The Gold and Silver Thread

[liebuster]

Don't assume gold going to the moon is necessarily indicative of bad things. It is to some extent, but these things take a life of their own. When things go parabolic, they usually do so on perceptions that do not correspond to fundamentals - think tech stocks and housing prices. My job as a trader and investor is to be able to differentiate between what is real and what is hype. There is little doubt in my mind that the end game for gold and silver will be all hype. Whether that is now, however, is open to question. Though I believe gold has gotten ahead of itself, I'm guessing there are more gains ahead after the inevitable correction.

FTR, I am heavily long silver, and got so last week and the week prior. But I will be gone in an instant if I think the trade is breaking down. Because when it ultimately breaks down, it will be extremely ugly.

Couldn't you say that gold is going up because people realize the fundamentals in everything else is screwed up and manipulated?

I realize that mine and your definition of "fundamentals" are probably different. I guess what I'm saying is people are realizing that all these weekly reports of job numbers and housing numbers, consumer prices, etc, etc. are manipulated and that reality doesn't match the fundamentals therefor a flight to the worlds oldest currency is inevitable.

As long as there is a demand for the yellow metal, right?

 

[editec]

I think people are getting set up for a fleecing.

Remember when Gold hit $800+ in the late 70s?

Then what happened?

Do any of us see USD hyperinflation in our near future?

I sure as hell don't.

Remember also, how real estate would always be a safe investment?

The herd is restless and fearful.

The herd IS being spooked and spooked by cabals who make it their business to stampede the herd.

Of course the market can stay wrong longer than we can remain solvent.

Gold is up about 66% in the last year.

Platinum's price, on the other hand, hasn't gone up all that much.

A year ago it was about 1600. Today it is about 1900. That's about a 20+% increase

One would think that platinum would retain its normal higher price (compared to gold) if the "fundamental" were driving the metals markets.

 

[Toro]

Couldn't you say that gold is going up because people realize the fundamentals in everything else is screwed up and manipulated?

I realize that mine and your definition of "fundamentals" are probably different. I guess what I'm saying is people are realizing that all these weekly reports of job numbers and housing numbers, consumer prices, etc, etc. are manipulated and that reality doesn't match the fundamentals therefor a flight to the worlds oldest currency is inevitable.

As long as there is a demand for the yellow metal, right?

I think you are correct.

I have invested in gold and silver for 10 years now. When I first started, the end game to my thesis was an eventual loss of confidence in all fiat currencies. Now, I didn't see the extent of the housing bubble and the financial crisis a decade ago, but the logical end to all this, given the economy and the responses, is probably some sort of currency crisis. I could be dead wrong, of course. However, if so, we probably have some ways to go.

The other possibility is that we are in the currency crisis right now, given the problems in Europe. At the end of boom, there is usually some sort of parabolic move. We may be seeing that parabolic move right now. If so, you must be prepared for it, because the aftermath of the end of the vertical boom is very ugly. Lots of people will be hurt by it, because they won't be able to recognize the end.

 

[Bern80]

I've been watching the escalating price of gold and kind of shopping around. I was just curious, is it typical that it is always going to be priced well above the market rate? I was looking at the new e-bay section for example. They have a 2.5 gram gold bar for $193. That would be $77.20 per gram. I believe the market price for gold is by the troy oz. and there are 31.10 grams per troy oz. The current market price is $1870 per troy ounce I believe or $60 a gram. Did I mess something up there or is that just the way the gold market is?

 

[Toro]

Looks like Zander is making money. After hitting $1913 this morning, gold has reversed and sold off, and is down $70 at 2.30pm. A 50% retracement of the recent move takes gold down to $1700.

Silver is also getting hit, falling 6% after climbing over $44 last night, which is the top end of an upward sloping channel. The bottom end of that channel is $39-$40, meaning half the correction is likely over.

Gold and silver have been driven by fear in August. I expect that will change as fear dissipates and the market once again focuses on inflation and currency debasement.

 

[Valerie]

SPDR Gold ETF Becomes the Largest ETF in the World


With gold prices nearing $1,900 and more assets flowing in, the SPDR Gold ETF has become the largest ETF in the world, surpassing the heavily-traded S&P 500 SPDR.

The SPDR Gold ETF [GLD] passed the S&P 500 SPDR [SPY] for the first time on Friday. It remained #1 as of yesterday’s close with $77.5 billion in assets, about $1 billion more than the S&P 500 SPDR, according to State Street Global Advisors, the marketer of the 2 ETFs.

News Headlines

 

[Valerie]

I think people are getting set up for a fleecing.

Remember when Gold hit $800+ in the late 70s?

Then what happened?

Do any of us see USD hyperinflation in our near future?

I sure as hell don't.

Remember also, how real estate would always be a safe investment?

The herd is restless and fearful.

The herd IS being spooked and spooked by cabals who make it their business to stampede the herd.

Of course the market can stay wrong longer than we can remain solvent.

Gold is up about 66% in the last year.

Platinum's price, on the other hand, hasn't gone up all that much.

A year ago it was about 1600. Today it is about 1900. That's about a 20+% increase

One would think that platinum would retain its normal higher price (compared to gold) if the "fundamental" were driving the metals markets.

Yes, there is a very unsettling divergence there, so be careful folks!

 

[Zander]

Time to short gold. Put a stop at 1950. Double your position on short once it drops below 1750

Gold is headed lower for now, possibly much lower. It's a bubble and it popping as we speak.

 

[Trajan]

Time to short gold. Put a stop at 1950. Double your position on short once it drops below 1750

Gold is headed lower for now, possibly much lower. It's a bubble and it popping as we speak.

I disagree.

