Gold

[AndersB 29]

It seems there is a rising wedge pattern forming for gold prices. It could mean that prices could really take off in September or so. This is in US$ of course. That would be an interesting development, as normally gold rises when there is fear and uncertainty in the market.

[AndersB 29]

[BakerSam 2]

To buy or not to buy that is the question! Gold has for me been the opposite of what I look for in an investment, all capital gains. I like getting a regular income or atleast knowing that I'll get something back over time. When people say the gold price is going to the moon I get very suspicious, like when people tell me house prices are going to go up 10%(!) it's a little warning bell. While I also agree that yes houses have at times gone up 10% as with gold, I don't think it is a safe way to make you rich.

I do own gold but more of an insurance thing, like most of my investments I buy and hold....forever....untill that rainy day comes.

But I agree with you Anders I have a gut feeling of storms approching.

[AndersB 29]

The 6-month chart is interesting. The fear in the equities market, measured by the VIX, peaked in October-November 2008.

http://www.simplesus...latility-index/

However, gold lagged and peaked in Australian dollar terms in February 2009 at around AU$1,545 per ounce (which is 35% higher than today's spot price).

Let's say that there was an extraordinary amount of fear in October 2008, which resulted in some sort of capitulation and acceptance of the dire circumstances by February 2009 (which approximately coincides with the stock market low point). The questions I ask myself are:

1) Will we see AU$1,545 per ounce again in the medium term? I think there is a chance for that before the end of 2010.

2) Is there going to be a minor downturn in the market in September/October 2009? That seems likely and perhaps we will see 20% increase in the gold price shortly thereafter.

3) Is there a possibility that the worst is yet to come? Yes, but it seems minor. Gold would really take off if that would be the case.

Another issue seems to be that gold in Australian dollars is more volatile than in US$. This I think is due to the fact that when equity markets go down worldwide, the Aussie dollar also gets punished together with our local equity markets. This makes gold prices go even higher in AU$ terms during global equity market falls.

I will soon allocate the main part of my SMSF in Gold bullion securities ( http://www.asx.com.au/research/industry/mining/bullion.htm ) or Perth Mint gold warrants ( http://www.asx.com.au/products/warrants/types/gold_pmg.htm ).

[AndersB 29]

Well, the price of Gold did take off in September as I predicted in early August, although it is a very modest rise so far. BTW, the image in the first post in this thread is updated daily.

I am still in two minds about what to do about gold investments. Based on the longer term charts, gold should take off higher now up until April 2010 or so. On the other hand, I'm not sure how Gold will fare in AU$ terms.

I am still bearish about the global economy. If my bearish predictions will become reality, then the AU$ will be hammered again, if the previous downturn can be used as a guide.

Paradoxically, last time around when the SHTF, the US$ strengthened! I would have thought that the massive US borrowings and "quantitative easing" would have devalued the US$. But it seems that when the whole financial world ground to a halt and turned illiquid, the most liquid market was the US$, which strengthened it relatively against the AU$. That is why the gold price hit AU$1,500+ for a while.

So, perhaps it is time to jump into gold again. It is around AU$1,140 right now.

[wulfgar 12]

Those who wish to accumulate gold, have little to worry about. I don't see gold becoming expensive in AUD. At least while the world is high on green shoots.

This will change when the next GFC crunch comes. So I'd continue with gradual accumulation of gold. Which will do in the next GFC event, what it did in the recent one. Climb dramatically in value.

Notice what some did in the last GFC. Even though wulfie said in March 2008, forget about gold for 18 months. A few of the crowd on GPHC ran out madly buying gold. When it was over 1500 AUD.

We will see the patten repeat itself. Gold will remain an affordable buy until the next GFC event.

I'm picking August 2010 as the next great crunch in the US financial system.

If I'm right, you have a 10 month window to accumulate gold. Even lower gold prices in the AUD are possible. Especially if the RBA makes some token rate rises.

It is usually the better option to accumulate gradually. Really a steady accumulation plan is the safest for most people. Buying more in dips.

Always view investment gold like money and treat it as such. And view your gold as a bank account.

Investment gold is a protection against deflation.

