Where is Gold going....

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MiguelRosas

Well-known member
Joined
Feb 15, 2011
Messages
89
Location
Dallas, TX
Where the heck is gold going?

So before I was in the PM business, I was a Financial Advisor. We all know that the stock market and investment decisions really are educated guesses since nobody can control or predict future events.

With this "flight to safety" mentality, hedge funds, mutual funds, and retail investors are dumping billions into the Gold market - is this artificially inflated? And if so, how long will it last?

Nobody talks about the recession anymore, but clearly unemployment and the housing market show that it's still a bad economy....

Does Gold have what it takes to make $2,000, dare I say $3,000???
 
Well you have to ask yourself If we are passed peak gold or before it. There is only so much of it there for once you hit the peak meaning more gold has been discovered than is left. The only place gold can go is up. But if there are major gold veins left un-tapped and not discovered then there is the ability for it to go down. As technology gets better and we can dig and see deeper into the earths crust and the bottom of ocean floors. But even PEAK Production of a commodity is still well relative speculation.

I actually saw a quote that in 2008 if you where to recycle all of the cell phones thrown away you would have 80 billion worth of PM's. So as for where the gold is going if everyone is buying bullion gold to sit in a safe some where then it will drive the market up because manufacturers will still need a supply of it for the products.

I figure that it is some sort of bubble simply because to much is going into bank vaults faster then it is coming out of the ground. Eventually when the time is right all that gold in the safes and dark closets around the world will start to come back out bringing down the market.

Just my thoughts and are not backed by anything other than research, questions asked, and lots ear to the ground :)

Regards
Ross
 
I come at PMs from that angle as well, though I am also very interested in refining.

IMHO when you ask "where is gold going" you should also ask "and when?"

My belief is: There will be a period of time in which serious deflation will occur, and I think that happens first. "Deflation"?? Yes, despite all the money printing going on and the worldwide race to the bottom of currency debasement (which we would think would produce serious INflation...and it certainly seems that way now) I happen to believe that there will be a period in which dollars will become very scarce, meaning, very valuable. We do not see this in celery or gasoline but the loss in dollar value of real estate will blow away what we see in consumables. Much of this loss in RE values has of course occurred, but is not over by any means. We have not seen the phase of a depression where massive, massive liquidation occurs. In this phase, assets such as houses and buildings and machinery are sold for whatever they can fetch. We have not seen this in depth because the banks and Fannie & Freddie have not been forced to mark real estate assets to market due to FASB 157. They are carrying gargantuan assets at fictitious valuations. If the banks were forced to mark their REO assets to market, they would be vaporized, instantly. Wells Fargo, for example, is carrying tens of thousands of second mortgages on underwater residential real estate, the total amount of which is far greater than their market capitalization. The proper description of a second mortgage on a badly underwater piece of residential real estate is "worthless".

During this period, and also in consideration of the possibility of a Euro collapse in our immediate future, it is very likely that PMs will collapse. I know we are all fans of PMs, but this possibility should not be ignored even if you think my view is completely asinine. If the Euro collapses, the dollar would unquestionably strengthen, and probably by a lot. FInancially, eg; as trading elements, PMs often act rather leveraged even though they are not thought of that way. Again, this is counterintuitive or I should say counter to the prevailing propaganda. Silver has doubled in the past 6 or so months. Has the dollar been cut in half? No way.

Continuing with the "grand theory", I believe the effort will keep going to place the majority of the vast amounts of mortgage banking fraud that have occurred in the US past the statute of limitations. And sometime in the future, PMs will THEN reflect the inflationary forces that cannot be postponed. At that point, there is no real way to determine how high PMs could go. $3000 is easy, but if gold were to reflect the amount of currency that has been created over the past 30 or so years, $15,000 is not out of the question. Of course that is an apparently ludicrous number, but a loaf of bread might be $50 at that time.

Obviously, the use of dollars as a standard of measurement is the part that confuses our brains.
 
Element and Rmi2416 -

You both bring valid points and opinions in regards to the global economy, and the impact of what seems to be un-related at first (but is ultimately directly interconnected) on the PM market.

I do believe that the Gold standard is a joke, but simply being able to print money has lead us to the position we are in today - so having some form of backed currency by a PM would be ideal. However, if we are beyond the "peak" of gold production, and the commodity is running low on supply then naturally the price will increase but what's to stop these financial giants from dumping their Gold position at some high number (let's say) $4,000oz, flooding the market with more supply than can be absorbed - forcing the price to drop drastically, leaving all the small players to ask "What the Hell just happened?"

And naturally when Joe Smith decides to cut his losses, and sell at $700 oz - Mr. Wall Street buys all the "unwanted" gold driving the price back up, and the circle continues.

This happens daily with countless produceable goods (like corn, etc), yet Gold is a limited commodity (like oil) and i can't help but wonder when financial firms will (for the most part) eliminate their Gold, Silver, Platinum positions when the world economy begins to show a steady increase in growth once again.

IMO there is still a good 2 years of slow, steady growth in PM's - but I would not be surprised if a major dip tests the "bottom" of the gold market before the end of the year.
 
Well one of the elements of owning physical PMs is that it is very difficult to get panicked out on a dip, like one might on SLV or GLD. I've been buying silver since $6 and have bot at $7, $9, $11, $13, $15, $17, $21, $24, $29 and $35 and with only the single exception of 20 silver dollars at Ag = $40, never paid or really even believed a silver price over $35. I just know the personality of the metal too well and I could see it was in a bubble over $40, even near $40. At $6-$7-$9, I was fully of the belief that one could not then and can not now drag the material out of the ground, smelt it, assay it, weigh it, and coin or ingotize it into a tradeable form for that money. It wasn't at all that it was a precious metal. It was like a slice of baloney for 1 cent. You cannot raise the cow, feed the cow, slaughter the cow, package the meat, and deliver the meat to a market for 1 cent, it is below the cost of production.

