Gold Down

[Eugene]

It has done exceptionally well lately when you compare it to other commodities. If it holds up in price, the mining companies can make good incomes again. Especially if oil trends down. Mines are energy intensive ventures.

It’s a relatively useless metal, and its main consumer (jewelry) has been thoroughly squeezed out of the market. So it naturally does not suffer as much as oil or platinum from the global commodity slowdown.

For the same reason it will not enjoy as big a bounce (if any at all) when the recession is over. On the contrary, investors will rush for the exits.

For the last 12 months gold had a strong negative correlation (-2 or more) with the dollar index.

http://tinyurl.com/3fv28u

Correlation -2 means that, when dollar gains 1% against other world currencies, gold price falls 2% in dollars and 1% in other currencies. It did not crash like silver because industrial demand is not a major contributor to its price.

Right now gold is higher than it should be based on this dollar index principle. But if GLD gets into 75 range again, I’d start buying.

[stockstradr]

Betting with gold against a fiat currency in the hands of politicians is the biggest no-brainer on the planet! Whee! This investing stuff is easy!

I absolutely agree with that.

Now, someone wrote that if the bail out FAILS tomorrow, then gold will RISE. You think so, eh? You coul be right but recent evidence suggests NOT.

Many expected a flight to gold on Sept 29th, the first time the Senate FAILED to pass the bail out.

Apparently you have NOT looked at the gold charts for Sept 29 -> 30, to see what actually happened.

Gold did NOT rise in response to bail out failing in the Senate.

I think the only way gold rises against accelarating deflationary pressures is IF we have real signs of total financial meltdown (beyond what we’ve already seen) and that scares everyone so deeply they run to gold.

[stockstradr]

Betting with gold against a fiat currency in the hands of politicians is the biggest no-brainer on the planet! Whee! This investing stuff is easy!

I absolutely agree with that.

Now, someone wrote that if the bail out FAILS tomorrow, then gold will RISE. You think so, eh? You coul be right but recent evidence suggests NOT.

Many expected a flight to gold on Sept 29th, the first time the Senate FAILED to pass the bail out.

Apparently you have NOT looked at the gold charts for Sept 29 -> 30, to see what actually happened.

Gold did NOT rise in response to bail out failing in the Senate.

I think the only way gold rises against accelarating deflationary pressures is IF we have real signs of total financial meltdown (beyond what we’ve already seen) and that scares everyone so deeply they run to gold.

[stockstradr]

Betting with gold against a fiat currency in the hands of politicians is the biggest no-brainer on the planet! Whee! This investing stuff is easy!

I absolutely agree with that.

Now, someone wrote that if the bail out FAILS tomorrow, then gold will RISE. You think so, eh? You coul be right but recent evidence suggests NOT.

Many expected a flight to gold on Sept 29th, the first time the Senate FAILED to pass the bail out.

Apparently you have NOT looked at the gold charts for Sept 29 -> 30, to see what actually happened.

Gold did NOT rise in response to bail out failing in the Senate.

I think the only way gold rises against accelarating deflationary pressures is IF we have real signs of total financial meltdown (beyond what we’ve already seen) and that scares everyone so deeply they run to gold.

[stockstradr]

Betting with gold against a fiat currency in the hands of politicians is the biggest no-brainer on the planet! Whee! This investing stuff is easy!

I absolutely agree with that.

Now, someone wrote that if the bail out FAILS tomorrow, then gold will RISE. You think so, eh? You coul be right but recent evidence suggests NOT.

Many expected a flight to gold on Sept 29th, the first time the Senate FAILED to pass the bail out.

Apparently you have NOT looked at the gold charts for Sept 29 -> 30, to see what actually happened.

Gold did NOT rise in response to bail out failing in the Senate.

I think the only way gold rises against accelarating deflationary pressures is IF we have real signs of total financial meltdown (beyond what we’ve already seen) and that scares everyone so deeply they run to gold.

[stockstradr]

Betting with gold against a fiat currency in the hands of politicians is the biggest no-brainer on the planet! Whee! This investing stuff is easy!