 

[Toro]

The $300 rise in gold in 6 weeks has the whiff of a bubble but bubbles and bull markets generally do not end when monetary conditions are enormously loose as they are today. They usually end when conditions are tight. Also, there are anecdotes of the public's involvement, such as the GLD becoming the largest ETF, but for the most part, neither the public nor the professionals are there in a big way.

Maybe it's different this time, I don't know, but history suggests otherwise.

That doesn't mean we can't get a good correction though.

 

[elvis]

Time to short gold. Put a stop at 1950. Double your position on short once it drops below 1750

Gold is headed lower for now, possibly much lower. It's a bubble and it popping as we speak.

I disagree.

With people expecting another recession, how could gold go lower?

 

[Zander]

I think we'll see a nice correction, followed by an up swing, followed by a massive bust. I don't know the exact time frame, but I am riding the down wave for now.....So far it has been a very good trade.

 

[Zander]

Gold is headed lower for now, possibly much lower. It's a bubble and it popping as we speak.

I disagree.

With people expecting another recession, how could gold go lower?

1) Strengthening dollar (the EU, British pound, and Japanese Yen are all a mess)
2) Central banks may decide to sell gold - they can collapse the price in about 10 seconds by selling hundreds of tonnes with the click of a mouse. (yes tonnes!! not ounces)
3) Miners are producing more gold today than any time in history.
4) all bull markets eventually run out of steam

 

[Toro]

This is fun!

1) Strengthening dollar (the EU, British pound, and Japanese Yen are all a mess)

Gold is going up in all currencies. Holding gold is a vote against fiat currencies, not just one currency.

2) Central banks may decide to sell gold - they can collapse the price in about 10 seconds by selling hundreds of tonnes with the click of a mouse. (yes tonnes!! not ounces)

Central bankers are net buyers of gold at $1500. They were big sellers at $300. That's your best argument about the efficacy of central banks as market timers. In the meantime, the buying continues.

3) Miners are producing more gold today than any time in history.

This is recent. For most of the past decade, mine production was falling, not rising.

4) all bull markets eventually run out of steam

Completely true. They all do eventually.

 

[Paulie]

I disagree.

With people expecting another recession, how could gold go lower?

1) Strengthening dollar (the EU, British pound, and Japanese Yen are all a mess)
2) Central banks may decide to sell gold - they can collapse the price in about 10 seconds by selling hundreds of tonnes with the click of a mouse. (yes tonnes!! not ounces)
3) Miners are producing more gold today than any time in history.
4) all bull markets eventually run out of steam

What if Bernanke goes QE3?

 

[Zander]

With people expecting another recession, how could gold go lower?

1) Strengthening dollar (the EU, British pound, and Japanese Yen are all a mess)
2) Central banks may decide to sell gold - they can collapse the price in about 10 seconds by selling hundreds of tonnes with the click of a mouse. (yes tonnes!! not ounces)
3) Miners are producing more gold today than any time in history.
4) all bull markets eventually run out of steam

What if Bernanke goes QE3?

I think it's already baked in the cake....

 

[Trajan]

1) Strengthening dollar (the EU, British pound, and Japanese Yen are all a mess)
2) Central banks may decide to sell gold - they can collapse the price in about 10 seconds by selling hundreds of tonnes with the click of a mouse. (yes tonnes!! not ounces)
3) Miners are producing more gold today than any time in history.
4) all bull markets eventually run out of steam

What if Bernanke goes QE3?

I think it's already baked in the cake....

no, I am not quite so sure of that, if you mean the price reflects this already.

 

[Trajan]

With people expecting another recession, how could gold go lower?

1) Strengthening dollar (the EU, British pound, and Japanese Yen are all a mess)
2) Central banks may decide to sell gold - they can collapse the price in about 10 seconds by selling hundreds of tonnes with the click of a mouse. (yes tonnes!! not ounces)
3) Miners are producing more gold today than any time in history.
4) all bull markets eventually run out of steam

What if Bernanke goes QE3?

he will, but hes going to wait, I expected it by October..now I am not so sure, Perry was right, its political now, purely.

 

[Zander]

This is fun!

1) Strengthening dollar (the EU, British pound, and Japanese Yen are all a mess)

Gold is going up in all currencies. Holding gold is a vote against fiat currencies, not just one currency.

2) Central banks may decide to sell gold - they can collapse the price in about 10 seconds by selling hundreds of tonnes with the click of a mouse. (yes tonnes!! not ounces)

Central bankers are net buyers of gold at $1500. They were big sellers at $300. That's your best argument about the efficacy of central banks as market timers. In the meantime, the buying continues.

3) Miners are producing more gold today than any time in history.

This is recent. For most of the past decade, mine production was falling, not rising.

4) all bull markets eventually run out of steam

Completely true. They all do eventually.

From what I understand, the Central banks that are buying are India, China, Russia and other emerging markets. Developed nations Central bankers are net sellers of gold.

Keep in mind gold is rarely consumed--almost all of the gold ever mined remains in use as jewelry or as bars in bank vaults. That's a lot-o-gold!!

 

[Trajan]

I disagree.

With people expecting another recession, how could gold go lower?

1) Strengthening dollar (the EU, British pound, and Japanese Yen are all a mess)
2) Central banks may decide to sell gold - they can collapse the price in about 10 seconds by selling hundreds of tonnes with the click of a mouse. (yes tonnes!! not ounces)
3) Miners are producing more gold today than any time in history.
4) all bull markets eventually run out of steam

if you have a tip, or some policy here to fore unknown the $ is going to strengthen, and I don't mean a 10 cent bump, please share.

I am not sure of this but, if the central banks ( euro US) are already squeezed for capitalization wouldn't that inflate the currency there by diluting their net holdings once sold after a short period?