Gold As An Investment?

[Pot Odds RAC 23]

I'd expect the Asian markets to send gold up first thing as investors go long on the weekend developments. Maybe a fall when London market opens due to euro-system fears and liquidation. But it could continue to soar. ECB meeting being held in an hour will show more intention.The bullion seller that I use in the UK - Bullion by Post has just stopped taking orders (never seen this before). I think they would like to see what happens before offering prices; I doubt that they're out of gold, lol.Not sure about when the American markets open, as that downgrade thing might not matter by that time - it is a minor credibility insult. The USTreasuries are still desired, and no serious damage done. It is the system's existence that is of concern, not numerical details within the system.

So far you're dead on. Flirting with $1,700

[ahosang 0]

So far you're dead on. Flirting with $1,700

It's like delivering a baby. Push!! Push!! C'mon, one more push, almost there!!Anyway everybody can relax. The G7 said they will save the system again.http://www.zerohedge.com/news/highlights-g...ust-went-global Yay!!

[AmScray 355]

Everything since 2008 was a dead cat bounce. I'm geared up to start buying since I think this might be the leading edge of 21st Century Meltdown 2.0, , but I don't think the opportunities are going to be quite as juicy as they were in 10/08.A lot of those INSANELY depreciated prices resulted from funds delevering to meet liquidity demands and a general lack of liquidity in the deeply spooked markets. Still, hopefully there's a whole lotta dumping going on and I can start buying in to great companies on the cheap cheap once the real intense fear sets in, which it's about to do.I'm actually kinda cool with a fubar'd dollar. We really need to get manufacturing going again. Best case scenario for American manufacturing is a global rebound that leaves the United States behind; the dollar loses 20%-40% of it's valuation relative to a standard currency basket, oil stays above $120 making import costs prohibitive and suddenly, it gets reeeeeeeeeal enticing to start making shit here again. Unfortunately, cycles like that can take decades upon decades to play out and work themselves back up into 'blue sky' territory again... It might be ugly for a long time. Oh well. I know how to grow a garden.

[aucu 3]

London AM fix at $1709.25 spot price as high as $1718Oil down to $83

[ahosang 0]

Turd Ferguson points out some TA on the gold charts. I'm more concerned with fundamentals since I hold physical, but also betting the spreads is profitable if you can time it right. He shows that it is looking good:http://www.tfmetalsreport.com/blog/1975/because-i-said-soAlso as he mentions, JPMorgan has suggested gold may well hit $2500 before year-end. Earlier in the thread I gave it before 2012-end, so that would be a bonus if it happened. I doubt it, but who knows?!http://www.zerohedge.com/news/shocker-jpm-...d-2500-year-end

[hblask 1]

Turd Ferguson points out some TA on the gold charts. I'm more concerned with fundamentals since I hold physical, but also betting the spreads is profitable if you can time it right. He shows that it is looking good:http://www.tfmetalsreport.com/blog/1975/because-i-said-soAlso as he mentions, JPMorgan has suggested gold may well hit $2500 before year-end. Earlier in the thread I gave it before 2012-end, so that would be a bonus if it happened. I doubt it, but who knows?!http://www.zerohedge.com/news/shocker-jpm-...d-2500-year-end

When the big guys start turning bullish, it's usually a good bet the run is approaching the end. I'm not sure what to think in this case.

[Pot Odds RAC 23]

...and the fun continues as the overseas markets continue to crash and Gold continues over $1,750

[aucu 3]

POG touched $1800 today.

[ahosang 0]

When the big guys start turning bullish, it's usually a good bet the run is approaching the end. I'm not sure what to think in this case.

I don't know why you say that?? If more people start saving in gold, then wouldn't that lead to a network effect(social proof) that would support whatever price there was. The price rises because the (real)flow is tiny.

[hblask 1]

I don't know why you say that?? If more people start saving in gold, then wouldn't that lead to a network effect(social proof) that would support whatever price there was. The price rises because the (real)flow is tiny.

I was partially kidding; usually the big dinosaurs are the last to know. They are the last wave of investors much of the time. Not always, but probably more often than not.

[AmScray 355]

I was partially kidding; usually the big dinosaurs are the last to know. They are the last wave of investors much of the time. Not always, but probably more often than not.

There is no one on this earth who has a meaningful sum of money to invest who has been 'unaware' of gold. It's possible that it hasn't fit into their strategies from a capital efficiency standpoint.Gold is very appealing to John Q Everyman because it's tangible, its roots run back to the beginning and it's dead simple to understand. It also has some 'unique properties' in terms of what it offers a store of value.Right now, it's running at about a 20% CAGR over a 10 year period. Most of that is in the past few years. I remember in the tech gogo days, such returns and everyone insisting that Microsoft was a $500 stock, for all manner of 'credible sounding' reasons.I remember in the real estat gogo days, such returns and everyone insisting that Arizona, Florida and Nevada real estate was 'still cheap- all those retirees are coming!"Gold is entering a similar frenzy. If this is a paradigm shift where gold makes it's 'big move' against fiat, OK- that would actually be kinda awesome- but if not, there's a bubble brewing here. One thing about gold/silver bugs is that they're usually very unsophisticated investors, and they're always in buy mode. When it's down, they're buying. When it's up, they're buying. It's almost like a fetish, more than a salient investing strategy.