The key question is what gold will do USD? And you can probably factor in a stronger AUD on top of that.

[wulfgar 12]

1980 47.49k, 1.158, 612.56, 90

Yes but 90 ounces is the next stop. I don't buy gold 30 years in a row. I buy it when it counts. I don't buy houses 30 years in row. I bought a house 15 years ago when it was worthwhile post boom. No use buying pre bust.

And it appears now the RBA has hung up it's printing guns. And it will bleak Xmas for property.

The massive property bust is now at hand. 300k Melbourne median in 2011. No more than 80 ounces to buy Melbourne house in 2013!

[AndersB 29]

Wow! Gold in US$ has risen to near US$1,020, but is very steady here at AU$1,148

[wulfgar 12]

Wow! Gold in US$ has risen to near US$1,020, but is very steady here at AU$1,148

The Gold Gnome knows all!

The Sound of Music needed Gnomes.

http://www.totallyfuzzy.net/ourtube/erasure/make-me-smile-come-up-see-me-video_252b03a07.html

[AndersB 29]

http://www.mmnews.de...aper-Money.html

Gold vs. Paper Money

Von Lars Schall

Sonntag, 4. Oktober 2009

Egon von Greyerz, Managing Partner of Matterhorn Asset Management AG in Switzerland, is known for his clear cut analysis on worldwide financial developments. His message: “The Dark Years Are Here.” In an exclusive interview for MMnews, Mr. von Greyerz reflects on hyperinflation, the end of the “US empire” and his expectations related to the gold market.

...

Virtually without exception, hyperinflation arises as a result of a collapse of the currency. It does not stem from demand pull or costs running out of control.

The prerequisites for hyperinflation are a deflationary or non-inflationary recession/depression leading to major government deficits. The government issues debt paper to finance the deficits. Initially investors continue to buy the government bonds especially as in the case of the US with the dollar being a reserve currency. This is the first stage of the money printing cycle.

Then foreign investors stop buying the bonds and the government has to buy their own paper. This is the second stage of the money printing cycle which is called quantitative easing (a nonsensical fancy word for money printing).

As the money printing accelerates due to growing deficits, foreigners will no longer buy the worthless paper and the currency begins to fall. This leads to a vicious circle of a falling currency, more money printing, inflation and finally hyperinflation. I realise that this is simplified version of the course of events leading to hyperinflation but I believe in explaining things so that most people can understand.

In my view the quantitative easing will now accelerate both in the UK and the US. Unemployment is going up in both countries. Real unemployment in the US is over 20% which is 30 million people. With dependents there are now 100 million people in the US affected by unemployment.

In the UK real unemployment including benefit seekers is 17% or 6.4 million. Including dependents there are 20 million people affected by unemployment. That means that both in the US and in the UK there around 1/3 of the population is affected by unemployment and the numbers are getting bigger daily. This is an untenable situation.

The next area which will necessitate acceleration in money printing this autumn is the financial system. None of the problems in the banks or the financial system have been solved in the last 12-18 months. They have just been swept under the carpet. The toxic debt situation is still critical. A big percentage of the $1 quadrillion derivatives is worthless.

...

My strong opinion is that the US dollar and the UK pound are going to very weak this autumn. This is the beginning of the hyperinflationary stage which will later spread to many countries.

...

On September 3rd, Hong-Kong recalled all its physical gold holdings from depositories in London.[4] What are your thoughts on this?

I think they are right. You should have your own gold under your own control. There is so much lending of gold taking place between central banks that there might not be any gold left at the end.

As you know there are rumors for years that Germany’s gold reserves are not located in Germany but in New York. Let’s assume this is the case: wouldn’t now be the perfect time to order them back? And if it was the case that the total amount of Germany’s gold holdings were stored in the vaults of the Federal Reserve of New York – why should this be of interest to the German population?

Yes, and for the same reason that Hong Kong took its gold back, I think Germany should. Firstly, only then do they know if the gold still exists and secondly I wouldn’t want another nation to control my gold, especially not a bankrupt nation.

...

[AndersB 29]

On September 3rd, Hong-Kong recalled all its physical gold holdings from depositories in London.[4] What are your thoughts on this?

