Gold rallies to $1,180 mark

[Sol Invictus]

http://www.theglobeandmail.com/globe-investor/gold-rallies-to-1180-mark/article1376642/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheGlobeAndMail-Business+(The+Globe+and+Mail+-+Business+News)

November 25, 2009

Gold prices hit record highs at $1,180.00 an ounce in Europe on Wednesday, boosted by a report that India may consider buying more bullion from the International Monetary Fund, and the weaker dollar.

Spot gold was bid at $1,178.30 an ounce at 1022 GMT, against $1,168.90 late in New York on Tuesday.

U.S. gold futures for December delivery on the COMEX division of the New York Mercantile Exchange also hit a record $1,180.40 an ounce and were later up $12.80 to $1,178.60.

[Psychonaut]

Guess whose investments have been making him a killing in these "hard times"? :cool:

[Sol Invictus]

Guess whose investments have been making him a killing in these "hard times"? :cool:

Likewise brother.

Don't sell yet, though. It's only going to get better for those of us smart enough to see what was on the horizon, when everyone else said "Get real".

[Psychonaut]

Likewise brother.

:high5


Don't sell yet, though. It's only going to get better for those of us smart enough to see what was on the horizon, when everyone else said "Get real".

Yup. Gold and silver (and possibly Copper, we'll see if it follows the same path as silver) are my long term investments.

[Loki]

Guess whose investments have been making him a killing in these "hard times"? :cool:

Stocks have actually risen more than gold this year since March.

Gold price March 09: $900 Now: $1,190 Change: +32%

Dow Jones stock index March 09: 6,500 Now: 10,400 Change: +60%

Verdict: Gold is overrated.

[chap]

Stocks have actually risen more than gold this year since March.

Gold price March 09: $900 Now: $1,190 Change: +32%

Dow Jones stock index March 09: 6,500 Now: 10,400 Change: +60%

Verdict: Gold is overrated.

No, you are gravely mistaken. And drawing a comparison from March 2009 is a highly cherry picked timeframe. October 2007 the Dow was at 14164 while gold was just under $800. What has happened since then?

Yes, stocks have risen in nominal terms.

Another way of thinking about it is, what good is it receiving a 10% wage increase if the price of the goods you buy is rising 20% a year? Sure, you'll be 10% better off in nominal terms, but your purchasing power is eroding.

When you factor inflation, the Dow has been in a long term bear market since the late 90s.

http://stockcharts.com/h-sc/ui

http://blogs.reuters.com/rolfe-winkler/files/2009/11/dow-vs-gold.jpg

http://i45.tinypic.com/1h361i.jpg

Back in 1999 it took 45 ounces of gold to buy the DJIA. In 2009 it is just over 9 ounces.

I predict that eventually the Dow will be equal to 1 oz. of gold.

[Loki]

When you factor inflation, the Dow has been in a long term bear market since the late 90s.


There have never been long-term bear markets on the stock exchange, only short and medium term, even when you factor in inflation. Bear market cycles typically don't last longer than 3 years. This particular one in gold terms seems to have bottomed. It is more reasonable to expect an eventual bounce here, similar to what we've seen in the '30's and '80's, after the sharp bear trends.

http://blogs.reuters.com/rolfe-winkler/files/2009/11/dow-vs-gold.jpg

Looking at this chart, one can clearly see that the Dow-vs-Gold ratio is at a low point. One of the worst mistakes that retail investors make, is to buy when prices are high, and sell when prices are low. It always happens, and people always lose out in the end. I guess one can blame the fear/greed effect.

Example: When crude oil was at $140/barrel recently, people were shouting "buy oil!!" and many investors took out crude call options of $200. That never happened, and the oil bubble burst shortly thereafter ... with prices plummeting to below $40/barrel ... dropping even quicker than it had risen. Similarly, gold is probably at a medium-term peak here, scratching $1,200/ounce. It may go further, who knows, but the risk is now to the downside. This is not a time to buy gold in my view. But it's anyone's guess, there are no clear crystal balls. All I'm saying is buy when it is low, and sell when it is at record levels. If you do the opposite, you're likely to be a sucker, and the market makers will be the only ones who benefit.

This recent Dubai worry has sent gold plummeting (http://www.thisismoney.co.uk/markets/article.html?in_article_id=494960&in_page_id=3):



Gold price plunges amid Dubai debt fears

27 November 2009, 9:38am

The price of gold tumbled nearly 5% today - its biggest one-day fall in a year - amid a widespread sell-off of assets due to Dubai debt concerns

Torried trading in Asia, which saw shares in Japan plunge 4% and Hong Kong's Hang Seng index fall 5%, saw commodities come under pressure. The price of oil was down 5%.

Bullion, which hit a new record of $1,195 an ounce yesterday, slumped from around $1,192 at midnight to $1,138 within a couple of hours.

[chap]

This recent Dubai worry has sent gold plummeting (http://www.thisismoney.co.uk/markets/article.html?in_article_id=494960&in_page_id=3):

Short term noise, gold has broken through $1,200: http://www.reuters.com/article/usDollarRpt/idUSN0139472320091201

[lei.talk]

Back in 1999
it took 45 ounces of gold to buy the DJIA.
In 2009 it is just over 9 ounces.

