The Gold and Silver Thread

[KissMy]

Gold & Grains is where people need to be. I have made 35% on grain recently. Corn is going to top $9 a bushel & Soybeans will top $18.

The fed is going to pump more money into the economy. It may not be the same way they did it with QE 1&2 but they are going to find a way to get it done. Fed strives to replenish depleted toolkit

 

[Toro]

A bit of a disappointment from the FOMC today, causing an initial sell off in precious metals. The FOMC did not announced additional QE measures, apart from extending two current programs to the end of the year. The market was pricing in at least some probability of the Fed announcing an expansion in QE but it did not happen. The Fed did leave the door open for future actions. Here is the paragraph from the FOMC statement that matters.

The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

Federal Open Market Committee Aug. 1 Statement: Full Text - Bloomberg

 

[TakeAStepBack]

Operation twist will be extended indefinitely. They will just never sell it that way. It's abou the flow, not the stock now. At the long end of the curve, the returns are negative. It isn't going any where.

Someone must have slapped Heli-Ben into some sort of reality. That man fears deflation with a phobic intensity Ive never seen. The idea of more money flowing into the economy must give him a raging boner.

 

[stars]

I don't have money for stocks but I'm a woman so I bought like really expansive chunky gold and silver jewellery in case I need to trade it in someday, like the expansive hard to find variety. It's worth surprisingly a lot and if you keep it in good condition it's worth the same as you bought, I checked a few weeks ago.

 

[KissMy]

Gold coins are the easiest to sell, assay & verify their gold content.

 

[Toro]

I added small positions in gold and silver today. I am still very wary ahead of the next three weeks, but with the strength in the stock market and what appears to be a pretty good bottom in precious metals, I've established a small starter position.

Everything is going to turn on politics, however. The important dates are

August 31 - Bernanke's speech at Jackson Hole
September 12 - Germany's Constitutional Court will rule on the constitutionality of the ESM
September 12-13 FOMC meets

I believe the market is baking in QE and EuroQE. Any backtracking from either could lead to a sharp reversal in risk assets and precious metals.

 

[Plight]

I added small positions in gold and silver today. I am still very wary ahead of the next three weeks, but with the strength in the stock market and what appears to be a pretty good bottom in precious metals, I've established a small starter position.

Everything is going to turn on politics, however. The important dates are

August 31 - Bernanke's speech at Jackson Hole
September 12 - Germany's Constitutional Court will rule on the constitutionality of the ESM
September 12-13 FOMC meets

I believe the market is baking in QE and EuroQE. Any backtracking from either could lead to a sharp reversal in risk assets and precious metals.

Worry not, long term gold and silver are going up regardless of the printing presses. Continue to add to your position and dont worry about these mettings...they can't do anything besides lower rates and print money. That's all they believe in anyway.

From WSJ: Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again.

 

[Mad Scientist]

I added small positions in gold and silver today. I am still very wary ahead of the next three weeks, but with the strength in the stock market and what appears to be a pretty good bottom in precious metals, I've established a small starter position.

Everything is going to turn on politics, however. The important dates are

August 31 - Bernanke's speech at Jackson Hole
September 12 - Germany's Constitutional Court will rule on the constitutionality of the ESM
September 12-13 FOMC meets

I believe the market is baking in QE and EuroQE. Any backtracking from either could lead to a sharp reversal in risk assets and precious metals.

Worry not, long term gold and silver are going up regardless of the printing presses. Continue to add to your position and dont worry about these mettings...they can't do anything besides lower rates and print money. That's all they believe in anyway.

From WSJ: Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again.

Which will be never.

 

[Toro]

I added small positions in gold and silver today. I am still very wary ahead of the next three weeks, but with the strength in the stock market and what appears to be a pretty good bottom in precious metals, I've established a small starter position.

Everything is going to turn on politics, however. The important dates are

August 31 - Bernanke's speech at Jackson Hole
September 12 - Germany's Constitutional Court will rule on the constitutionality of the ESM
September 12-13 FOMC meets

I believe the market is baking in QE and EuroQE. Any backtracking from either could lead to a sharp reversal in risk assets and precious metals.

Worry not, long term gold and silver are going up regardless of the printing presses. Continue to add to your position and dont worry about these mettings...they can't do anything besides lower rates and print money. That's all they believe in anyway.

From WSJ: Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again.

One day, gold will collapse. That is the history of all commodities, including gold. Today is no different.

However, it might go to $5000 first.

 

[editec]

Looks to me like precious metals will be (has already) losing ground in price comparison to food commodities.

Basically gold's value has been closely mirroring the world price of oil for decades.

Gold-Oil Ratio = Price of Gold (per oz.) / Price of Crude Oil (per barrel)
The gold-oil ratio helps us to identify overbought and oversold opportunities for gold. The chart below shows solid support between 8 and 10 barrels/ounce of gold over the last 30 years, with occasional spikes carrying above 20 but seldom holding for any length of time.

source

 

[william the wie]

Looks to me like precious metals will be (has already) losing ground in price comparison to food commodities.

Basically gold's value has been closely mirroring the world price of oil for decades.

Gold-Oil Ratio = Price of Gold (per oz.) / Price of Crude Oil (per barrel)
The gold-oil ratio helps us to identify overbought and oversold opportunities for gold. The chart below shows solid support between 8 and 10 barrels/ounce of gold over the last 30 years, with occasional spikes carrying above 20 but seldom holding for any length of time.

source

Great chart but it ignores advances in drilling technology. With fracking and off-shore drilling the supply of oil and especially natural gas is exploding worldwide. I would also use the DJIA vs. Gold.