I think they are right. You should have your own gold under your own control. There is so much lending of gold taking place between central banks that there might not be any gold left at the end.

As you know there are rumors for years that Germany’s gold reserves are not located in Germany but in New York. Let’s assume this is the case: wouldn’t now be the perfect time to order them back? And if it was the case that the total amount of Germany’s gold holdings were stored in the vaults of the Federal Reserve of New York – why should this be of interest to the German population?

I wonder if the rumours about Germany wanting their gold delivered back to them from New York is going to create a panic to scramble together physical metal?

[AndersB 29]

http://www.bloomberg.com/apps/news?pid=20601068&sid=alO7Gib3l2CY

Gold Rise to Record Shows Investors Split With Banks

By Pham-Duy Nguyen

Oct. 7 (Bloomberg) -- Gold’s rally to a record shows commodity investors remain concerned that the U.S. economic recovery will spur inflation even as Wall Street forecasts and government bonds suggest stable prices.

Bullion has jumped 18 percent this year, heading for a ninth annual gain, and futures touched a record $1,049.70 an ounce today amid rising demand for a hedge against inflation and a weaker dollar. Economists surveyed in the past month expect U.S. consumer prices to fall 0.5 percent this year, the first drop in five decades.

Demand for gold is increasing as U.S. government debt reaches record levels and the Federal Reserve keeps interest rates near zero percent. Inflation surged to a 14.8 percent annual rate in March 1980 after a four-year gain in gold that included a then-record $873 in January 1980.

“Gold is a forecaster of inflation instead of a coincident indicator,” based on its surge before 1980, said Dan Greenhaus, the chief economic strategist at Miller Tabak & Co. in New York. “There’s nothing right now that says inflation will break out to all-time highs. But gold can move considerably higher from here. Should growth return, inflation will return.”

....

[AndersB 29]

Senator Alan Grayson wants to know if the US Federal Reserve possess all the gold on its balance sheet:

The General Counsel, Alvarez, for the US Fed is squirming quite a bit!

Here is an interview with Alan Grayson about the questioning of the Fed's Alvarez.

http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/10/2_Congressman_Alan_Grayson_files/Alan%20Grayson%2010%3A02%3A2009.mp3

[wulfgar 12]

As you know there are rumors for years that Germany’s gold reserves are not located in Germany but in New York. Let’s assume this is the case: wouldn’t now be the perfect time to order them back? And if it was the case that the total amount of Germany’s gold holdings were stored in the vaults of the Federal Reserve of New York – why should this be of interest to the German population?

Yes, and for the same reason that Hong Kong took its gold back, I think Germany should. Firstly, only then do they know if the gold still exists and secondly I wouldn’t want another nation to control my gold, especially not a bankrupt nation.

Most gold reserves of major nations were located in Fort Knox. Originally this was to facilitate international settlements. What was left in Fort Knox was shipped to the NY Fed in the 1970's.

The US governments policy has been to not return physical gold reserves since WW2. Norway's crown gold collection, which was stuff like jewelery and old coins. Was only returned a few years ago, after been locked in the US since WW2. The US refused to return it for 60 years.

Europe and America both claim the same gold as their property. Another problem is most of it has has leased to the market over the years. There is very little physical gold left in the NY Fed.

You see much of the official gold reserves is double claimed. Because it was swapped.

[Solomon 32]

Most gold reserves of major nations were located in Fort Knox. Originally this was to facilitate international settlements. What was left in Fort Knox was shipped to the NY Fed in the 1970's.

The US governments policy has been to not return physical gold reserves since WW2. Norway's crown gold collection, which was stuff like jewelery and old coins. Was only returned a few years ago, after been locked in the US since WW2. The US refused to return it for 60 years.

Europe and America both claim the same gold as their property. Another problem is most of it has has leased to the market over the years. There is very little physical gold left in the NY Fed.

You see much of the official gold reserves is double claimed. Because it was swapped.

Ahhh Wulf.

The mind boggles.

Could a major dispute be looming as to who actually has ownership.