I predict that eventually
the Dow will be equal to 1 oz. of gold.how does one buy "DJIA (http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average)"?

[Loki]

how does one buy "DJIA (http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average)"?

That can be done in various ways ... the most simple way is buying any of the 30 individual stocks that make up the index. Or, one can do it via leveraged financial instruments like options, warrants, CFD's, spreadbets etc. Or indirectly through index-tied investment funds.

[chap]

Weighted average of those 30 stocks, priced in gold, the DJIA is just an indices.

[Loki]

Short term noise, gold has broken through $1,200: http://www.reuters.com/article/usDollarRpt/idUSN0139472320091201

Turns out the "noise" was the upside spike over $1,200? Gold is now even lower than it was with the Dubai scare ... currently trading at below $1,130.

Record Volumes in Gold Market Indicate a Gold Top (http://seekingalpha.com/article/177554-record-volumes-in-gold-market-indicate-a-gold-top)

Last week we saw unusually high volumes of short sellers in the COMEX futures market. On Friday, 4th December, we saw the biggest volume of sellers in the SPDR (GLD) ETF in its 5 year history. In four working days, between the 3rd – 8th December, Gold has had a sharp sell off, dropping more than $100. Together, these show the volatility of investment demand and draw into question whether this is a top for the gold price...

The SPDR Gold Shares ETF is the second largest ETF in the world. Today the SPDR holds 1,116.25 tonnes of gold bullion. That’s more than the central banks of Russia, China and India [See the official central bank holdings here].

The size of the ETF means it weighs in with a heavy influence on the gold price. Commodity based ETFs are a fairly recent investment vehicle. Because of their easy access to commodity prices, their popularities have risen sharply in their short lifetime. As they have risen so has the effect of investors who use them. Today traders in the GLD ETF can have a major influence on the price of gold, which is why we turn our heads when they have such huge volumes (volume = number of shares traded during a period).

http://static.seekingalpha.com/uploads/2009/12/10/saupload_comexvol101209_thumb1.png

Can this be the gold price top?

ETFs are attractive to short term speculators because it is an easy way to get exposure to a commodity. Short term traders are, however, much more volatile in the reactions to market news. This means the gold price is partly built on an unstable demand. What we witnessed on Friday and throughout last week was mostly short term traders selling their gold positions on the back of news...

News this week which would have acted as drivers included the Fed Chairman Ben Bernanke claiming that inflation "appears likely to remain subdued for some time."

JPMorgan Chase said, "Fundamentally, the gold price appears over-valued."

Credit Suisse stated "Gold may decline to $900 to $1,000 an ounce by the end of the first quarter next year."

And on Wednesday, 2nd December, the Telegraph reported that the vice governor of the People's Bank of China, Hu Xiaolian said Beijing would not buy gold indiscriminately, suggesting it was in a bubble.

These parts of the news address underlying demand for gold: Bernanke’s claim about subdued inflation addresses the widely held view that gold is an inflation hedge; the banks statements suggest we’re in an overvalued gold bubble; and if a representative of the People’s Bank of China indicates China is unwilling to acquire gold at its current price, investors will remember China is known to need to acquire the yellow metal to bulk up its reserves. They are suppose to be buying on dips. In reaction people have started to sell their positions which has triggered the huge fall we witnessed.

The recent spate of selling will have involved a large amount of day traders and short term traders who have put in place stop losses, seeking to make a return on their profits. The higher the price of gold climbs you'll see a larger amount of stop losses in place as people seek to protect their value. In our opinion only something similar to the Dubai crisis can prevent gold climbing higher.

As with all commodities the path will involve corrections... it will not be a smooth ride to the top. We mentioned last week that the investment demand has led to a much more volatile trader investing in gold. What the spikes in volume indicate is the investment demand that is determining the gold price is much more reactive to other factors happening in the market, and likely to experience wide swings in sentiment. Speculators are looking short term, they are driven by fear. As a consequence the price can unravel rapidly. Whilst the recent events look like a top in the gold price, all bull markets will have corrections. Now doesn’t look like a time to panic... It may continue to decline for the near future, but the fundamentals are still in place and we’ve not seen the end of the giant hangover from quantitative easing. Until then, we do we believe the gold price will, once again, be hitting new highs soon.

=====

Anyone's guess, interesting to watch.

[Loki]

Short term noise, gold has broken through $1,200: http://www.reuters.com/article/usDollarRpt/idUSN0139472320091201

How's the gold investment coming on, Mr chap? ;)

http://img132.imageshack.us/img132/8343/goldm.jpg

SELL!!!11 :D :p

[chap]

Investing in gold or anything is about making a long term call based on the fundamentals and the fundamentals for gold are still positive. I'm happy that most of the (physical) gold I own was got at well under $900/oz. Precious metals will prove to be a good place to be as what will happen in North America and the Eurozone plays out. Silver under $20/oz looks good value. The price of gold denominated in US dollars is still over 30% higher than it was 12 months ago. It seems likely that gold will finish 2009 much higher than where it started, which would be something like the tenth year in a row it has ended higher.

[ikki]

and theres still coming a 1000-1500 tons of gold from the central bank vaults via loans and the banks into the market.
In another 10 years fort knox & european, japanese etc equivalents will be empty.