[El Guapo 8]

Agree 100%

[mrdannyg 274]

I was partially kidding; usually the big dinosaurs are the last to know. They are the last wave of investors much of the time. Not always, but probably more often than not.

I assume you're kidding about this too. They are always the first to know. Well, maybe a boutique firm or hedge fund here or there starts making moves earlier, but the 'dinosaurs' know a long time before you and I. They only publish articles about it once they're comfortable in their positions.

[hblask 1]

I assume you're kidding about this too. They are always the first to know. Well, maybe a boutique firm or hedge fund here or there starts making moves earlier, but the 'dinosaurs' know a long time before you and I. They only publish articles about it once they're comfortable in their positions.

I guess my feeling sort of agrees with this; by the time they are recommending it to the general public it is pretty late in the run.I am reminded of something by Peter Lynch, where he talks about how brokers always recommend GE and IBM. If they recommend Upstart Inc and it goes in the crapper, it's bad advice. If they recommend GE or IBM and it goes in the crapper, bad GE/IBM.I think gold is the same. When gold is doing nothing, recommending it is risking your reputation. After a two year run, it's an easy recommendation. If it bombs, well, that was just bad luck on the timing.

[El Guapo 8]

If a single recommendation is making or breaking your portfolio, you owned too much of it.

[aucu 3]

If a single recommendation is making or breaking your portfolio, you owned too much of it.

Way guilty of this.But looking to off load another chunk of my holdings

[El Guapo 8]

http://www.youtube.com/watch?v=nO4I-Rf7rrw

[AmScray 355]

I guess my feeling sort of agrees with this; by the time they are recommending it to the general public it is pretty late in the run.I am reminded of something by Peter Lynch, where he talks about how brokers always recommend GE and IBM. If they recommend Upstart Inc and it goes in the crapper, it's bad advice. If they recommend GE or IBM and it goes in the crapper, bad GE/IBM.I think gold is the same. When gold is doing nothing, recommending it is risking your reputation. After a two year run, it's an easy recommendation. If it bombs, well, that was just bad luck on the timing.

I wonder what classic mania signal *isn't* present in gold?There are commercials on TV telling you to buy now before it's too late... There are commercials on TV offering to buy the stuff you have... There are little shops springing up in strip malls all over the place, exploiting retards who can't go on Google and figure out how to send their gold into the refinery themselves. Just as everyone who once owned a home felt they had 'skin in the game' of the real estate market, now, everyone who has a wedding band feels 'invested' in the Gold market. The butchers, bakers and candlestick makers are all in play... Per accounts, all this stuff is a repeat of what happened with $30, $40, $50 silver in the early 80's (that's about $130/oz, inflation adjusted). Same little shops, same ads in the newspaper offering to by "scrap silver/gold", same commercials on TV... I'm totally open to the possiblity that this really is the beginning of the end and all those 'baseline' factors present in gold are driving credible value, but right now, it takes 10 ounces of gold to buy a brand new car? Between them, what has more intrinsic value? The materials, per-unit industrial investment and labor involved with manufacturing a brand new car, or the time and effort it takes to mine 10 ounces of gold?Asians are driving a lot of this, but they're they same people who think eating monkey dicks will cure the gout. How much of this is a credible realization of value? How much of this value is durable, once the frenzy dies down?

[El Guapo 8]

Here you go scram, read this:http://seekingalpha.com/article/262560-usi...intrinsic-valueGold has an approximate intrinsic value between $450 and $600 and ounce in current dollars. Gold is a fools market plain and simple. I know I have said this before, but GLD, the ETF, has grown from zero in 2004 to almost 80 Billion in assets. They buy and store bouillon based on shares outstanding. People have not stopped buying, when they start selling watch out.It might not be for a while, but when it happens, 50% plus drop in a few weeks could be the result.

[hblask 1]

Here you go scram, read this:http://seekingalpha.com/article/262560-usi...intrinsic-valueGold has an approximate intrinsic value between $450 and $600 and ounce in current dollars. Gold is a fools market plain and simple. I know I have said this before, but GLD, the ETF, has grown from zero in 2004 to almost 80 Billion in assets. They buy and store bouillon based on shares outstanding. People have not stopped buying, when they start selling watch out.It might not be for a while, but when it happens, 50% plus drop in a few weeks could be the result.

