Investing in physical gold – discuss

Pippa · Post by **Pippa** » 27 Jun 2006, 14:23

Have a read of todays daily reckoning at www.dailyreckoning.co.uk and find out what Bill and the Mongomo Guru have to say about gold and the economy - not pleasant!

snow hope · Post by **snow hope** » 27 Jun 2006, 22:00

Can anybody explain to me why the gold price/oz dropped from $800 USD to $580? I seemed to have missed the logic of this .....

Pippa - those reports are quite worrying. For some reason today I had the first feelings of panic. What the feck are we going to do..... I do quite a lot of reading of the situation - resources, markets, economics, politics, etc - I am very concerned that the SHTF is not far away....

Pippa · Post by **Pippa** » 28 Jun 2006, 09:12

Borrow money and buy gold - its what Robin Hood would do! (maybe).

Read as much daily reckoning as you can. I think there is a lot of truth in what they write.

A small minority of people are getting rich at the majorities expense. This is true in general society as well as the stock and commodities markets.

If I were in government (god forbid), realising what an impossible mess we were in, I would endevour to make my debt and that of my people worthless. Practically the only way to do that is inflation. Reduce the value of existing debt (cleverly robbing the people who lent the money in the first place - never mind 'cause the USA won't mind not owing China so much), tighten lending for the future and then inch along and see what happens!

Borrow worthless money and invest it in something that, if society continues, is held to have value. If things go tits up, it doesn't really matter anyway.

SILVERHARP2 · Post by **SILVERHARP2** » 28 Jun 2006, 13:27

snow hope wrote:Can anybody explain to me why the gold price/oz dropped from $800 USD to $580? I seemed to have missed the logic of this .....

The central banks all came together and pulled money out of the system, hedge funds which had invested in commodities and gold on margin were forced to liquidate. Also as the emerging markets fell, the traditional safe haven is the US dollar which also put pressure on gold. Normally the stock market and gold should not rise together.
There is talk that the FED may raise rates by .5% on Thursday, short term this is dollar positive but by next year rates above 6% will kill the US economy

I read the DR but they have a way of writing that implies were only ever 5 minutes from disaster, although their long term thesis is correct.

snow hope · Post by **snow hope** » 28 Jun 2006, 16:05

It would seem to me - as a complete novice regarding gold - that now must be a perfect time to buy in, since everybody seems to predicting that gold will go through the roof?

Is anybody saying gold will not go up strongly? Is anybody saying that as the financial meltdown comes on that gold will go down in value? Is there any reasoning that says this might happen?

Is this not a complete no-brainer?

grinu · Post by **grinu** » 28 Jun 2006, 20:42

Probably in the short-term the consolidation period will continue. Bush is probably going to lay off on his crusade for world domination until after the elections, so the terror premium will be much reduced. Also, current interest rate rises (which are making certain paper currencies more attractive to own) and the current falling trend in commodities due to economic slow are probably dampening the gold price.

Gold is at present generally considered to be linked to commodities (tangible materials, copper, bronze, grain etc.), and is currently rising and falling with commodity prices. However, there will be a point (when economic growth, world stability, fiat currencies etc. go tits up) when the markets will realise that gold is actually different to commodities, in that people have faith in it as a precious metal and an economic safe haven in times of economic strife or uncertainty, and then we will see what happens to its value...

Maybe in the short term wait and see, good time to buy may be immediately after the next US elections, when I'm sure hypocritcal pressure on certain countries to stop producting certain materials will recommence with a vengeance.