Then there will be quite a value gain for gold ;)
Unless ofcourse ownership is once more banned by non-governments... this time on a global scale.

[Psychonaut]

Investing in gold or anything is about making a long term call based on the fundamentals and the fundamentals for gold are still positive.

That's it right there. Gold is at minimum a 5-10 year investment. It's most useful as a hedge against inflation, and a safeguard against unforseen currency devaluations.

[Svipdag]

When gold "rallies" it means that the dollar has proportionally slumped. At least in the long term, the value of gold never changes.The changes of price reflect inversely the value of the currency on which the price is based. Of course, fluctuations in short-term trading affect the price temporarily, but, owing to inflation, the overall trend is always upward.

No, the price of gold hasn't peaked. I have seen projections of $10,000 per ounce. If that seems preposterous, consider this. When I first invested in gold
in 1974, it was $200 per ounce. $10,000 bought me 50 ounces of gold. If I hadn't been such a fool as to sell the gold and buy land, I would have $59,000 worth of gold today.

In 1934, just before FDR stole our gold, the price of gold in US dollars jumped abruptly from $20 per ounce to $35. This had nothing to do with the value or scarcity of gold. It represented a major devaluation of the dollar. The Treasury didn't have enough gold to back the fiat money which the government was using to pay for make-work projects which eased unemployment but added not a penny to the GNP .

Roosevelt had to confiscate privately owned gold to bolster a badly faltering dollar. Why do I harshly say "stole" and "confiscated" ? Because much of the confiscated gold, which was all treated as bullion by the Treasury, had numismatic value far in excess of its bullion value. A St. Gaudens $20 gold piece, worth about $50 as a collectible, was "purchased" from its owner for $35 .

A rise in the price of gold, therefore, is good news to investors who have gold, bad news to potential investors in gold, and worse news for the general public, the buying power of whose dollars has decreased.

[chap]

http://dailyreckoning.com/files/2009/12/DRUS12-24-09-1.GIF

I doubt gold will go much below $1k.

2010 will see an explosion in US treasury issuance which is bullish for gold, if foreign appetite isn't there then it's either inflation, a forced rate hike which would crush the 'real economy' or they'll try to collapse the stock market to force a rush to safety.

[Groenewolf]

wwIkBOpx_zM

I myself do not own gold at the moment. However I do own stocks in gold and silver mines and own some gold market indices.

[Northern_Paladin]

Because America's Housing Market is Permanently Depressed. It's has dropped in 2008,2009, and will continue to do so for 2010, and beyond because Frankly no One wants to live in AmeriKa anymore. Turning into a 3rd Cess Pit.

American Wealth has tradionally been died in Housing. Since there is no where left to invest People with Money are going to put their Money into Stocks and Commodities.

Lately the Market has taken a Beating. In the Long term Hard Commodities like Gold,Silver, and Oil are buys. So are Necessary Commodities like Wheat,Meat, and Corn. If the Economy goes up Commodities will go Up. If the Economy goes down Commodities will Still go Up. The World's Population is only Increasing and the World's Resources are only Dwindling.

http://www.barchart.com/futures/Energies

I predict Gold @ $2,000 in 2 years. And Silver @ $70 Dollars an Oz in 2 Years. America is going Bankrupt. We have $1,000 Trillion in Government and Private Debt.

http://www.usdebtclock.org/

[Breedingvariety]

Gold is on the roll now. 864 euros and rising. It's going to $1225, $1600, $2000, $5000, $~. In other words, real money rise in the world of collapsing currencies.

[Svipdag]

Gold never "plummets:". The VALUE of gold never changes. The price varies inversely with the value of the currency in which the price is expressed. In 1934, the price of gold jumped from $20/0z. to $35/oz., not because gold had become any more valuable, but because the buying power of the dollar decreased by nearly 43% because the US Treasury issued silver certificates in excess of the amount of silver it had to back them, in order to pay for Roosevelt's government make-work projects.

That, of course is why Roosevelt had to steal gold from the American public by executive order. I say "steal" advisedly inasmuch as the government paid
for the confiscated gold at the bullion price though much of the gold was in collectible coins having a numismatic value vastly in excess of the bullion value.

It didn't really work. This illegal seizure of private property stabilised the dollar relative to gold but did not make up for the ~43% decrease in the value of the dollar. That is, the price of gold remained $35/oz.

Unsupported fiat money always follows Gresham's Law. The legal tender laws assure that Americans must accept anything which the government calls money. But they are not binding outside the US and the exchange rate of the dollar suffers as "bad money drives out good" in accordance with Gresham's inexorable law.

[Breedingvariety]

Physical Silver is Money - END JP Morgan Chase Ponzi of Debt:
http://www.youtube.com/watch?v=OU80B_5Ee4s&playnext_from=TL&videos=AJMSpt4CUtY

[Breedingvariety]

That, of course is why Roosevelt had to steal gold from the American public by executive order. I say "steal" advisedly inasmuch as the government paid for the confiscated gold at the bullion price though much of the gold was in collectible coins having a numismatic value vastly in excess of the bullion value.
They paid $20 and after they collected as much as they could, they revalued gold to $35. Most people didn't give up their gold and they wouldn't give it up today either.

Gold never "plummets:". The VALUE of gold never changes.
The value of gold depend on supply and demand.

