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G0ldfinger's GOLD Thread: Longer Term Aspects

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One days action does not constitute failing at a level, we only just touched $18 yesterday early morning for a few hours. Everyone is so eager to jump on any gold/silver weakness at the moment.

Silver is struggling to keep up. This is not necessarily a bad thing, given the recieved wisdom is that silver races to play catch-up immediately prior to the blowoff of a big move. We may have a way to go in this up-move.

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Silver is still a little subdued. But it also tends to catch up much more quickly.


I wouldn't exactly short it...



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Silver is struggling to keep up. This is not necessarily a bad thing, given the recieved wisdom is that silver races to play catch-up immediately prior to the blowoff of a big move. We may have a way to go in this up-move.

Exactly :)



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Silver is struggling to keep up. This is not necessarily a bad thing, given the recieved wisdom is that silver races to play catch-up immediately prior to the blowoff of a big move. We may have a way to go in this up-move.


I might be also talking my book as a dip into the start of Novemeber in both gold and silver would suit me perfectly with decent lump sum coming in.

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DOUBLE POST for housekeeping purposes.

why on earth would the Fed want to suppress the price of gold as an inflation expectation indicator, when they are actively trying to generate inflation themselves[/b], get the money flowing, force people to invest instead of save, etc?

It is somewhat puzzling, but then, recent official announcements have been along the lines that physical selling has largely been stopped now. So, in that logic, they are doing the right thing at the moment. However, my general answer would be that they consider gold inflation as "bad", while inflation in property or stocks is considered as "good". This has a long history, since gold has always been the canary in the financial coal mine. High gold/property/stocks prices seem to signal that inflation is not so good, maybe not under 'control', while high stocks/property but low gold signals that all is hunky-dory. This is a guess.


1. Central banks (mostly) hold gold in order to be able to suppress the price by selling it (secondarily perhaps as an investment)

No. Central banks hold gold because it is money. In fact, the only real, tangible money.


5. True price of gold is calculate from the ratio of held physical gold to net outstanding paper liabilities - perhaps after a haircut has been applied to

Essentially, yes. I would call this an equilibrium price. See the link in my signature, or essays by Jim Sinclair or (less accurate IMO) Paul van Eeden on this subject. The equillibrium price by now is certainly north of $10,000 / oz (even in the most conservative calculations), but I would have to check on it.


In January 1980, Jim Sinclair sold out all his gold at just below $900 / oz, which was the equilibrium price he had calculated back then. He created(!) this blow-off top exactly according to these kind of considerations. That's why so many people read him. This time, he thinks, the price won't crash but stay up, because the situation is fundamentally different.

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More recording, sorry.

... can you explain to me how from the point of view of central bankers today 'gold is money' (and not an asset or a mere tool)?

I am not a central banker, but I certainly believe that some think of gold in exactly your terms above. But those who still have some gold left in their vaults, have it, because it has always been money. That's how they got it first place.


Your question is a little like asking, 'why from the point of view of Coca Cola today is water the main non-alcoholic drink of mankind?'

Coca Cola will answer: 'No, it's Coke.'


Also, let's listen again to what Greenspan has to say:


“Fiat money, in extremis, is accepted by nobody,” Alan Greenspan, the former chairman of the US Federal Reserve, told lawmakers in Washington almost a decade ago. “Gold is always accepted,” he added.


Can you remember if that rough $10k/oz was in any future dollar or roughly in today's dollar

This is in today's dollars.


Excellent info! I did know this at all. I've been reading his stuff on-and-off, but at my time frame I haven't found his stuff to fit my needs yet.

I have no better reference at the moment:


Two years later, on January 21, 1980, the price of gold - in its own little bubble market - hit an all-time high of $887.50. [For reference, the Dow closed that day at 9,921.] >>This number is of course by 10 too large. GF<<


“The next day,” Forbes reports, “Sinclair says he unloaded his entire gold position, personally netting $15 million...Sinclair then predicted at an annual gold conference that the metal would languish for the next 15 years.”

“The next day” is alsow wrong, it was overnight according to Sinclair himself (can't find the source on this but read it several times before, also on JSMineset).


This is why the 'Cartel' certainly reads him too (he makes comments hinting towards this regarding the IPs that look up JSMineset).

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Personally I do NOT believe gold is de jure money now.

Of course not de jure, but per naturam.


This is why the central banks don't store pork bellies. And everytime they do (or, say, mortgage-backed securities instead of pork bellies), you know that the (fractional reserve banking) game is almost up, and that gold will reinstate itself soon - if only in price.

