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  #141  
Old 13.10.2010, 13:06
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Re: Gold Buying

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Interesting, but are they forecasting gold rising or the dollar falling?

I would be interested to see an authorative view on the future of gold/CHF; as I mentioned before this rate is currently circa 10% below its recent high.
I don't know of any such view, but couldn't you just combine a view of Gold/USD with a view of USD/CHF?

The problem is getting an authoritative view on each! I'm a fan of Jim Sinclair http://jsmineset.com - but he has a vested interest as he owns a gold mine. It's interesting that Goldman have now nicked his long held prediction of $1650 (Jim's $1650 is probably the most famous prediction in the gold market of this decade/century).

edit: Marc Faber (who happens to be Swiss) is also very good, but he's also kind of a goldbug. His monthly report http://www.gloomboomdoom.com costs $200 per annum, but his current views can easily be found by putting 'Marc Faber' into Google news

Last edited by carver; 13.10.2010 at 13:10. Reason: added Marc Faber
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  #142  
Old 13.10.2010, 13:40
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Re: Gold Buying

http://www.galmarley.com/Chart_pages...ncy_charts.htm
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  #143  
Old 13.10.2010, 13:46
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Re: Gold Buying

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Useful things... base metals, wine, diesel generators, fuel, ... really depends on your view on world stability and inflation rates. 'Things' that people will want/need at 0% inflation or 20% inflation.

I would imagine people buying gold bars own their house so they have a basis to borrow against - and currently cash in hand to buy the shiny yellow bits. Can always max out mortgage.

Failing that - unsecured rates are nothing compared to 20% rate fears ... in terms of house values - well - if rates go from now 2% to 20% then the liability of your outstanding fixed rate debt of 5yr:

exp(-5*0.02) = 90.5%
exp(-5*0.2) = 36%

So the house price would need to drop to about 40% of current level. At that point - the bank wont want it back. they will own all the houses from folks with floating rate mortgages.

FYI - I don't buy gold and i'm not borrowing to buy 'things'. It just seems a smarter approach if you believe in hyper inflation or instability.
Gold is used for a lot of things other than for jewellery, as is platinum.
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  #144  
Old 13.10.2010, 19:58
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Re: Gold Buying

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I stopped buying gold years ago. There is no way I'd mortgage my home to buy wine (bid up anyways, esp. 2009) base metals (hitting all time highs - spreads for physical & storage - unless you're talking about financial instruments) fuel (does not store - unless you're talking about financial instruments). But each to their own.
if you would not buy gold here - why are you holding it at these prices?

I did mean exchange contracts, for example, LME copper:

http://www.lme.com/copper.asp

Note forward prices are lower than spot. So you actually get 'paid' to store it if spot prices stay constant.

However, if you think the financial system will not honour financial contracts like LME copper (which is physical delivery via warrant) then you best sell your gold and buy guns.
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  #145  
Old 13.10.2010, 20:10
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Re: Gold Buying

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Gold is used for a lot of things other than for jewellery, as is platinum.
not significant quantities. note drop in industrial demand and increase in scrapping as prices have risen.

http://www.research.gold.org/supply_demand/
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  #146  
Old 13.10.2010, 20:18
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Re: Gold Buying

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not significant quantities. note drop in industrial demand and increase in scrapping as prices have risen.

http://www.research.gold.org/supply_demand/
sorry meant to give this link:

http://www.gold.org/deliver.php?file...ply_Demand.pdf
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  #147  
Old 13.10.2010, 20:21
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Re: Gold Buying

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if you would not buy gold here - why are you holding it at these prices?

I did mean exchange contracts, for example, LME copper:

http://www.lme.com/copper.asp

Note forward prices are lower than spot. So you actually get 'paid' to store it if spot prices stay constant.

However, if you think the financial system will not honour financial contracts like LME copper (which is physical delivery via warrant) then you best sell your gold and buy guns.
But in post #135 on the previous page you said "note I said (useful) 'things' rather than (financial) assets". It appears that you did mean financial assets.

Gold isn't a buy for me personally, it's a hold. If it doubles again, it'll probably be a sell.

Your last sentence doesn't make a great deal of sense to me. One of the properties of (physical) gold is default & catastrophe insurance. That's why central bankers own hundreds of tonnes of the stuff. There's plenty of guns in switzerland anyway.
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  #148  
Old 13.10.2010, 20:24
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Re: Gold Buying

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not significant quantities. note drop in industrial demand and increase in scrapping as prices have risen.

http://www.research.gold.org/supply_demand/
I don't really care if it's significant or not. You said 'useful things' implying that gold isn't a useful thing, which is wrong.