The real result will be based on two factors, from what I can tell. First, how much of the coming economic shitstorm is already priced into gold. And second, how much do you believe the Fed is omniscient enough to withdraw all the excess money supply that they've been dumping on the country for the last couple years, and will their attempts be enough.Smarter people than me study those questions all day and night. Based on the mania, the answer to the first part looks to me like "all of it and more". Based on the second part I'd say "gold's got a long way to go". The Fed is promising at least two more years of the same... is gold really THAT overpriced right now?That's why I'm not in gold.

[El Guapo 8]

Two more years of the same, means two more years of no inflation.

[hblask 1]

Two more years of the same, means two more years of no inflation.

At least, that's what the Fed is betting the farm on. Basically, as soon as the economy shows any signs of life, that money is going to come flooding in. They have to withdraw just the right amount of it just before that happens. At this point, 2 years before those signs of life come back doesn't seem too unreasonable. But I have no faith that they will get their timing right.

[El Guapo 8]

At least, that's what the Fed is betting the farm on. Basically, as soon as the economy shows any signs of life, that money is going to come flooding in. They have to withdraw just the right amount of it just before that happens. At this point, 2 years before those signs of life come back doesn't seem too unreasonable. But I have no faith that they will get their timing right.

The one thing about Bernake, right or wrong, he is much more proactive than Greenspan was.Also, if you watch that youtube video above it sorta jokes about the fact that gold is viewed as an alternative for inflation and deflation. It can't be both. I think it is being used as a cash alternative, which is scary.

[hblask 1]

The one thing about Bernake, right or wrong, he is much more proactive than Greenspan was.Also, if you watch that youtube video above it sorta jokes about the fact that gold is viewed as an alternative for inflation and deflation. It can't be both. I think it is being used as a cash alternative, which is scary.

Yeah, I've never heard it used as a hedge against deflation, that doesn't even make sense. And certainly as a cash alternative seems to cross the line into kook territory. I think that'd only occur in thermonuclear war levels of economic ruin.

[ahosang 0]

I wonder what classic mania signal *isn't* present in gold?There are commercials on TV telling you to buy now before it's too late... There are commercials on TV offering to buy the stuff you have... There are little shops springing up in strip malls all over the place, exploiting retards who can't go on Google and figure out how to send their gold into the refinery themselves. Just as everyone who once owned a home felt they had 'skin in the game' of the real estate market, now, everyone who has a wedding band feels 'invested' in the Gold market. The butchers, bakers and candlestick makers are all in play... Per accounts, all this stuff is a repeat of what happened with $30, $40, $50 silver in the early 80's (that's about $130/oz, inflation adjusted). Same little shops, same ads in the newspaper offering to by "scrap silver/gold", same commercials on TV... I'm totally open to the possiblity that this really is the beginning of the end and all those 'baseline' factors present in gold are driving credible value, but right now, it takes 10 ounces of gold to buy a brand new car? Between them, what has more intrinsic value? The materials, per-unit industrial investment and labor involved with manufacturing a brand new car, or the time and effort it takes to mine 10 ounces of gold?Asians are driving a lot of this, but they're they same people who think eating monkey dicks will cure the gout. How much of this is a credible realization of value? How much of this value is durable, once the frenzy dies down?

Between this and your previous post, you seem to have taken the 'all or bust' line wrt gold. Personally, I don't think either will happen anytime soon. I believe that gold will continue to rise, before eventually hitting its 'bubble' when alternative vehicles for investment become viable. Unlike the doomsayers, I do not believe that the dollar will crash out in some apocalyptic manner, nor gold restored to some sort of day-to-day currency(but these of course are possibility). Also I don't believe that gold 'bubbles' at this time. Real rates are negative and BB's stated policy is to continue this ZIRP for 2 years. With financial assets being shaky, innovative investment short on the ground, and cash/UST offering negative real returns, I believe that gold will continue to be the savings vehicle for surplus.The value of gold is not measured in price. Price in this current order is irrelevant.The value of gold is as a store, such that its expected return at some future cash-out date is equal or greater to that at the present(or if all are negative returns, as in true Armageddon, then gold must be seen as the best of a bad lot). If the price is $1700, I must only believe that the return will be better than other savings method when I cash out in 5yrs. If the price is $5000, the same applies. The bolded is surprising, coming from you???? Seriously wtf?? Labour theory of value????????????????? WTF??????????Because gold is NOT a commodity in this regard, the price makes no difference, since the utility of me spending $1700 is not based on a volumetric consumption of a product(I am not going to eat the gold or weave it into a basket, lol), but only the confidence that my ounce will be redeemed for the same or better purchasing power in the future(when I will convert to dollars and consume on a volumetric basis). So if price rises to $5200 fairly quickly(but my wages are the same, and i only have $1700 surplus as before), then I can only afford a 10g piece rather than a 31g(1 ounce) piece. But again, this is irrelevant - all that matters is that my expected return on that $1700 is greater. In this way supply in terms of volume is priced higher to handle demand, as a flow over time. There is no substitute apart from vehicles which will give me a better EV.