The price varies inversely with the value of the currency in which the price is expressed.
Value of currencies depend on supply and demand. Demand for currencies depend on peoples confidence. In other words- how much people allow themselves to be conned. Currencies collapse when confidence in them vanishes. Otherwise currencies keep going lower because of ever increasing supply.

Ways to make currencies go higher are:
-Deflationary collapse. People lose currency through bankruptcies. Deflationary collapse is usually followed by hyperinflation, because of loss of confidence.
-Taxation for debt repayment. High taxation ruins economy and leads to currency depreciation.
-Mandatory Insurance.
-Collecting currency for social benefits and then going back on promises. (For example 401(k) retirement savings plan is going to be decimated for the benefit of bankers).
-Other government schemes designed to rob population.

In order to increase the value of currencies banksters heve concocted commodities trading schemes like ETFs. They naked short commodities. This is the same as fractional reserve banking except it is done with all traded commodities and especially gold and silver, where their naked short positions amount to 100 shorts for 1 physical ounce in their possession. Gold and silver suppression scheme is important in order to sustain confidence in fiat currencies. Other significant consequence of this scheme is that currency is being locked in ETF commodities market when it could be spent on real things, thus making money demand stay higher then it otherwise would be, because paper is backing paper.

[Breedingvariety]

Gold is anti- bubble right now. When we cease seeing cash for gold adds, parties and kiosks, then we might be in a gold bubble.

Right now, silver is opportunity of a lifetime, IMO.

[Breedingvariety]

The legal tender laws assure that Americans must accept anything which the government calls money.
Legal tender is named after forced tender.

[Breedingvariety]

Goldman Again Buying Gold, Selling Copper As It Lowers Gold Price Forecast, Boosts Copper:
http://www.zerohedge.com/article/goldman-again-buying-gold-selling-copper-it-lowers-gold-price-forecast-boosts-copper

[Groenewolf]

Some interesting recent news (http://www.thedailybell.com/962/Gold-Manipulation-Goes-Mainstream.html) about how the government(s) and certain banks manipulate the gold price to keep it artificially low :


There is no silver lining to the activities of JPMorgan Chase and HSBC in the precious-metals market here and in London, says a 40-year veteran of the metal pits. The banks, which do the Federal Reserve's bidding in the metals markets, have long been the government's lead actors in keeping down the prices of gold and silver, according to a former Goldman Sachs trader working at the London Bullion Market Association. Maguire was scheduled to testify last week before the Commodities Futures Trade Commission, which is looking into the activities of large banks in the metals market, but was knocked off the list at the last moment. So, he went public. Maguire -- in an exclusive interview with The Post -- explained JPMorgan's role in the metals pits in both London and here, and how they can generate a profit either way the market moves. "JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the US dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the US taxpayer," Maguire said. In the gold pits, Maguire sees HSBC betting against the precious metal's price without having any skin in the game in the form of a naked short. "HSBC conducts an ongoing manipulative concentrated naked short position in gold. Silver is much easier to manipulate due to its much smaller [market] size," Maguire added. "No one at JPMorgan is familiar with Andrew Maguire," said Brian Marchiony, a company spokesman. HSBC declined to comment. – NY Post

Dominant Social Theme: Stuff happens, even gold shenanigans.

Free-Market Analysis: Long ago at an international confab, the mainstream press was supposedly thanked by a powerful personage for keeping quiet about various maneuvers leading to world government. But today the mainstream media, led by "conservative" media titan Rupert Murdoch, is fighting furiously to retain its audience and cannot hush up power elite machinations for fear of losing credibility.

[...]

[Breedingvariety]

Still believes:

[Breedingvariety]

Anti- gold bugs who are better known as paper bugs. They are to economics what world peace hippies are to politics.

To put it more clearly- as advancing army can't be stopped by hippies stoned insights so gold can't be stopped by paper bugs economic expertise.

It's the clash of reality and fantasy.

[Groenewolf]

Marketwatch (http://www.marketwatch.com/story/wsj-central-banks-swap-gold-at-record-pace-2010-07-07)


SAN FRANCISCO (MarketWatch) -- Central banks around the world have sold their gold to the Bank for International Settlements at a record pace, according to a report in The Wall Street Journal Wednesday. The bank has taken 349 metric tons of gold (384 short tons) since December, allowing central banks around the world to raise $14 billion. The central banks have entered swaps with the BIS, in which they take loans that would allow them to repurchase gold at a later date. The unlikely prospect that central banks can't make good on the loans, forcing the BIS to sell the gold in the open market, has weighed negatively on gold, the WSJ said.

[The Lawspeaker]

This is a very interesting development. It would mean the centralization of financial power in even fewer hands. It's going at a record pace now is it?

[Groenewolf]

This video is related to silver, but can be interesting to watch since from what I have read a lot of silver this year went to the production of silver buffalo's and in such quantities that the industry will get problems getting their own necessary supplies.

g5fdc75ubOM

[Breedingvariety]

25th of December, 2010. Gold at $1381.70, Silver at $29.15. Accelerated rise of precious metals and decline of financial instruments fakery is visible on the charts.

