the action.

I can think of no better way other than to average in monthly/weekly a la Dr Solar. Silver on the other hand is even smaller and everyone is expecting it to get hammered in a correction. Again perhaps it will, perhaps it wont. At present it isn't even anywhere near its highs and it could easily jump to 25/oz or even 30 as go down to 13. Best to be in, monthly or weekly. Can you afford not to be? Just IMHO thats all.

 

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Thanks for posting and before I give my response yes i do think it is important to hear range of opinions and no i do not necessarily think you hold the same opinion as the writer in the article...

 

So lets dissect the writers thinking a little. He thinks gold is overdue a correction. At some point in the future he will most likely be a buyer of gold when he reckons it is the best store of value. So we have yet another gold bottom picker who will wait and wait till we get a correction before buying. But what if we shoot off to 1350 USD from here. A healthy 10% pull back brings us to 1215 USD a clear 10% + higher than where we are today! As our dear Hugh Hendry said "monkeys pick bottoms" :lol:

 

I don't think it is too much of a stretch to say he thinks ultimately gold will go higher in nominal terms than it is today. Is it really malinvestment to buy gold today then? I dont think so certainly if you have no gold exposure yet. As i keep saying ad nauseam average small investors should really start building a core position NOW if they haven't done so already. Once a core position is built and someone feels they want to play the market fine by me. I just think it is way too risky to try and time this thing thinking you can get your core at rock bottom prices. Average in and then you might be able to take advantage of such an opportunity.

 

k1292503.jpg

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Interview with Pierre Lassonde (Ex CEO of Newmont Mining) by Eric King

 

He explains that investment has now overtaken jewellery as the primary demand for gold. Previously it was 80% jewellery, 10% industrial & 10% investment, now there is over 50% investment demand. He talks about how important the recent Indian buying of gold is, saying central banks will now be net buyers rather than sellers. Also that the Dow/Gold ratio is going to 1:1, but is unsure as to what price that will be, it depends on how much money the CB's print.

 

http://kingworldnews.com/kingworldnews/Bro...e_Lassonde.html

 

Pixel - everyone of your posts is top dollar gold!

 

Thanks for posting that - I seem to skip over audio interviews but I am grateful that I had a chance to listen to Pierre.

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Pixel - everyone of your posts is top dollar gold!

 

Thanks for posting that - I seem to skip over audio interviews but I am grateful that I had a chance to listen to Pierre.

No problem, glad some are finding my posts interesting. :)

 

Here's another short one that is quiet interesting from this weekend. Chris Powell (GATA) being interviewed by Eric King on the purchase of 200 tons of gold by the Indian Central Bank form the IMF, control of the markets by the government, US unemployment and the stock market rally and destruction of the middle class and more.

 

There is talk that the Indian gold actually isn't gold transferring to their vaults, but maybe just a claim to pre-leased gold.

 

http://kingworldnews.com/kingworldnews/Bro.../11/6_GATA.html

 

 

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Thank You Chris Powell!

 

Posted Sunday, 8 November 2009 | Source: GoldSeek.com

 

By Andy Hoffman

 

Gold appears on the verge of not only breaking out explosively, but triggering a broad, sweeping worldwide perception of its existence and, more importantly, its role in the international monetary system. In other words, its role (as well as silver’s) as a CURRENCY.

 

The forces of evil, for lack of a better term (central banks, politicians, and cohort money center banks), have been conspiring against gold and silver for decades, directly causing the massive economic and financial imbalances that are in the process of consuming United States citizens, not to mention billions of others worldwide.

 

However, the jig is nearly up, as the suppression scheme utilized to denigrate REAL MONEY, aka gold and silver, and promote the expansion of toxic paper currencies such as the dollar, pound, and yen, is faltering due to the inevitable demand explosion and supply reduction resulting from these activities. In other words, yet another real-world application of Economics 101.

 

As I have noted these many years, the most dedicated organization to unveiling this mask of suppression is GATA, the Gold Anti-Trust Action Committee (www.lemetropolecafe.org). Commentaries written on its site each day by its Chairman, Bill Murphy, and the growing “GATA Army” have proved invaluable in my quest to learn and understand, as well as to try and make a profit here and there. This “army” represents among the brightest and most passionate group of people I have come across in my life, dedicated to seeking out the truth and bringing it to light while, all along, enduring the non-stop (but finally dissipating) scorn and denigration of much of the Western world. Not to mention many friends and relatives.

 

However, reading the below missive, I realized just how underappreciated GATA’s Secretary/Treasury Chris Powell is. Chris works a bit more anonymously than Bill, but with just as much dedication and intelligence. This link connects to the remarks Chris made last week at the International Precious Metals and Commodities Conference in Munich, Germany, and I’d bet anything they were made to a standing room-only audience. It reads as a perfect chronological litany of admissions made by politicians and central bankers over the past 15 years regarding their surreptitious (and in some cases not so surreptitious) intervention in the gold market.