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It's a currency Jim, but not as we know it:









The swirling motion of the above loop is powerful. With the crude oil sales no longer taking US$ payments, the loop is completed. The financial engine in the Dollar Carry Trade now will have a commercial engine to further its momentum, to add power to the cycle, and force powerful lethal feedback reactions. Only when the financial and commercial sides fit like two giant interlocking pieces does the power take hold, much like a toilet assembled. The Fisk report on a 2018 timeframe for the phase out of US$ petro sales is more politically massaged information. The timetable will be just a couple years, doubtful more. The reactions from systems will force the timing to be much sooner, out of desire, out of necessity, due to broken systems that accelerate the breakdown process due to the announcement itself in feedback loops. By the way, the swirling motion in the vicious loop should remind people of a toilet being flushed.


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I have bought a selection of gold and silver coins (I don't live in the UK anyway). My main holdings are at bullionvault.com and goldmoney.com. With these companies you own real physical metal which is audited on a regular basis. So I trust that the metal is real and in the vault and it is owned by the customer who bought it not by the company. So even if the company were to go bankrupt the customers' metal cannot be legally taken from them.


Good luck. If you average in I hope you get a correction to help you. If this bull market continues, which I think it will, a few pounds either way will not feel like much in couple of years.


Placed an order for my first Sovereigns yesterday, sorry folks but Gold went into decline pretty much immediately after!


Thanks for the links - Interesting and possibly even more cost effective than the ETF route if longer term investing. Trouble is like the ETF, too easy to develop a fascination with price fluctuations and associated trading temptations.


Also, as I mentioned earlier, much of current Gold Mining activity is conducted in a manner that is environmentally disastrous on a truly massive scale. This for me was a bit of a problem when first contemplating gold as a legitimate form of wealth preservation, - should the bankers irresponsible behaviour and that of their political leckies actually succeed in destroying the value of my hard earned savings.


However the 'buy Physical' advice on this thread not only reduces the temptation to trade, but for me anyway it clears the conscience. So I'll only be acquiring recycled Gold. I can see even on the Coin shop websites, that purchasing bullion bars can be more cost effective, but If I do decide on this as an alternative to coins, then I'll buy from a dealer that will certify it's from recycled scrap.



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This seems to be taking on more substance, could the squeeze finally be on?


Blight on Humanity Addendum


By: Rob Kirby


Earlier this week, I wrote about possible “incongruities” in the gold bar registry of GLD. Specifically, here is what has happened to the GLD bar list which is published each Friday at approximately 4:30 pm EST. An alert reader I communicate with [who shall remain anonymous] has been documenting the length of the published GLD bar list:


- on Friday, Sept. 25 – the list was 1,381 pages long

- on Friday, Oct. 2 – the list was 208 pages long

- on Friday, Oct. 9 – the list was 195 pages long

- then, on Wednesday, Oct. 14 – after questions were being raised about the strange machinations with the bar list in chat rooms on the internet – the list was back up to 855 pages long


Something TRULY stinks here. No explanation has been offered for the DRAMATIC swings in this list. Where gold is concerned nothing happens by accident.


How Precious is Settled in London:


Loco London clearing is the daily paper unallocated transfers between London clearers; the transfers of gold and silver only across accounts held between clearers for their own accounts and third parties; and, as mentioned earlier, the clearing out of Zürich for the platinum group metals. It avoids security risk and the cost of physical movement of bullion; has standard market practices…


[However] Both allocated and unallocated account agreements are available. There are allocations for credit purposes, bilateral credit agreements between clearers, and London good delivery….


Some short definitions: an unallocated account is an account where specific bars are not set aside, and the customer has a general entitlement to the metal. This is the most convenient, cheapest, and most commonly used method of holding metal. The allocated account, on the other hand, is an account opened when a customer requires metal to be physically segregated, and this needs a detailed list of weights and assays….


To Summarize:


- GLD gold bullion inventory is principally held in London

- I’ve already written about some large [allocated] physical transactions that were settled last week in London under VERY strange circumstances indicative of a shortage of physical gold bullion for good delivery.

- At the same time, significant irregularities appeared in the GLD bullion bar list




- is the correlated timing of these unusual events a coincidence???? Could GLD inventory have been utilized to effect these physical settlements, which in turn, would have required the “sanitization” or doctoring of the GLD bar list to avoid MANY obvious, easily detectable, duplications of bar numbers?