For curiosity- alleged gold & silver holdings & mining situation in the world:

[Breedingvariety]

From Egon von Greyerz of Matterhorn Asset Management

Hyperinflation Will Drive Gold To Unthinkable Heights

We now live in a world where governments print worthless pieces of paper to buy other worthless pieces of paper that combined with worthless derivatives, finance assets whose values are totally dependent on all these worthless debt instruments. Thus most of these assets are also worth-less.

So the world financial system is a house of cards where each instrument’s false value is artificially supported by another instrument’s false value. The fuse of the world financial market time bomb has been lit. There is no longer a question of IF it will happen but only WHEN and HOW. The world lives in blissful ignorance of this. Stockmarkets remain strong and investors worldwide have piled into government bonds in a perceived flight to safety. Due to a century of money creation (and in particular since the 1970s) by governments and by the fractal banking system, investors believe that stocks, bonds and property can only go up. Understanding risk and sound investment principles has not been necessary in these casino markets with guaranteed payouts for anyone who plays the game. Maximum leverage and derivatives have in the last 10-15 years driven markets to unfathomable risk levels, with massive rewards for the participants.

In the meantime central banks are cranking up the printing presses but as Bernanke recently said quantitative easing is an “inappropriate” description of what should be called “securities purchases”! Who is he kidding? What the Fed is buying has nothing to do with “securities”. There is no security whatsoever in the rubbish the Fed is purchasing. They are buying worthless pieces of paper with worthless pieces of paper. This is the Ponzi scheme of all Ponzi schemes.

Let us be very clear, this financial Shangri-La is now coming to an end. The financial system is broke, many western sovereign states are bankrupt and governments will continue to apply the only remedy they know which is issuing debt that will never ever be repaid with normal money.

So why does the world still believe that the financial system is sound?

* Firstly, because this is what totally clueless governments are telling everyone and this is what investors want to hear.
* Secondly, whether governments apply austerity like in parts of Europe or money printing as in the US, investors want to believe that any action by government is good, however inept.
* Thirdly, market participants are in a state of false security due to shortsightedness and limited understanding of history.
* Fourthly, as long as they can benefit from inflated and false asset values, the market participants will continue to manipulate markets.
* Fifthly, there has been a very skilful campaign by the US to divert the attention from their bankrupt economy and banks `to small European countries like Greece, Ireland or Portugal. These nations, albeit in real trouble, have problems which are miniscule compared to the combined difficulties of the US Federal Government, states, cities and municipalities.

Euro zone members can’t print money. Many EU countries are downgraded by US rating agencies which don’t dare to touch the US rating. The AAA rating of the US is an absolute sham and totally politically motivated. True to form, rating agencies will only downgrade debt once it has become worthless but never before.

Hyperinflation Watch

The result of massive money printing is a collapsing currency, leading to escalating prices and eventually hyperinflation. This is in simple terms how every hyperinflationary period in history has happened. If in addition, there are world shortages of food, energy and other commodities, this will accelerate the process.

There are currently a number of indicators all pointing to escalating money printing and an imminent start of a hyperinflationary era. Here are some of them:

1. Fiscal Gap widening at alarming rates in many major economies.
2. Commodity prices at all-time highs.
3. Long term interest rates rising.
4. Most Currencies falling.
5. Precious Metals at all-time highs against most currencies.

Fiscal Gap

Tax receipts are collapsing and government expenditure soaring in many major economies including virtually all southern European countries as well as in the UK. James Turk has produced on his fgmr.com site two excellent graphs for the USA and the UK showing the extreme severity of these two countries’ deficits.

The USA and the UK are the favourites to reach hyperinflation first amongst major economies. Both these countries will experience major problems in 2011. Also many other nations have unsustainable debt levels which will never be repaid with normal money.

Commodity Prices
Commodity prices have increased 26% in the last 12 months and 77% in the last 24 months based on the Continuous Commodity Index (CCI). So whilst most economies publish inflation rates of 1-3%, the real cost of food and energy is surging. The US government, which doesn’t eat or use energy, recently published the adjusted 12 months’ Consumer Price Index (ex food and energy) of 0.8% per annum. Whilst most people are struggling with a massive increase in their cost of living, the US government is continuously adjusting and manipulating the published figures. There are lies damn lies and US government statistics. Who are they fooling!

Long Term Interest Rates

In spite of US government debt being totally worthless, investors have bought more than ever, with virtually no return, in a world drowning in sovereign debt paper. We have for some time stated that the US bond market is one of the biggest financial bubbles ever. As we forecast back then, the market turned down (rates up) in January 2009. A 14 month correction ended in August 2010. Since then both the 10 year and 30 year US Treasury bonds have moved up one full per cent. So investors are finally waking up to the enormous risks in the financial system by selling government debt. We expect both short and long interest to surge in 2011 in many countries and to reach well into double digits in the next few years.

In spite of interest rates at minimal levels, both sovereign states and individuals have major problems servicing current debt. With interest rates likely to rise to at least 12-15% and probably higher, no one will be able to service debt with “normal money”. Add to that the fact that government debt will surge in most countries. The US debt is currently $ 14 trillion. It is likely to rise to at least $20 trillion in the next few years and probably a lot higher. The interest cost for the US government at that stage is likely to be at least double the tax revenue. One would assume that the US government is well aware of what their ruinous actions are leading to. But in spite of this, they continue to increase the deficit by reducing fiscal revenues and increasing spending. What planet are they living on! What is absolutely self-evident is that they will not clear up their own mess, as the present government will be a one term wonder!