 

[KissMy]

"36 times as many municipal defaults over the past 40 years as the conventional wisdom suggests."..."Moody’s Investors Service has reported that from 1970 to 2011, there were only 71 municipal bond defaults. But the Fed report counted 2,521 defaults in that time."

I guess all that bond paper will keep you warm for a couple of minutes when you light them on fire. Maybe you can eat them for fiber althought the ink on them may not be so good.

 

[Mad Scientist]

One day, gold will collapse. That is the history of all commodities, including gold. Today is no different.

Not if yer holdin' Dollars.

However, it might go to $5000 first.

Please outline even ONE plausible scenario where Gold will go to $5,000 then drop back to pre (as you call it "Commodity Bubble") days of say 250-300 dollars(US).

Just one.

 

[Toro]

One day, gold will collapse. That is the history of all commodities, including gold. Today is no different.

Not if yer holdin' Dollars.

However, it might go to $5000 first.

Please outline even ONE plausible scenario where Gold will go to $5,000 then drop back to pre (as you call it "Commodity Bubble") days of say 250-300 dollars(US).

Just one.

When the Fed normalizes interest rates. That will happen one day.

I don't know if gold will ever go to $250 again. But an 80% drop from $5000 is $1000, and a 90% drop puts it at $500.

Gold isn't a religion. Gold Bugs act like it is. The True Believers in gold will ultimately suffer the same fate as the True Believers did during the Tech Bubble and during the Housing Bubble. That's the history of financial markets. That's the history of commodities.

 

[Plight]

As I mentioned previously...there little to nothing the government can do...gold is soaring again today...They're broke, so keep interest rates low...propping up small businesses who produce things of little value because the consumer is broke...indefinite inflation...dont trust your government buy gold and silver

 

[Toro]

Analogies to Weimer Germany, Hungary and Zimbabwe are false. A better analogy is modern-day Japan. Public borrowing in the United States has replaced the collapse in private sector borrowing. Total debt has remained roughly constant in the United States as the private sector deleveraged and debt transferred to the Fed's balance sheet. As one would expect in an asset bubble collapse, velocity has collapsed as banks have chosen to keep reserves at the Fed rather than lend them out into the private market. Weimer Germany, Hungary nor Zimbabwe were characterized by a balance sheet recession caused by an implosion in asset prices, as happened in Japan and the United States. The only way we would ever get hyperinflation is if velocity accelerated, something that isn't remotely occurring. If it starts, then the hyperinflationists will have an argument. We'll wait until consumer price inflation rises above 5% first before we worry about 5,000,000% inflation.

I added to my gold and silver position after the Fed minutes were released. My position is still small but the minutes were an incremental positive for gold and silver. It also appears that precious metals have put in a bottom. Gold appears to have broken out of the downward technical pattern. It has a lot of work to get back to $1920 but $1750 is feasible in the near-term. However, if the Fed disappoints at either Jackson Hole or at the FOMC meeting, or the German constitutional court rules against the ESM, gold and silver will be vulnerable. They will also be vulnerable as we approach the fiscal cliff.

 

[Toro]

As I mentioned previously...there little to nothing the government can do...gold is soaring again today...They're broke, so keep interest rates low...propping up small businesses who produce things of little value because the consumer is broke...indefinite inflation...dont trust your government buy gold and silver

Gold is NOT soaring today. Gold is basing. It soared to $1920 then collapsed to $1530. Today it is at $1650, the same price it was in May.

 

[Toro]

I added small positions in gold and silver today. I am still very wary ahead of the next three weeks, but with the strength in the stock market and what appears to be a pretty good bottom in precious metals, I've established a small starter position.

Everything is going to turn on politics, however. The important dates are

August 31 - Bernanke's speech at Jackson Hole
September 12 - Germany's Constitutional Court will rule on the constitutionality of the ESM
September 12-13 FOMC meets

I believe the market is baking in QE and EuroQE. Any backtracking from either could lead to a sharp reversal in risk assets and precious metals.

Worry not, long term gold and silver are going up regardless of the printing presses. Continue to add to your position and dont worry about these mettings...they can't do anything besides lower rates and print money. That's all they believe in anyway.

From WSJ: Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again.

Which will be never.

It will start in earnest when the excesses in the housing and mortgage markets are finally expunged, which, if you do the math, will be around 2014, give or take. That's how balance sheet recessions work.

 

[EdwardBaiamonte]

Worry not, long term gold and silver are going up regardless of the printing presses. Continue to add to your position and dont worry about these mettings...they can't do anything besides lower rates and print money. That's all they believe in anyway.

From WSJ: Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again.

Which will be never.

It will start in earnest when the excesses in the housing and mortgage markets are finally expunged, which, if you do the math, will be around 2014, give or take. That's how balance sheet recessions work.

This depression may feature Barry at the helm in 2014 so there is no knowing that part of the future for 3 months.

 

[william the wie]

It will start in earnest when the excesses in the housing and mortgage markets are finally expunged, which, if you do the math, will be around 2014, give or take. That's how balance sheet recessions work.

How do you account for the big spike, over 200% in CT if memory serves, in first time late/missed payments on mortgages?

Real estate price writedowns as opposed to mortgage writedowns are a step function with treads of 24-36 months and is driven by the lack of funds to bulldoze abandoned buildings. With inadequate municipal, county and state budgets CA, IL and most of the Washington Boston corridor are headed for another downturn in 2014. The exodus of jobs and homeowners from the affected areas will be the big story in 2014 and really help the rest of the country recover.

So, while like you I expect most of the country to see rising or at least stable real estate prices from 2014 on the pricey areas will see continuous price declines until they revert to the price trendline and if they can't get rid of the abandoned buildings they will keep on dropping.