I discussed these irregularities with a very informed source [the same one who informed me of specific [allocated] trades settled last week] and the reply I received was as follows:


“What can I tell you that you don't already know?


They are all scrambling big time since a number of large interests have demanded audits. Independent auditors are NOW descending onto the various vaults to verify, validate and certify.


They can move this as many times in circles as they like to try to fool people.


In an Asian depository they’ve found “Good Delivery” bricks that had been gutted and filled with tungsten.


"Soon, there will be xxxx hitting the fan all over place.”


These circumstances suggest that a VERY REAL physical short squeeze is in progress RIGHT NOW and a gang of fraudsters from “fiat-crack-houses” [Central Banks] are attempting to finesse their losing over-sold hand in an elaborate Three-card Monty. With reports of independent physical audits now being conducted and mysterious happenings with GLD’s bar list – GLD has NEVER looked more suspect.


Hope you’ve all got some physical gold already.



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Interesting post from over at GIM: http://goldismoney.info/forums/showpost.ph...postcount=30742

I have identified these 10 characteristics of fraudulent gold writers. These are their tricks of the trade:


1. Focus on trading, and NOT investing. Genuine PHYSICAL gold advocates tell clients to be right and sit tight. Frauds refer to "being nimble", or "caution advised", and imply you should panic and sell your physical gold on every whim. That's nonsensical to extreme.

Zz, such a coincidence! How did this thread get its name?


2. Focus only on the short-term. If the short term is perpetually bearish there's NEVER a good time to buy gold, right? Mission accomplished if you are anti-gold. You can proclaim long term bullishness while sabotaging all efforts to get on board.

Especially the 2nd point reminds me of someone on here who always wants to buy "cheap"(!) USD and who always waits for lower prices in gold short term. No names, please! ;)


3. Never admit the connection between hyperinflationary Fed monetary policy and the gold consequences. If you admit trillions of dollars are being printed out of thin air then the sky's the limit for gold.

THEY would never allow it, right? :lol:


4. Deliberately use word bombs to instill terror in potential gold buyers. "Stratospheric", "overblown", "overheated", "frothy", and "uncharted waters" are all words designed to scare off potential gold investors.


5. Price targets hundreds of dollars lower than the current price. It sobers up readers, and makes them gulp. Who wants to buy something that might fall 30% before the year is over?

Oops. Another poster comes to mind. No names please! There are also some better known people out there with agenda no. 5.


6. Ignore evidence of ALL market manipulations, including gold. It is intellectual fraud to act as if nothing could possibly manipulate a market, when there's so much evidence to the contrary. I call this Pollyanna fraud. Every government statistic and proclamation is proclaimed truthful.


7. Ridicule and label gold suppression advocates. Think Michael Dukakis when he rode around in an army tank with a helmet 3 sizes too big. That's the takeaway image they want to convey. The words "conspiracy", and "theory" are deliberate misnomers designed to marginalize.

Again, any bells ringing? No names please!


8. Never engage in debates on the information available about gold suppression. A fraud twists the subject, refuses to debate, and injects false premises and false allegations as to what GATA is really saying.


9. Never reveal personal track records for the gold advice being given. Even if many of their readers eventually wise up to the lame gold advice there are always more readers coming along to get suckered for a while.

Interesting point. Those posters who have gold $200 as a target, regularly short silver, or never buy gold because they want to load up cheap Dollars - what's your track record please? :)


10. Imply GATA is outside of mainstream gold thinking, therefore irrelevant. In today's turbulent economy it's MAINSTREAM reporting, not GATA, that isn't representing the public's interest. The growing discontent for mainstream media belies the smearing of news sources that report factual information. A fraud pretends factual information.

Interesting list, isn't it? Finally, we have some stereotypes for the 'other side'. :lol:


OK, please do take this with a small pinch of salt.

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DOUBLE POST for housekeeping purposes.


Finally, the banks may see the Gold sale orders piling up on their books, and sell some gold for their own

accounts, confident that those orders show that there is enough potential selling to drive the price back down.

Exactly. And they can do so by the full backing of the Federal Reserve, the senior central bank of the world and (just by coincidence?) the largest official holder of gold bullion on this planet as well. How fair is that? So, with how much momentum can they do this? And, they can do it all at the same time, because they know everyone else is doing it. You don't even need to communicate it. Collusion - it just happens I guess?


I can tell you that when I was in the business, people used to laugh at GATA and people like Jim Sinclair, since

although they were "experienced Gold traders", they really had no idea how the banks really work (as I have


I do think Sinclair had the better laugh in January 1980. And I think he will have a good laugh again in a few years time.