Currencies Declining

Since 1971, the value of the US dollar (paper money) has gone down 97.5% against real money (gold). Since Nixon abolished gold backing of the US dollar in 1971, both the dollar and most other currencies have been totally destroyed by reckless government. Nixon should not have been impeached for Watergate. Instead he should have been prosecuted and jailed for destroying the world’s currency system. Concurrently, banking developed into a fractal system whereby banks could lend massive multiples of their deposits and capital. All of this has served to drive up asset prices to totally unsustainable levels.

All currencies are declining against gold but some faster than others. The US dollar for example is down 78% against the Swiss Francs since 1972. During the same period the pound has declined a massive 85% against the Swiss Franc. Both the dollar and the pound are now at all-time lows against the Swiss currency. But the Swissy is only strong relative to weak paper currencies because against real money/gold the Swiss Franc has declined 87% since 1972.

As a consequence of accelerated money printing, all paper currencies will fall precipitously against gold in the next few years. Therefore all paper money should be avoided and especially the Dollar, the Pound and the Euro.

Precious Metals to reach unthinkable heights

Gold has gone up 40 times against the Dollar in the last 40 years and almost 6 times in the last 11 years. Very few investors have participated in this rise since the 1999 low at $ 250. Less than 1% of world financial assets are invested in gold and gold stocks. Between 1920 and 1980 circa 25% of financial assets were invested in gold and gold stocks.

The major rise in gold in the last 11 years has been a stealth move with very few investors participating. The dilemma is that there is not enough gold to satisfy the coming increase in demand. We have in previous articles forecasted the gold price to reach anywhere between $ 6,000 and $ 10,000 in the next few years – see “Gold entering a virtuous circle”. As we explained at the time, these are totally realistic targets without the effect of hyperinflation.

Bearing in mind that we are likely to see hyperinflation in the US, the UK and many European countries, the $6-10,000 target for gold is much too low. The dilemma is that it is absolutely impossible to predict how much money will be printed by governments. In the Weimar republic gold reached DM 100 trillion. But it is really irrelevant what level gold and other precious metals will reach in hyperinflationary money.

What is much more important to understand is that physical gold (and silver) will protect investors against losing virtually 100% of the purchasing power of their money. Whatever real capital appreciation gold will have in the next few years is of less importance. But what is vital, is that physical gold (stored outside the banking system) is the ultimate form of wealth protection both against a deflationary collapse and a hyperinflationary destruction of paper money.

Throughout history gold has protected investors against various calamities but this time, holding physical gold will be absolutely critical to financial survival.


31st December

Gold Switzerland - Matterhorn Asset Management
http://www.zerohedge.com/article/matterhorn-closes-year-style-hyperinflation-will-drive-gold-unthinkable-heights

[Loddfafner]

As answers to this obvious scam to induce fools to part with their money, please refer to the responses of Lei.talk, myself, and Psychonaut in this thread (http://www.theapricity.com/forum/showthread.php?p=322555#post322555).

[Breedingvariety]

Some day these bubble callers will be right. Probably when they start buying themselves.

[Breedingvariety]

“I have never seen a series like the above end with a whimper or a fizzle,” says the dean of newsletter writers, Richard Russell. “The end or the wind-up of such a series usually arrives with an upside ‘explosion,’ as those who have failed to participate in the series finally rush in to join in the apparent endless advance.

“This is the wild and wooly speculative phase of a great bull market. Big bull markets don’t end with a sigh, they end in exhaustion.”
Just The Beginning: Year-End Gold Price, 2000-2010:

[Loki]

Gold? Silver. Since 2 years ago, the silver price has more than trebled.

[Groenewolf]

Gold? Silver. Since 2 years ago, the silver price has more than trebled.

Yes, traditionally there is a certain relation between the price of gold and that of silver. And based on that there still is a lot of potential for the silver market.

http://www.slimbeleggen.net/wp-content/uploads/2011/03/Deutsche-Bank-goud-zilver-ratio.jpg

[Oreka Bailoak]

Gold is a joke. It should never be larger than about 1-2% of an investment portfolio.

Our markets are no longer mercantile based like in the dark ages. Monetary value is stored in many medians (real estate, bonds, stocks- which are all based on something solid). If you diversify you can eliminate unsystematic risk and your money will be safe in long run investing.

[Breedingvariety]

Marketwatch (http://www.marketwatch.com/story/wsj-central-banks-swap-gold-at-record-pace-2010-07-07)

Central banks around the world have sold their gold to the Bank for International Settlements at a record pace, according to a report in The Wall Street Journal Wednesday. The bank has taken 349 metric tons of gold (384 short tons) since December, allowing central banks around the world to raise $14 billion. The central banks have entered swaps with the BIS, in which they take loans that would allow them to repurchase gold at a later date. The unlikely prospect that central banks can't make good on the loans, forcing the BIS to sell the gold in the open market, has weighed negatively on gold, the WSJ said.
:rolleyes: What a nonsense story. "sold gold at a record pace to raise $14 billion" As if $14 billion mean something. They can be created with a drop of a finger on keyboard in an instant. Actually, that kind of money is being created every day. The real gist of the article is that gold is not valuable and money is and sell your gold before it falls. Such message is commonly imbedded in economic reports. The message being purposeful and reports being baloney.

