Gold

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superfrank
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the ECB are now printing (expanding their balance sheet), but doing it in a different way to the FED and BoE. lending trillions to private banks at 1% so they can buy sovereign debt at higher yields is effectively the same as buying bonds directly. the ECB doesn't have the money to lend, they've just created it out of thin air (why do you think the Euro has crashed in the last few weeks? printing money = diluted currency).
Iron
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The ECB has 420 billion euros worth of gold - see http://af.reuters.com/article/metalsNew ... 1H20111213.

Rather than print all the money they need for bailouts (something that might well trigger a financial meltdown!), the ECB might sell some of that gold.

Jeff
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superfrank
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Ferru123 wrote:Rather than print all the money they need for bailouts (something that might well trigger a financial meltdown!), the ECB might sell some of that gold.
no chance Germany would allow that to happen. Portugal and Greece still have gold but haven't sold any or been forced to.
Iron
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Germany might find themselves between a rock and a hard place, forced to choose between options they find unacceptable.

Let's say that Italy needs a bailout(and as their 10 year bonds are still around 7%, that looks increasingly likely). Germany can either:

A. Let Italy default, and cause the collapse of the Euro and possibly the global financial system

OR

B. Print money and/or sell gold

Jeff
superfrank wrote: no chance Germany would allow that to happen. Portugal and Greece still have gold but haven't sold any or been forced to.
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superfrank
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even if they sold all their gold and gave it to the PIIGS it would be throwing good money after bad and wouldn't make a fundamental difference. what would you rather have in your vault, gold (proven as a store of real wealth for 6,000 years) or the bonds of bankrupt countries with no hopes of growth (while in the euro)?
Iron
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If Germany were to let Italy go under, and a global financial meltdown were to ensure, Germany's gold reserves might not be worth very much anyway.

And you could argue that a nation's gold reserves are a small price to pay to prevent a financial apocalypse. I think that, like the Americans in 2008, they'd take the medicine with clenched fists, as the alternative could mean anarchy on the streets...

Jeff
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superfrank
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Ferru123 wrote:If Germany were to let Italy go under, and a global financial meltdown were to ensure, Germany's gold reserves might not be worth very much anyway.
eh?!!!

where are the rich going want to put their money in the event the system blows up?
Iron
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You're assuming that there will even be rich people post-apocalypse...

I don't think anyone has a clue what would happen in the event of a major world economy defaulting in the current circumstances. Maybe gold would soar in value. Or maybe it would become almost worthless. Who knows?

These are interesting times...

Jeff
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CaerMyrddin
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I reckon it would probably soar, although you have to ask yourself, in a post-apocalypse scenario, would you like to eat gold?

:lol:
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superfrank
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Photon
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Downward trend which started on 6th Sep seem to have reversed and the momentum is on the up and with investor not really finding a good opportunities elsewhere and with the lending at ECB at rock bottom prices, German bond yielding negative, PIGS continuing to see negative outlook, I feel there's a real concern about the world economy and I think Gold is most likely to be the winner.
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superfrank
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gold n silver on the march again... hardly surprising given the print, print, print mentality of central banks. FED next.
http://www.marketwatch.com/story/gold-g ... 2012-02-23
Iron
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Warren Buffett: gold has no value - http://www.telegraph.co.uk/finance/pers ... value.html

"Bubbles blown large enough inevitably pop," he said. "And then the old proverb is confirmed once again: "What the wise man does in the beginning, the fool does in the end."
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superfrank
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buffet should stick to stock picking. the bubbles he conveniently ignores (because they bailed him out) are the ones in government debt, bonds and the monetary base.

of course gold doesn't produce a dividend - because it can't be created at the touch of a button to keep the paper asset rich rich (rich in, er, paper) at the expense of the asset-poor, the young and the unborn (for many generations to come).

http://usdebt.kleptocracy.us/
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