And, I also have sold silver, at $18, $28, and $39. Do I regret selling at those lower prices? Yeah, some.

What you say about what might happen in a "raid" where big holders dump large amounts in an effort to drive down prices is I suppose possible. But if you are going to say that is possible, then you should also consider that if we are conscious owners of PMs for EITHER of those hyperinflationary & "preservation of purchasing power" outcomes, then we have traded our USDs voluntarily for that/those eventual outcomes. We do not know and can not know if those outcomes will occur next year or in 2-3 years or....ever. In one sense, we are speculators, but we are not avid sellers on a small incremental price ramp. In my case, sure, maybe I will peel off 10% of my total (which is what I did at $18 and $28 and $39) but I will never be all the way out of silver. And by the way, after selling some at $18 I started buying again. I am not the kind of speculator (at least as far as Ag is concerned) who sells on a spike; I am speculating on the eventuality or the possibility that our current money system will collapse. And that gets to part of my answer to you, which is, all over the world, there are many other people who feel the same way about owning PMs. In 1980, last time this happened, there were not hundreds of thousands of Chinese & Indians (with millenium-long histories of valuing PMs) who could afford PMs. There were no markets in those countries at the time. Now, there are. I am frankly rather surprised at how well silver has hung on to $35. I still believe it will see $30 before it sees $40, but I'm willing to be wrong. I happen to believe that countries all over the world are debasing their currencies in a competitive race to the bottom, and there are more people who believe that today than ever before. And they have the means to do something about it, eg; buying PMs to protect themselves.

So as intelligent (we think!) speculators who are gambling not on a $2 price bump, but on a quadrupling or octupling of value which may take a long, long time, we have to consider that the "raid" you speak of will have an "after" period. In other words, what happens after said raid? If you say that the masters of the universe will dump their silver and then scoop up the silver that folks sell out of panic, then the one who does nothing should make out OK, don't you think? I do not fear such a raid. Indeed, I welcome it, because I believe that after such a raid, if a person is not fully invested (and IMO one should NEVER be fully invested in anything) then the cash I retain will be able to buy many more ounces of silver than it can today. That represents the deflationary period I mentioned in my prior post.

I myself look at the silver and gold I own and I would rather own that metal than the USDs it would take to buy it. I felt that way at Ag $12 and Ag $17 and Ag $24 and I feel that way today. So it's not a matter of the market price.
 
I don't know if anyone has ever noticed but a coke in USA will cost you say 89cents the same coke cola in India will will cost equivalent to a quarter or 25cents even less in some areas. Fiat currency allows this, negative abut fiat currencies is it creates unlimited dept (modern day slavery) positives and can be manipulated to reflect micro economies allowing for the entire economy to run at a much low level like say India where wages are very low price of living low compared to USA but price of living close to 90% of yearly salary for most as in USA 60% or less for most. If we and all others ran of a gold standard then that coca cola would cost the same in gold no matter where you go.Plus of having gold for standard in currency low inflation less manipulation negatives of gold standard you create a mandatory economic ceiling meaning you cant have more dept or circulating currency then there is gold. Gold is limited so currency becomes limited. Another negative about gold standard and a economic ceiling is as ppl per kapa keep going up the amount of currency available per person becomes less. Meaning simply by creating more people faster then people are going away eventually you reach a point where even if everyone was employed and doing great jobs we would all still be broke. Leading into the current state of the global economy. it is my assumption that if the total world economy is worth 74 trillion and some change but the worlds population is 6.9 billion that means if you where to give every person in the world 10,500$ for 1 year to live of off. You actually would exceed the current global economy limit. This is why prices are going up and money is being printed un-controlled its either dept or starve. Make you think 10,500 per person for a year to live of off would bankrupt the entire world. And everyday the number gets bigger faster than the economy grows. The demand for things goes up everyday simply by creating more people. Im not preaching population control by any means but the only thing we have come up with for an answer is derivatives. And check these numbers out (Derivatives outstanding notional amount: $273 trillion (end of June 2004), $84 trillion (end-June 1998) ([4]) ) its scary.

Best Regards,
Ross
:cry: :cry:
 
I don't know where gold and silver is going but I think the answer will smack all of us in the face Jan. 1, 2013. I am of the opinion that the whole world governments have bought into the end of the world on Dec. 21, 2012 and have decided to eat drink and be merry as it will make no difference after Dec. 21, 2012 anyway. I will have a few ounces of each on hand and a lot of food stored away as well as a place in the country that is hard to get to as a fall back position for my family a few friends and all of us willing to do what it takes to defend it all.
Mark
 
Population increase is not the cause of inflation of the U.S. dollar. The inflation is caused by the number of dollars in existence increasing faster than the net value of the U.S.

If the number of dollars remained the same, while the population increased, then dollars would become more scarce, and their value would therefore increase.

It's the wild printing of more and more paper dollars that is solely responsible for this inflation.

I saw Governer Ventura ask some Wall Street executives, "Why do the top financial people make so much in salaries and benefits?" Their answer was, "because we hire the best of the best."

It would appear that the "best of the best" are either too dumb to know that you can't keep printing excessive dollars without this crazy inflation rate; or they are doing it on purpose.

:?:


In answer to the question of topic---the cost of everything, including gold and silver, must go up as long as they continue to print unbacked paper dollars at this excessive rate. All the other stuff they try to blame it on is merely smoke and mirrors.
 
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