Reply to: The shiny metal, India may buy more...

[Fishface]

go on ebay and search 'scrap gold'

it's all there.


just looked at that blog


is this real or made up, he says they went from 1st world country to 3rd world in 8 years !

is he exagerating that stuff ?


Milan.

Take a HUGE pinch of salt with what (all lot) argentines say.

Ask 'so where is all that money you got from the IMF?' and you will get reams of BS about the 'economy' - the real answer is it 'privatised' in numbered accounts in Uruguay. And a lot of the 'lower middle class' got burnt because they bought into a ponzi scheme called 'Italian' or 'goverment' bonds that gave a retun of +/- 40% annually!! wow! - all their gains were 6% but dreamed of getting 40% and spent accordingly thus all the whining and bleating about whatever.

And the petty obsession with gold - they think they are being really smart by pawning gold coins and buying them back after a period of hyper inflation and somehow the gold houses don'y know what they are attempting to do(!).

the 'hand of god' syndrome is deeply embedded in their culture long before Maradonna.

It has never been a first world country - I lived there once - nice people but sheeeeezz do they BS.

[TimberWolf]

I'm not chasing the price at the moment. Will buy on any dips, otherwise I'll stick with me 2 Kilos worth.

If Gordon were in charge of science, the value of the kilogram would be inflatable and your 2kg would soon weigh 4kg. Then we would all be rich. I like the way that article defined the low point of gold as when Gordon sold ours.

[DimPrawn]

I'm not chasing the price at the moment. Will buy on any dips, otherwise I'll stick with me 2 Kilos worth.

[TimberWolf]

TW,

are you a leader or a follower ?

Milan.

Too late to be a leader now.

[Moscow Mule]

I would like to buy gold but I suspect as soon as I will buy
it will drop like a stone. All my investments do that .

Quick - buy loads. I could do with a drop...

[Andy2]

I would like to buy gold but I suspect as soon as I will buy
it will drop like a stone. All my investments do that .

[milanbenes]

TW,

are you a leader or a follower ?

Milan.

[TimberWolf]

...Gold's top is a long way off...

So why aren't they buying gold instead of spending valuable gold buying time writing articles, working for a living, etc?

Have you bought any recently, or are you planning to buy more soon?

[DimPrawn]

Gold could reach $6000 a ounce

On January 21, 1980, after a decade of Western economies stumbling from one economic crisis to another, gold spiked to a high of $850 an ounce at the London PM fixing. That price wouldn’t be seen again for another 28 years.

One man, Jim Sinclair, sold all his gold the very next day, netting some $15m ($40m in today’s dollars). How did he manage to time the market so perfectly? “I think I just got sober one day before everyone else,” was his explanation in a 2002 interview.

But mathematician Tom Fischer of Heriot-Watt University reckons he had a model to base his decision on. Today, I want to take a look at that model, alongside a recent report from Société Générale on gold, and see what they suggest about just how high gold could go this time around.

After the Bretton-Woods agreement at the end of World War II, the US dollar was supposed to be interchangeable with gold at a rate of $35 an ounce. However, in the 1960s the French became concerned that, to pay for their new welfare state and the Vietnam war, the Americans had allowed many more dollars to be issued than they had gold to back them. The French were, rightly, concerned about the impact this would have on the value of their US dollar reserves, so they began exchanging them for gold. The central banks of Belgium, the Netherlands, Germany and even Britain in 1970 followed suit, ushering in gold’s great bull market of the 1970s, during which it rose from $35 an ounce at the collapse of Bretton Woods in 1971, to $850 in 1980.

Today China is the one expressing concerns about the weak dollar. China has increased its gold holdings. Russia has followed suit and last month India bought 200 tons from the International Monetary Fund (IMF). Some have suggested that this purchase marks the top of the market, just as Gordon Brown’s sale marked the bottom. But already gold is almost 10% higher.

Dylan Grice of Société Générale writes: “Gold feels frothy today, but the Indian purchase of IMF gold eerily parallels the French purchases of the late 1960s. And ill policy winds are blowing in its favour. With the precious metals consultancy GFMS estimating that central banks will be net buyers of gold for the first time since 1988, have the Indians just sounded the same starting gun the French did in 1965?”

In 1980, at $850 an ounce, the market value of the 260m ounces of gold said to be held in Fort Knox (there has been no independent audit since the Eisehower era) reached $221bn. Yet only some $160bn paper dollars were in issue. American gold was actually worth 140% of American paper. So low was confidence in modern fiat money, that the free market had effectively put the US back onto a gold standard. One Zurich banker declared, “The US Treasury is once again solvent, thanks to the high price of gold.” Was that what caused Sinclair to sell?