What a wake-up call that would be to the rest of the world to discover that gold reserves are insufficient!!!

This was being mooted, if I remember correctly, last year, and nothing eventuated.

Watch this space!!

[wulfgar 12]

Ahhh Wulf.

The mind boggles.

Could a major dispute be looming as to who actually has ownership.

What a wake-up call that would be to the rest of the world to discover that gold reserves are insufficient!!!

This was being mooted, if I remember correctly, last year, and nothing eventuated.

Watch this space!!

The official gold reserves are mostly paper iou's. The US treasuries gold reserves of 8300 tons are a piece of paper from the commercial banks that have saying iou for decades.

A physical build up gold in the NT FED was most likely due to lease expiry in the 80's. Most of this gold was transfered to Euro nation ownership in international settlements. But it all stayed in the Fed. The NY Fed finally had a physical stockpile of 13,800 tons in the early 90's. But from 1995 to 2005 most of this gold was used to short the market.

But that 13,800 ton stockpile was the majority of the world's 32,000 ton official reserves. A lot of it I assume is double claimed via swaps.

How much real physical gold is in the official reserves these days? Zip!

[PrintCash 1]

Have heard alot lately that history never repeats exactly, this seems to be a variation of lightining never strikes twice which has also been proven untrue.

At the moment the DowJones is following in the old worn footsteps of the first great depression in spite of the time differences. Which is why the Dow is having the strongest bull market since the 1930's because is only since then the same circumstances have existed.

Great Depressions are caused by systemic risk with the outcome being massive job failures, at the moment the US unemployment is at very high levels.

Other side effects of system risk include inflation, deflation, bank failures, food shortages, wars, government collapses/bankruptcies, riots, asset bubbles etc

[tor 89]

Have heard alot lately that history never repeats exactly, this seems to be a variation of lightining never strikes twice which has also been proven untrue.

At the moment the DowJones is following in the old worn footsteps of the first great depression in spite of the time differences. Which is why the Dow is having the strongest bull market since the 1930's because is only since then the same circumstances have existed.

Great Depressions are caused by systemic risk with the outcome being massive job failures, at the moment the US unemployment is at very high levels.

Other side effects of system risk include inflation, deflation, bank failures, food shortages, wars, government collapses/bankruptcies, riots, asset bubbles etc

?

Are you saying we are in a great depression?

Or are you saying we should be preparing for all the things at the bottom?

Frankly I don't see how you could prepare for all of those and figure the only sensible thing to do would be to completely ignore them as anything will be needless worrying.

[wulfgar 12]

We are at the beginning of the "Grand Depression". You ain't seen nuttin yet!

[AndersB 29]

This news is a bit difficult to assess. Perhaps when gold investment is mainstream it is time to sell out?

http://www.news.com....2-31037,00.html

Harrods now selling blocks of gold

From correspondents in London

Reuters

October 16, 2009 09:20am

LONDON luxury goods department store Harrods is moving into the precious metals market with the launch of a service to sell investment-grade gold bullion bars and coins to customers.

Malcolm McLean, general manager of Harrods Bank, told Reuters overnight that the company saw a gap in the market for a well-known retailer to enter the increasingly high-profile gold market.

"We have been very conscious of the fact that there has been an ever increasing amount of interest in the gold market, and in buying investment gold," he said.

"We became very conscious that there is no well-recognized name out there which the general public can turn to and say, I know that name, I trust it, I want to buy from them."

"That is not to say there are not reputable dealers out there - we know there are," he said. "But they don't carry the brand that we do."

Since Monday, Harrods has been selling Swiss-sourced investment grade bars and coins including sovereigns, South African Krugerrands and American Eagles, from the Harrods Bank premises on London's upscale Brompton Road.

...