I absolutely agree with that.

Now, someone wrote that if the bail out FAILS tomorrow, then gold will RISE. You think so, eh? You coul be right but recent evidence suggests NOT.

Many expected a flight to gold on Sept 29th, the first time the Senate FAILED to pass the bail out.

Apparently you have NOT looked at the gold charts for Sept 29 -> 30, to see what actually happened.

Gold did NOT rise in response to bail out failing in the Senate.

I think the only way gold rises against accelarating deflationary pressures is IF we have real signs of total financial meltdown (beyond what we’ve already seen) and that scares everyone so deeply they run to gold.

[peterb]

Yes, I think stockstradr is right about the panic aspect. Deflationary pressure is a real price killer. if you look at gold in most recessions, it goes down with everything else. And esmith as well about the valuation aspect. But Bob Hoye, the walking economic history encyclopedia, points out that after a massive credit bubble has burst like in 1873 and 1929, gold does very well in real terms. Well, it’s a little hard to tell in 1933 because FDR raised the price from $21 to $35 over night. And in a depression, no less!!
But he claims that central banks will become so crazy with currency creation in an effort to “solve” the problem that people will lose faith in the currencies and go back to gold as in a defacto standard of the market.
No one can predict the future, but I do see central bankers going nuts and I do see massive deflation as well. So, if gold gets in the $700’s I’ll probably increase my position. But in the meantime, the US$ is treating me ok. But it wasnt for 4 years! I guess timing really is everything.

[peterb]

Yes, I think stockstradr is right about the panic aspect. Deflationary pressure is a real price killer. if you look at gold in most recessions, it goes down with everything else. And esmith as well about the valuation aspect. But Bob Hoye, the walking economic history encyclopedia, points out that after a massive credit bubble has burst like in 1873 and 1929, gold does very well in real terms. Well, it’s a little hard to tell in 1933 because FDR raised the price from $21 to $35 over night. And in a depression, no less!!
But he claims that central banks will become so crazy with currency creation in an effort to “solve” the problem that people will lose faith in the currencies and go back to gold as in a defacto standard of the market.
No one can predict the future, but I do see central bankers going nuts and I do see massive deflation as well. So, if gold gets in the $700’s I’ll probably increase my position. But in the meantime, the US$ is treating me ok. But it wasnt for 4 years! I guess timing really is everything.

[peterb]

Yes, I think stockstradr is right about the panic aspect. Deflationary pressure is a real price killer. if you look at gold in most recessions, it goes down with everything else. And esmith as well about the valuation aspect. But Bob Hoye, the walking economic history encyclopedia, points out that after a massive credit bubble has burst like in 1873 and 1929, gold does very well in real terms. Well, it’s a little hard to tell in 1933 because FDR raised the price from $21 to $35 over night. And in a depression, no less!!
But he claims that central banks will become so crazy with currency creation in an effort to “solve” the problem that people will lose faith in the currencies and go back to gold as in a defacto standard of the market.
No one can predict the future, but I do see central bankers going nuts and I do see massive deflation as well. So, if gold gets in the $700’s I’ll probably increase my position. But in the meantime, the US$ is treating me ok. But it wasnt for 4 years! I guess timing really is everything.

[peterb]

Yes, I think stockstradr is right about the panic aspect. Deflationary pressure is a real price killer. if you look at gold in most recessions, it goes down with everything else. And esmith as well about the valuation aspect. But Bob Hoye, the walking economic history encyclopedia, points out that after a massive credit bubble has burst like in 1873 and 1929, gold does very well in real terms. Well, it’s a little hard to tell in 1933 because FDR raised the price from $21 to $35 over night. And in a depression, no less!!
But he claims that central banks will become so crazy with currency creation in an effort to “solve” the problem that people will lose faith in the currencies and go back to gold as in a defacto standard of the market.
No one can predict the future, but I do see central bankers going nuts and I do see massive deflation as well. So, if gold gets in the $700’s I’ll probably increase my position. But in the meantime, the US$ is treating me ok. But it wasnt for 4 years! I guess timing really is everything.