 

After reading it, even the most jaded market observer would have a difficult time not understand what is going on. And I’m guessing that more and more do. Just wait until (not long from now) the average person understands it, too.

 

 

http://news.goldseek.com/GATA/1257721500.php

 

Among Chris’ myriad duties, such as making presentations for GATA around the world, is his role in posting articles regarding the gold market as GATA press releases, which in its totality creates a broad mosaic of information that educates thousands of new readers worldwide each week.

 

Below is a link to Eric Hommelberg’s wonderful website, www.golddrivers.com, in which he posts daily the most updated version of the “GATA dispatch.”

 

http://www.golddrivers.com/gata.aspx

 

Before I go, I wanted to share one article that Chris posted to the GATA dispatch this weekend, an article from today (Sunday’s) London Financial Times, possibly the most influential newspaper in the world (sorry cheerleading Wall Street Journal, you’re not it). It’s title is “Why gold is certain to move higher”, and obviously demonstrates that the financial market mainstream, at least everywhere but the U.S. (which has the most to lose by a significant upward revaluation of gold), is starting to catch on.

 

http://www.gata.org/node/8000

 

And, as a note, four MAJOR events occurred in the past week that demonstrate the rising momentum of gold, and consequently the likelihood that it will likely accelerate upward in the very, very near term:

 

1. India buying 200 tonnes of gold from the IMF (Int’l Monetary Fund) at record-high prices

 

2. The Federal Reserve announcing it will continue to print money with reckless abandon for “an extended period of time”

 

3. The G20 group of financial ministers yesterday stating that ultra-easy monetary policy will continue indefinitely

 

4. The U.S. House of Representatives yesterday passing a $1.2 trillion (bet it ends up being 5x that amount) healthcare bill, further pushing the U.S. toward the horribly unproductive system of communism

 

My final note is a plea to consider a contribution to GATA, or just as useful signing up for its daily commentary for the mere price of $199/year. As I have noted so many times before, this may be the best investment you ever make, as you will learn what is REALLY going on in the financial world each day, as well as what gold and silver will do to PROTECT YOU from what is coming down the pike, and fast!

 

 

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Arise SIR Pixel8r you have been duly knighted for your dedication in your search for the truth in gold and then delivering that message to the masses.!!!!

 

 

pr75848.jpg

 

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Arise SIR Pixel8r you have been duly knighted for your dedication in your search for the truth in gold and then delivering that message to the masses.!!!!

 

 

pr75848.jpg

 

+100

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+100

Thanks, makes it all worth it :)

 

 

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Are there any gold bugs on here?

 

Today’s the Day for Gold Bugs

 

November 6, 2009

 

http://blogs.wikinvest.com/dailyangle/2009...-for-gold-bugs/

 

"Giffen Good" anyone?

 

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

 

In economics and consumer theory, a Giffen good is one which people consume buy more of as price rises, violating the law of demand. In normal situations, as the price of such a good rises, the substitution effect causes people to purchase less of it and more of substitute goods. In the Giffen good situation, cheaper close substitutes are not available. Because of the lack of substitutes, the income effect dominates, leading people to buy more of the good, even as its price rises :D

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GOLD and COT data...

What did gold do in that timeframe? Follow the 'smart' money!?!

An overlay may help some? :lol:

 

My eyeballs see this

zzzzny.gif

 

Let's check and see how accurate that is...

 

It works rather well ... Gold chart update

zzzzo.gif

 

In contemplating what may come next, I make a comparison with the gold breakout in 2005/6,

and I see that gold ran higher (by over $200?) after the Commercial shorts had hit its maximum - was this short-covering?

 

That may happen again, and if it does, Gold may not be done yet.

But if the Commercials are not forced to cover, then Gold could be done at/near $1100.

 

An interesting golden battleground, we are in now.

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"...an article from today (Sunday’s) London Financial Times, possibly the most influential newspaper in the world (sorry cheerleading Wall Street Journal, you’re not it). It’s title is “Why gold is certain to move higher”

 

Haha.

Who is doing the cheerleader here?

 

If the WSJ had published the bullish-to-Gold article, they would have been "possibly the most influential newspaper in the world"

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I am starting to notice a spooky correlation between 'tension' on GEI and subsequent POG increase - I may have to start using it as a guide.

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I am starting to notice a spooky correlation between 'tension' on GEI and subsequent POG increase - I may have to start using it as a guide.

Me too. Gold in GBP looks a bit sheepish in comparison. Cup and handle anyone?

 

0-826-12-0.png

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