Yes, traditionally there is a certain relation between the price of gold and that of silver. And based on that there still is a lot of potential for the silver market.

http://www.slimbeleggen.net/wp-content/uploads/2011/03/Deutsche-Bank-goud-zilver-ratio.jpg
I guess the ratio will fall to below 20 before it climbs back up higher.

[Breedingvariety]

If you diversify you can eliminate unsystematic risk and your money will be safe in long run investing.
Diversification is a sign of uncertainty. Concentration is a sign of certainty.

What about certain systemic risk?

[Oreka Bailoak]

Diversification is a sign of uncertainty. Concentration is a sign of certainty.

This is probably the stupidest investing advice I've ever read in my entire life. I suggest that you read the book "A Random Walk Down Wall Street". You will end up losing lots of money if you go into investing without even the most basic understanding of investing.


What about certain systemic risk?
Systematic risk is market risk, undervisfiable risk and aggregate risk. Things such as a meteor destroying half the earth, a breakout war like world war two that almost nobody could predict, or aliens start attacking the planet. In other words if you can time travel and/or predict the future you can know what "certain systematic risk" is. But for us mortals we have no idea what systematic risk is. In investing we assume it at a certain level. It is unavoidable.

That is why the whole point of investing is to reduce unsystematic risk, , diversification risk such as the risk when a certain sector of the economy is broke- like the financial collapse a few years ago. If you had diversified you'd be ok. Systematic risk is mostly undetectable (unless you are the CEO of a major company, but you're still not allowed insider trading or the President of a major country about to be involved in a war or other major news issues that the public doesn't know about). blah blah blah

Really just read that book this is basic stuff.

[Breedingvariety]

This is probably the stupidest investing advice I've ever read in my entire life. I suggest that you read the book "A Random Walk Down Wall Street". You will end up losing lots of money if you go into investing without even the most basic understanding of investing.
That was not an investment advice. Neither is "diversify" an investment advice. Investment advice is what and when to buy or sell. Even robot could say "diversify".

I'm not going into investment as I don't want to lose money because I'm not an insider.

Systematic risk is market risk, undervisfiable risk and aggregate risk. Things such as a meteor destroying half the earth, a breakout war like world war two that almost nobody could predict, or aliens start attacking the planet. In other words if you can time travel and/or predict the future you can know what "certain systematic risk" is. But for us mortals we have no idea what systematic risk is. In investing we assume it at a certain level. It is unavoidable.
Systemic risk is too much debt, consequences of which is usually blamed on staged "unforeseen" political events.

[Oreka Bailoak]

That was not an investment advice.
Yes it is. Investing is based on statistics.


Neither is "diversify" an investment advice.
It's the single most important rule of investing.


Investment advice is what and when to buy or sell.
Actually this is not true. Read the book "A Random Walk Down Wall Street". The timing of recessions, and ups and downs, cannot be determined with certainty. Economists, market analysts, investment analysts can only determine if something is overvalued and has the potential of creating a bubble burst. Look at the charts in that book "A Random Walk Down Wall Street" and you will see that even the billion dollar investment companies CANNOT beat the market year after year! If billion dollar companies cannot time the market correctly you also will not be able to time the market correctly. This is because NOBODY can predict the correct time to sell and buy investments better than a randomly selected and well diversified stocks/bonds.


Even robot could say "diversify".
Which is what makes it so great- it's simplicity.


I'm not going into investment as I don't want to lose money because I'm not an insider.
You don't have to be an insider to make money. The market increases at something like 7% a year for the past 200 years. It is like a snowball that will not stop. If you don't want to hop on the ride then you're missing out making money.

One of the most important things that many people get frustrated with about investing is that they don't understand it. But the problem is that they are trying to understand things that CANNOT be understood. Even the hundreds of structural and technical analysts at the major banks- whose entire job is to analyze data and predict future revenues (which is an area that I studied in college) cannot out preform a basic market index. This is because they cannot predict the future values better than a person randomly selecting diverse stocks/bonds.

All you need to know is that when you average all the bonds/stocks on the stock market they go up at 7-8% a year on average. If you invest 1,000 today you will probably earn 70 by the end of the year. If you invest 1,000,000 you will earn 70,000 by the end of the year. Add to that compound interest and you can get very rich like a snowball in 20-30 years time. If you play modestly without greed, you will make lots of money. Don't try to understand things that nobody can predict which are the ups and downs- it's like trying to determine on today, what days it's going to rain next year.

[Breedingvariety]

It's the single most important rule of investing.
Rule is not the same as advice. But "diversify" isn't even a rule. Rule would be something all investors abide to. But some investors might concentrate. Diversify or concentrate are principles of investment strategy.

Suppose there are only two investment options: X & Y. Somebody thinks X is going to perform better than Y. Then he would invest in X. There is no point to invest in something that would perform worse or even make a loss. Somebody else has no idea which would perform better so he diversifies. In that case diversification is reasonable strategy. Wheres in the first case investment is made based on something and can be wrong, in the second case investment is made based on assumption- nothing can be known or predicted and it can't be right.