[AndersB 29]

Is there a mad scramble to gather physical bullion bars together because of audit activity at the GLD Exchange Traded Fund?

http://news.goldseek.../1255630435.php

By: Rob Kirby

Earlier this week, I wrote about possible “incongruities” in the gold bar registry of GLD. Specifically, here is what has happened to the GLD bar list which is published each Friday at approximately 4:30 pm EST. An alert reader I communicate with [who shall remain anonymous] has been documenting the length of the published GLD bar list:

-

on Friday, Sept. 25 – the list was 1,381 pages long

-

on Friday, Oct. 2 – the list was 208 pages long

-

on Friday, Oct. 9 – the list was 195 pages long

-

then, on Wednesday, Oct. 14 – after questions were being raised about the strange machinations with the bar list in

chat rooms

on the internet – the list was back up to 855 pages long

Something TRULY stinks here. No explanation has been offered for the DRAMATIC swings in this list. Where gold is concerned nothing happens by accident.

...

To Summarize:

- GLD gold bullion inventory is principally held in London

-

I’ve already written about some large [allocated] physical transactions that were settled last week in London under VERY strange circumstances indicative of a shortage of physical gold bullion for good delivery.

- At the same time, significant irregularities appeared in the GLD bullion bar list

Conclusion:

-

is the correlated timing of these unusual events a coincidence??? Could GLD inventory have been utilized to effect these physical settlements, which in turn, would have required the “sanitization” or doctoring of the GLD bar list to avoid MANY obvious, easily detectable, duplications of bar numbers?

I discussed these irregularities with a very informed source [the same one who informed me of specific [allocated] trades settled last week] and the reply I received was as follows:

“What can I tell you that you don't already know?

They are all scrambling big time since a number of large interests have demanded audits. Independent auditors are NOW descending onto the various vaults to verify, validate and certify.

They can move this as many times in circles as they like to try to fool people.

In an Asian depository they’ve found “Good Delivery” bricks that had been gutted and filled with tungsten.

Soon, there will be xxxx hitting the fan all over place.”

...

[itching 2]

This news is a bit difficult to assess. Perhaps when gold investment is mainstream it is time to sell out?

http://www.news.com....2-31037,00.html

I was in Angas and Robertson earlier today (big book store - incase you dont have them interstate) and I was walking past the finance section and noticed Peter Schiff's book, so I stopped and picked it up and leafed through it. This kinda held me up in that section of the store and I took note of the books on the shelves, anyway while standing there I remembered this quote(above), although not who made it, from this forum.

Lots of books

a- about how to become a property milllionaire

b- about how to invest in stocks

c- covering managing your own super

d- one was "best stocks to buy in 2008" which was kinda funny

e- with Kochie's picture on them

But not one about gold. Maybe that is a good way to know its gone mainstream??

Unrelated here's an article on the precious from Marc Faber claiming it will never go below $1000 again

http://www.bloomberg...id=az6qQ8ZuXg9M

[wulfgar 12]

Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as central banks print money to help fund budget deficits, said Marc Faber, publisher of the Gloom, Boom & Doom report.

That's funny a couple of weeks ago I saw a quote from him predicting a rally in the USD and gold price under 900?

My own opinion is that we'll never see sub 900USD gold again and may true as he now states 1000USD as well. Faber could be another one who doesn't understand the monetary implications of gold and perceives it more as commodity.

I'm of the view that gold will spend the majority of next year climbing to 1500USD or more, before it flattens out again for a lengthy season.

While the FED continues to run near zero prime rates, gold will continue to move up. The USD is measured not only by the banknote, but by the vast number of US treasuries being created. These can be used as currency at the brokerage level.

The growth in the quantity of US treasuries has been over 13% per annum in the decade, and now has accelerated in anything. The USD will be the wheelchair case on the world exchanges in a few years. A world reserve currency in name only.

[Bernard L. Madoff 14]

http://jessescrossroadscafe.blogspot.com/2009/11/long-term-gold-chart-updated.html

Chart:

http://4.bp.blogspot.com/_H2DePAZe2gA/SwCjSYhwxUI/AAAAAAAAKcw/jQBBSDwOWq8/s1600-h/goldlongterm.PNG

[Haydos 0]

We are at the beginning of the "Grand Depression". You ain't seen nuttin yet!

Couldn't agree more. Wait until we see governments rolling back their attempts to prop up the system. It can't go on forever. I have been expanding my silver collection of late and with the aussie dollar riding so high will get a little of that yellow stuff now. Even AK was spruiking it tonight.