Gold

[Photon]

The assumption that gold is bought purely for investment purpose is wrong. The main driver of demand of gold is jewellery which makes up c. 70% of demand. Continue steady demand, albeit slightly weakened by price increase, is exacerbated by investors looking for increasingly allusive yield since shares and property market has taken a bit of battering a late. Normally gold price was inversely related to oil price. Whenever oil price spiked upward gold price took a dive. However, that relationship is seem to have been broken down. People have seem to be predicting peak of gold price for at least 4 to 6 years now but have been proven to be wrong. I'm not advocating that the gold price would continue to rise ad infinitum but its more resilient than most people realise.

[superfrank]

The old Wall Street adage to always keep 10% of your wealth in gold and hope that it does not work remains wise.

[Euler]

Sell when people are greedy and buy when they are fearful and that makes me think that gold is a sell.

[Iron]

Are people not fearful of the economic situation though (which is presumably part of the reason why they're buying gold)?

BTW, I'm surprised you're not in Omaha this week, particularly given the rubbish racing we've been having!

Jeff

PS Shouldn't it be the other way around, ie prices of a stock or commodity rise when people think there's easy money to be made, and fall when they panic when they're long on an instrument that's falling in price?

Sell when people are greedy and buy when they are fearful and that makes me think that gold is a sell.

[Euler]

I'm always fearful of the economic situation but worrying about it hasn't made any positive difference to me in the last 40 years.

[superfrank]

Sell when people are greedy and buy when they are fearful and that makes me think that gold is a sell.

I see loads of ads etc for people wanting to buy gold but none from people wishing to sell it to me.

I might be wrong but I think the bull market in precious metals has several more years left in it. Sovereign debts of the west are too big to ever be repaid by conventional means. Bonds are the biggest bubble.

[superfrank]

I know Buffet hates gold, but he was once a fan of silver!...

[RideTheLightning]

There is more to Gold and Silver than just looking at whether people are fearful or not. Look at the economic fundamentals AND the geopolitical situation. WW3 is on right now and it will soon be upgraded to a limited Nuclear War. If you think people are fearful now, that is nothing to what is coming. Everyone is born into a geopolitical chessboard and the planning involved takes into account 5/10/20/30/50/100 years plans. Many prominent analysts involved such as Brzezinski have stated this. In his book The Grand Chessboard published in 1997 he stated that The US/NATO alliance needed a Pearl Harbour type event to go to war in the Middle East, and as luck would have it 9/11 happened and they got what they wanted. Over the last 6/7 years you have had the privately owned, heavily financed CIA run foundations fomenting revolutions in the former Soviet states such as the Ukraine and Georgia and now they have stepped it up big time in 2011 in North Africa and the Middle East. Another False Flag event will happen in the US and that will lead to invasions of Iran and North Korea. All the great empires in history have fallen due to 2 primary factors: The devaluation of their currency and over extending themselves abroad. Both these factors are heavily inplay at the moment. It is important to remember that the ruling oligarchy are not nationalistic - they are internationalists. They are using the US military to bring 2 key countries firmly into their World Wide Web and once that is done the US will totally collapse.

What do you think will happen to Gold and Silver then?

[sweetybt]

Which 2 countries?

Luxembourg and?

[Iron]

My suspicion that gold may be turning around in price (at least temporarily) is supported by today's graph.

Jeff

[superfrank]

Silver has been dropping like a stone. <$40 atm - it nearly touched $50 the other day.

The futures exchange keeps raising margins on silver - never on oil or food which are actually essentials for life!

I suspect the investment banks are trying to shake out the longs before letting it really take off!

I hope gold goes to 1000 (worthless) dollars so I can load up! The fundamentals of gold + silver are sound - unlike western currencies.

Silver bears part 6...
http://www.youtube.com/watch?v=u9LcKcXp ... r_embedded

[superfrank]

What do you think will happen to Gold and Silver then?

Short term I haven't got a clue but long term I think that gold will be double the DOW with the gold/silver ratio at 15:1 (same as Mike Maloney!).

I'm yet to hear a credible argument of how the west will ever repay their debts (and they are still rising exponentially).

[Iron]

I agree.

I don't think most people realize the scale of the crisis. I subscribe to the Taxpayers Alliance page on Facebook. It has about 1,000 members; given the scale of the problem we face, it should be hundreds of thousands! We are sleepwalking into oblivion...

Jeff

I'm yet to hear a credible argument of how the west will ever repay their debts (and they are still rising exponentially).

[superfrank]

Jeff,

We are a very small minority because most people just want to believe that things will return to normal i.e. real growth, rising living standards, rising house prices, share prices etc.

But the truth is that the 'growth' of the last 15 years has been an illusion based on ever expanding debt.

Globalisation has changed the game.

"If the world operates as one big market, every employee will compete with every person anywhere in the world who is capable of doing the same job. There are lots of them and many of them are hungry." - Andy Grove, Intel.

[Iron]

Hi Frank

I would draw a parallel with terrorism.

Pre-9/11, it wasn't that big a deal for most people in the West. It was something that happened thousands of miles away, and wasn't a massive issue in the bigger scheme of things.

But 9/11 put terrorism at the top of the global agenda, and the US and Britain rewrote their laws and spent over a trillion dollars invading and occupying countries in order to fight it.

I think the same sort of thing will happen when the West's financial meltdown proper kicks in. People will be determined never to let something so terrible happen again, and all sorts of knee-jerk measures will be put in place, even though it's a case of closing the stable door after the horse has bolted...

Jeff

Jeff,

We are a very small minority because most people just want to believe that things will return to normal i.e. real growth, rising living standards, rising house prices, share prices etc.