SILVERHARP2 · Post by **SILVERHARP2** » 29 Jun 2006, 09:53

I concur with above, what I have learned over the past couple of years is that the central banks are ?managing? the markets, so if they want to bring down gold, they can do so, however their power to do this will erode as say PO sets in, coming at it from a different tack, who isn?t taking on 30 year mortgages cos they ?know? property is a sure bet, who has stopped buying new cars cos they are aware that petrol could be 5 times more expensive in the coming years, virtually no one, so it?s early days and to be honest most of the time gold is a lousy investment, however sometimes it is a great investment, to my mind PO ensures gold will be a great investment when the financial markets blow up

biffvernon · Post by **biffvernon** » 29 Jun 2006, 11:30

SILVERHARP2 wrote: PO ensures gold will be a great investment when the financial markets blow up

Gold is pretty useless stuff other than for electrical switches, baubels and bangles. It's value depends utterly on other people's willingness to get hold of it. You'd be better off investing in the skills and materials needed to survive the harsh realities of the Olduvai Gorge

SILVERHARP2 · Post by **SILVERHARP2** » 29 Jun 2006, 13:10

biffvernon wrote:
SILVERHARP2 wrote: PO ensures gold will be a great investment when the financial markets blow up
Gold is pretty useless stuff other than for electrical switches, baubels and bangles. It's value depends utterly on other people's willingness to get hold of it. You'd be better off investing in the skills and materials needed to survive the harsh realities of the Olduvai Gorge

I read the article, you must be a hoot at parties! (only joking), timescales are everything, all I need for gold to work as an investment is that is goes up say in the first couple of years after peak oil, then I could sell it and buy some land which may be cheap after the property bubble implodes. I'm sure the banks would take my gold in exchange for the land that they reposses.

Re the article, who knows, average consumption of energy per person is not that important from a global survival point of view, that just means that Africa and Asia would go into population decline and suddenly the average could increase. There is no reason that 2bn people could not live with a modified 19th century standard of living combined with pockets of hi-tech where deemed strategic.

biffvernon · Post by **biffvernon** » 29 Jun 2006, 22:29

SILVERHARP2 wrote:...all I need for gold to work as an investment is that is goes up say in the first couple of years after peak oil, then I could sell it and buy some land which may be cheap after the property bubble implodes.

That strategy only works if most people think gold is more useful than land. I wouldn't but too many of my eggs in that basket.

SILVERHARP2 · Post by **SILVERHARP2** » 30 Jun 2006, 08:58

biffvernon wrote:
SILVERHARP2 wrote:...all I need for gold to work as an investment is that is goes up say in the first couple of years after peak oil, then I could sell it and buy some land which may be cheap after the property bubble implodes.
That strategy only works if most people think gold is more useful than land. I wouldn't but too many of my eggs in that basket.

I would tease this out and say that it doesn't matter if people buy gold or not, it only matters that central banks and bond funds diversify out of the dollar and into gold. central banks are not in the business of buying land etc.

grinu · Post by **grinu** » 11 Sep 2006, 19:58

Following on from what I said above a couple of months back, gold might continue creeping down, then possibly experience a bit of a jump if central banks dont meet their sales quota towards the end of this month. If the sales quota isn't met, this will raise a few eyebrows. Probably hover up and down a bit until November, when US mid-term elections and the Iran situation will determine where things go. I reckon that something big will happen late Oct - Nov, which may signify blast-off for precious metals and possibly other things.

End of Sept - beginning Oct probably a good time to think about increasing holdings if you want to hold gold. If you want to play safe then wait till after elections.

snow hope · Post by **snow hope** » 11 Sep 2006, 21:40

Brent Crude Oil down to $64 and Gold down to $588 today. It really looks like everybody is selling..... or is this market manipulation for the US elections - can the TPTB really do it that well?

grinu · Post by **grinu** » 11 Sep 2006, 23:02

Currently a reduced terror premium due to less pressure and vocalism on the part of the US = drop in oil price.

Rising US interest rates increase confidence in dollar. Rising dollar typically = drop in oil price.

Fears of global slow-down mean people are worried about falling demand for commoditites and energy = drop in oil price.

Drop in oil price reduces inflationary effects, reduces economic tensions, reduces political tensions = drop in gold price.

Over simplified to the point of being ridiculous, but gives rough concept.

People class gold as a commodity and there is real concern that the commodities bull run is ending. People are therefore piling out of oil, metals etc. at present.

I give it till November before things come to a head sufficiently to push gold up again. (of course, I could be completely wrong).

Pippa · Post by **Pippa** » 16 Oct 2006, 16:29

?

What next?