With central banks today printing money like mad, they run the risk of a similar destruction of confidence. So if gold was forced up to a price that reflects the number of US dollars in issue, what price would it be then?

Grice reckons around $6,300 an ounce. With 260m ounces of gold held by the US and the Fed’s monetary base currently $1.7 trillion (and printing), I make it a mite higher at $6,538.

To get back to that 140% high of 1980, then my O-level maths suggests a figure above $9,000 an ounce – assuming no more dollars are printed. But that is the great irony: the more dollars that are printed, the lower confidence in the dollar will fall, and the more likely this extreme scenario becomes. Moreover, the more dollars that are printed, the higher the gold price needed to back them becomes.

According to Fischer, Sinclair’s model is slightly different. In March 2009, Sinclair wrote that gold’s role “during periods of monetary stress” is to “balance the international balance sheet of the USA”.

Using the Fischer-Sinclair model (read Fischer’s article in full here), there is currently some $3,400bn of Federal debt held by foreign investors (source: US Dept of the Treasury, Financial Management Service). If we divide that by the 260m ounces of gold held by the US, we arrive at a figure of $13,076 per ounce. But, of course, US Federal Debt is rising exponentially, as the chart below shows, so that potential gold price is forever increasing.

Currently, the Americans’ 260m ounces of gold at $1,150 an ounce comes to about 17.5% of the Fed's monetary base. The all-time low was in 2001 at about 12%, according to SocGen’s Grice. If you prefer the Fischer-Sinclair model, gold amounts to just 8.55% of its external debt.

In any case, there’s a long way to go before the amount of gold the US holds in any way reflects the quantity of dollars on issue. Even at $1,150 an ounce Fischer says, “it is no exaggeration to say that the current price of gold is very cheap in terms of money supply”.

Though it is the path we appear to be on, there is of course absolutely no guarantee whatsoever that the gold price will come to reflect the US Federal Reserve Monetary Base or its external debt. But should it ever exceed it, as it did in 1980, and there are also signs of financial sobriety returning to the establishment, then that will be the time to offload your gold. But any such top – should it ever occur – is still years away.

As they take on more and more debt, governments and central banks are doing nothing to stop this bull market and everything to inflame it. The longer it goes on (eight years so far) the greater, the more ridiculous and the more out of touch with reality valuations will be at its peak.

There will be more 20% and 30% corrections en route, when people will declare that it was all a bubble, but then gold will creep up again. And it will keep creeping up until governments and central banks properly purge the system and we get back to the next cycle of growth – at which point gold will be just about the worst thing you can possibly own.

But that time is a long way off.

[Moscow Mule]

is he exagerating that stuff ?


Milan.

I shouldn't think so. The Argentine Peso collapsed, along with almost their entire country - food riots etc.

[milanbenes]

go on ebay and search 'scrap gold'

it's all there.


just looked at that blog


is this real or made up, he says they went from 1st world country to 3rd world in 8 years !

is he exagerating that stuff ?


Milan.

[Moscow Mule]

Wouldn't scouring eBay and charity shops be a better approach, seeing as you're only going to get scrap value anyway?

Probably, I'm looking for an Elizabeth Duke wholesaler really...

[Scary]

Wouldn't scouring eBay and charity shops be a better approach, seeing as you're only going to get scrap value anyway?

[TimberWolf]

if you are suggesting to buy small rings because they offer a smaller denomination than it confirms comments a man from the bank made a couple of years ago, he was basically saying it's ok having krugers and bars, but if you are preparing for a disaster then krugers won't be much good when you want to buy a loaf of bread, meaning what will you do, hacksaw a small piece off the kruger to pay for the bread, so he was basically saying if you are planning for a disaster you need to also keep shiny metal in much smaller denominations which I guess from the above, owning the gold rings solves this problem

please provide the link to the blog

Milan.

http://annoyedwhitemale.squarespace....rban-survival/

He made lots of interesting suggestions there, although I don't recall them all now.

Re gold rings, you take a big financial hit if things don't go very pear-shaped. Seems like an expensive way of buying gold otherwise.

[EternalOptimist]

if you are suggesting to buy small rings because they offer a smaller denomination than it confirms comments a man from the bank made a couple of years ago, he was basically saying it's ok having krugers and bars, but if you are preparing for a disaster then krugers won't be much good when you want to buy a loaf of bread, meaning what will you do, hacksaw a small piece off the kruger to pay for the bread, so he was basically saying if you are planning for a disaster you need to also keep shiny metal in much smaller denominations which I guess from the above, owning the gold rings solves this problem

please provide the link to the blog

Milan.

The man who fell to Earth understood this. Just his wits and a pocket full of gold rings


Fainted? Mister, I thought you were dead