If Sinclair loses his big bet in January 2011, then they will be laughing again.

No one took up his bet, by the way. No once could cough up the $1 million for the wager. I think they wanted too feed him an OTC derivative, so he had to refuse. :)


Do you think Sinclair's experience is somehow more relevant than my own?

I think Sinclair has done more in his life than dabbling on gold on his on account:


Jim Sinclair is the Chairman and CEO of Tanzanian Royalty Exploration Corporation (TRE: Altanext NYSE platform, TNX: Senior Toronto Stock Exchange). He is a precious metals and commodities specialist. Some of the highlights of his nearly 50 year career include the founding of Sinclair Group of Companies (1977), which offered full brokerage services. Mr. Sinclair served as a Precious Metals Advisor to Hunt Oil and the Hunt family for the liquidation of their silver position as a prerequisite for the $1 billion loan arranged by the Chairman of the Federal Reserve, Paul Volcker. He was also a General Partner and Member of the Executive Committee of two New York Stock Exchange firms and President of Sinclair Global Clearing Corporation and Global Arbitrage.


That is pure fantasy. Bullion banks do not create "endless paper shorts."

Do you think that JP Morgan Chase can simply keep shorting more and more gold, and flauting all the various Risk limits that US banks are governed by?

They certainly are as well-managed here as they were in mortgage-backed securities, right? As said above, the limitless Fed put plays a role here, don't you think? Or do you really think, Goldman Sachs is a fair match for a small gold mine with high production costs?


Ask yourself: Why do GATA people never discuss the realities that I have laid out here?


They probably understand them (some like Jim Turk do). The reason you dont hear about this may be that such facts get in the way of the Case-for-Manipulation that they are working so hard to make stick.

My stand is that I think that there is collusion for gold price manipulation/suppression. The tendency of suppression comes from a "gold put" silently underwritten by the Fed. The 'Cartel' is real in the sense that only the major bullion banks have access to it and hence can act in the ways above described.


As with all these lengthy discussion, semantics play a role. What is a 'cartel'? How 'manipulative' is the behaviour of the bullion banks?

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I told my better half that the gold coins I bought cost the equivalent of my small car. They are now worth the equivalent of his Toyota Prius. I also predict that one day, those coins will be worth as much as our house.

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An update on the house:gold ratio.





Goldfinger. Thank you for taking the time and trouble to prepare these charts. They are very clear and informative.


This gold/property chart is absolutely phenomenal! I had to log back on tonight just to look at it again; it says so much..


To me, the bottom line is that if you bought in 1962 (or 1990, 1996 etc) and sold today, you would have gained nothing. To paraphrase jim sinclairs quote on the DOW this week;

" Quite simply – house prices have in effect gone NO WHERE in REAL TERMS for 45 YEARS! Let this sink into your mind – 45 YEARS have come and gone and all the gyrations in the house prices and all the ups and downs have accomplished not a single bit of real gains when compared to an ounce of gold.


The debauchery of the pound has made a mockery out of wealth preservation for those who bought a house." :lol:


Interesting stuff; is there a similar chart for rents? does such data exist. that would be interesting to see

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I think it could be that Jim Sinclair has nailed the next spike. It's possibly less than a year away.

James Turk when asked on FSN this weekend mentions gold should be between $1200 to $1500 by Christmas.



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The debauchery of the pound has made a mockery out of wealth preservation for those who bought a house." :lol:

In all fairness one has to keep in mind that the house has utility if you (or others who pay rent to you) live in it. On the other hand, the house has to be kept up to standard.

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Bill Bonner on gold (on Frisby's "Bulls and Bears"):




[...] I would stick with it because everything else looks soooo dangerous compared to gold, and I'm sticking with gold. [...] I am putting a downward floor above $800 on gold, and then an upward ceiling could go into the thousands eventually.

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This article looked at how much gold the London OTC market should be holding in order to be able to trade 2,134 mt each and every day. The conclusion was that the exchange should have at least 64,000 mt. From GFMS data it can be deduced that the London OTC market only has a maximum of 15,000 mt because this is the estimated total existing London Good Delivery (LGD) bars in the world. This means that there are at least 49,000 mt of ‘imaginary" gold that have been sold that do not exist. This scam is unlikely to be discovered unless the owners of the "imaginary" gold actually request delivery. The bad news for the Gold Cartel is that this is beginning to happen.



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