[peterb]

Yes, I think stockstradr is right about the panic aspect. Deflationary pressure is a real price killer. if you look at gold in most recessions, it goes down with everything else. And esmith as well about the valuation aspect. But Bob Hoye, the walking economic history encyclopedia, points out that after a massive credit bubble has burst like in 1873 and 1929, gold does very well in real terms. Well, it’s a little hard to tell in 1933 because FDR raised the price from $21 to $35 over night. And in a depression, no less!!
But he claims that central banks will become so crazy with currency creation in an effort to “solve” the problem that people will lose faith in the currencies and go back to gold as in a defacto standard of the market.
No one can predict the future, but I do see central bankers going nuts and I do see massive deflation as well. So, if gold gets in the $700’s I’ll probably increase my position. But in the meantime, the US$ is treating me ok. But it wasnt for 4 years! I guess timing really is everything.

[partypup]

Gold and silver are being manipulated by central banks on a massive scale. I’ve been hearing about metals shortages for months now, but I experienced it first-hand today. I called my broker to buy 10K in silver, and he told me that as of two (2) days ago, a restriction was instituted by Fidelitrade that limits purchase of silver to 500 ounces per account.

No exceptions!

The U.S. mint has stopped selling almost all of its gold products, including gold Eagles.

At the end of the day, the laws of supply and demand will prevail.

You simply cannot long suppress the price of something that is clearly in short supply. The smoke eventually clears, and the mirrors one day break.

Metals are the only honest money left. The paper will go up in flames. I only keep enough in dollars to tide me over until people realize they are worthless. Then everyone will turn to gold and silver — and food, liquor and cigarettes.

Just watch.

[partypup]

Gold and silver are being manipulated by central banks on a massive scale. I’ve been hearing about metals shortages for months now, but I experienced it first-hand today. I called my broker to buy 10K in silver, and he told me that as of two (2) days ago, a restriction was instituted by Fidelitrade that limits purchase of silver to 500 ounces per account.

No exceptions!

The U.S. mint has stopped selling almost all of its gold products, including gold Eagles.

At the end of the day, the laws of supply and demand will prevail.

You simply cannot long suppress the price of something that is clearly in short supply. The smoke eventually clears, and the mirrors one day break.

Metals are the only honest money left. The paper will go up in flames. I only keep enough in dollars to tide me over until people realize they are worthless. Then everyone will turn to gold and silver — and food, liquor and cigarettes.

Just watch.

[partypup]

Gold and silver are being manipulated by central banks on a massive scale. I’ve been hearing about metals shortages for months now, but I experienced it first-hand today. I called my broker to buy 10K in silver, and he told me that as of two (2) days ago, a restriction was instituted by Fidelitrade that limits purchase of silver to 500 ounces per account.

No exceptions!

The U.S. mint has stopped selling almost all of its gold products, including gold Eagles.

At the end of the day, the laws of supply and demand will prevail.

You simply cannot long suppress the price of something that is clearly in short supply. The smoke eventually clears, and the mirrors one day break.

Metals are the only honest money left. The paper will go up in flames. I only keep enough in dollars to tide me over until people realize they are worthless. Then everyone will turn to gold and silver — and food, liquor and cigarettes.

Just watch.

[partypup]

Gold and silver are being manipulated by central banks on a massive scale. I’ve been hearing about metals shortages for months now, but I experienced it first-hand today. I called my broker to buy 10K in silver, and he told me that as of two (2) days ago, a restriction was instituted by Fidelitrade that limits purchase of silver to 500 ounces per account.

No exceptions!

The U.S. mint has stopped selling almost all of its gold products, including gold Eagles.

At the end of the day, the laws of supply and demand will prevail.

You simply cannot long suppress the price of something that is clearly in short supply. The smoke eventually clears, and the mirrors one day break.

Metals are the only honest money left. The paper will go up in flames. I only keep enough in dollars to tide me over until people realize they are worthless. Then everyone will turn to gold and silver — and food, liquor and cigarettes.

Just watch.

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