[Oreka Bailoak]

Rule is not the same as advice. But "diversify" isn't even a rule. Rule would be something all investors abide to. But some investors might concentrate. Diversify or concentrate are principles of investment strategy.
LOL


Suppose there are only two investment options: X & Y. Somebody thinks X is going to perform better than Y. Then he would invest in X. There is no point to invest in something that would perform worse or even make a loss. Somebody else has no idea which would perform better so he diversifies. In that case diversification is reasonable strategy. Wheres in the first case investment is made based on something and can be wrong, in the second case investment is made based on assumption- nothing can be known or predicted and it can't be right.
lol- really buy that book I told you about. In terms of small business investing situations do happen where people must decide upon funding business plan A or business plan B. But in stock market investing this is NEVER the case- the model you used doesn't fit with stock market investing for reasons you can understand in that book I told you about.

"A Random Walk Down Wall Street" - To understand the theory behind investment decisions in the stock market; like diversification.

Right now it's like trying to talk about the benefits of using an autoregressive integrated moving average to predict future stock performance with somebody who has no experience in statistics without using a text book or any examples- it just doesn't work. You will never understand until you study the basics of finance/investments more. I don't mean this as an insult- I was at the same stage you're at a mere 3 years ago myself. Read read read- start with that book.

[Breedingvariety]

A "contrarian" view.



A golden opportunity beckons but can the metal keeps its shine
Investors turn to gold in times of trouble, but the herd instinct has run riot

GOLD is a bubble and wise inves-tors would do well to avoid its charms. You would think that in this country, after getting so badly burned by the property bubble, we would be wise to another ballooning bubble. But not a bit of it.

As in a lot of countries at the moment, gold is proving to be a very popular investment.

Investors generally buy gold as a hedge against any economic or currency crises. But gold is displaying the classic characteristics of a bubble, and investors need to be careful that this is not the year that it bursts.

A bubble occurs when a particular investment performs particularly well. This tends to draw the attention of investors. This in turn leads to more money being put into the investment which causes further price rises.

Investors get even more confident. This leads to an upward spiral that takes prices far above the levels which can be justified by any rational assessment of the real value of the future cash flows an investment may generate.

The gold bubble could stay inflated for a while. But that doesn't make gold less speculative and risky than it was a year ago.

However, investors need to note that you will never look too wise tying to call a bubble.

This week gold tipped over $1,500 an ounce, up from less than $500 just five years ago. That works out an eye-popping annualised return of 23pc.

Fear is driving the price ever upwards. Investors have always turned to gold in times of trouble, but it is questionable if rises like this can be maintained.

If you like bling, then gold is the thing.

But if you are buying gold as an investment you need to consider that it is nothing more than a bet that someone else will be prepared to pay more for it tomorrow than you did.

Heydays

This year could mark the last of the heydays for gold, warns Pat McCormack of Barclays Bank Ireland.

"The dollar isn't about to collapse, hyperinflation is not lurking around the corner, the gold price has already risen a long way and there is no yield -- nor any prospect of one.

"It wouldn't be a surprise to see gold at some stage fall by 20pc to 30pc if investors were to regain confidence in other assets."

You should never have more than 5pc of your investment portfolio in gold. This is especially so as gold has few industrial uses.

Almost every industrial use of gold is also an industrial use of silver. Since silver is much cheaper than gold you can imagine that people would rather use silver than gold for industrial purposes.

And gold does not pay you a return, unlike a share or a deposit.

With a share you have some hope of getting your money back over time from dividends.

In fact, if gold were a house, it would be one you could not live in and could not get rent from.

One of the richest men in the world, and truly the most successful investor of our time, Warren Buffett, is not a gold bug.

Speaking about gold, he said recently: "Look, you could take all the gold that's ever been mined and it would fill a cube 67 feet in each direction.

"For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal.

"Which would you take? Which is going to produce more value?"

It is hard to argue against the Sage of Omaha.


Thursday April 21 2011
Charlie Weston Personal Finance Editor
http://www.independent.ie/business/stocks-markets/a-golden-opportunity-beckons-but-can-the-metal-keeps-its-shine-2625908.html

[Breedingvariety]

Wall Street Laughs At Main Street:
http://www.youtube.com/watch?v=MjVCdPwE7XA

Blythe Masters of JP Morgue Rides The Silver Rocket
http://dont-tread-on.me/blythe-masters-of-jp-morgue-rides-the-silver-rocket/

[The Lawspeaker]

Wall Street Laughs At Main Street:
http://www.youtube.com/watch?v=MjVCdPwE7XA
This is the Flemish TV with a fake translation provided. It's about someone who accidentally got castrated. Because it is a very unfunny video which is used now for political propaganda I have reported the video.

[Breedingvariety]

This is the Flemish TV with a fake translation provided. It's about someone who accidentally got castrated. Because it is a very unfunny video which is used now for political propaganda I have reported the video.

If I'm not mistaken, somebody has posted the video on theapricity for fun.

Propaganda that is warning people. Since when are you pro- Wall Street?

[The Lawspeaker]

I am far less Pro-Wallstreet then libertarians are. But I recognise propaganda and flagrant abuse of foreign tv for political propaganda when I see it.