I know for a fact that in my line of research we use platinum and gold all the time and anything else wouldn't cut it.
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  #149  
Old 13.10.2010, 20:36
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Re: Gold Buying

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Reminds me of the story about a group of people who were trading in boxes of herring. One of them opened a box & complained the fish were bad - reply was "they are for trading not consuming".
Perhaps it was Swedish pickled herrings?

Just a thought from an ignoramous, perhaps banks have stopped selling cos they've not got any left to sell. Seems to be a silver bullet at the moment, excuse the metaphor, so surely it's bound to collapse. As I understand it, in dynamic systems containing masses of autonomous agents, increases in volatility precipitate huge changes. Could be markets, traffic jams or changes in states, i.e. liquid to gas or superfluid or something. Something to do with random walks I think, anyway the game theory stuff all made sense to me at the time.
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  #150  
Old 13.10.2010, 20:39
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Re: Gold Buying

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But in post #135 on the previous page you said "note I said (useful) 'things' rather than (financial) assets". It appears that you did mean financial assets.

Gold isn't a buy for me personally, it's a hold. If it doubles again, it'll probably be a sell.

Your last sentence doesn't make a great deal of sense to me. One of the properties of (physical) gold is default & catastrophe insurance. That's why central bankers own hundreds of tonnes of the stuff. There's plenty of guns in switzerland anyway.
LME copper isnt a financial asset - it is a commodity.

http://highered.mcgraw-hill.com/site.../glossary.html

how is a property of gold to be default or catastrophe insurance? that is my original point - it is only because others think it is. at the end of the day - it have very little utility and thus inherent value.
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  #151  
Old 13.10.2010, 20:43
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Re: Gold Buying

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I don't really care if it's significant or not. You said 'useful things' implying that gold isn't a useful thing, which is wrong.

I know for a fact that in my line of research we use platinum and gold all the time and anything else wouldn't cut it.
significant ultimately matters for the price and thus to people choosing to use it as a 'store' of value.

out of interest - does the research actually consume the gold or can you reclaim it once the experiment is done?
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  #152  
Old 13.10.2010, 20:53
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Re: Gold Buying

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LME copper isnt a financial asset - it is a commodity.

http://highered.mcgraw-hill.com/site.../glossary.html

how is a property of gold to be default or catastrophe insurance? that is my original point - it is only because others think it is. at the end of the day - it have very little utility and thus inherent value.
I'd define an LME contract as a financial asset. The price of which can go down. Not really something to mortgage one's home in order to speculate on.

The central bankers believe that gold is default or catastrophe insurance. The Russian, Indian & Chinese central bankers are buying it as a cash (dollar) hedge. Personally I choose to weight their view over that of an anonymous poster on the interweb.
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  #153  
Old 13.10.2010, 20:55
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Re: Gold Buying

Got my grannies false teeth in a box here - circa 1930s - the base is thick and looks very yellow (=20+ carats). Very useful it must have been, and in those days only for the well-off bourgeoisie.

How much?
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  #154  
Old 13.10.2010, 21:29
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Re: Gold Buying

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I'd define an LME contract as a financial asset. The price of which can go down. Not really something to mortgage one's home in order to speculate on.

The central bankers believe that gold is default or catastrophe insurance. The Russian, Indian & Chinese central bankers are buying it as a cash (dollar) hedge. Personally I choose to weight their view over that of an anonymous poster on the interweb.
Not sure why you would define LME copper as a financial asset. Certainly not my understanding. If you hold it to expiry they will give you the copper in a warehouse.

If you believe in hyper inflation - you should do just that. I fail to see why you would not. I do not believe in hyper inflation.

Please remember that a currency is only worth something because others chose to recognize it as having value. The same can be said for gold (aside from its very limited utility).

I would suggest we agree to disagree.

PS your implied negative comment about anonymous poster was uncalled for - I simply asked you to explain how it is a default or catastrophe hedge. you replied because others think it is...ironic.
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  #155  
Old 13.10.2010, 21:34
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Re: Gold Buying

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LME copper isnt a financial asset - it is a commodity.

http://highered.mcgraw-hill.com/site.../glossary.html

how is a property of gold to be default or catastrophe insurance? that is my original point - it is only because others think it is. at the end of the day - it have very little utility and thus inherent value.
Bank-notes can be printed. Gold cannot be printed. It can be mined, yes. But only a finite amount in a specific time-period.
Paper-money is only worth something, because people belief they can buy something in exchange for it (that's why the grocery store accepted the note).
Nowadays, there is concern that all the money that has been printed by governments around the world cannot buy as much as it used to do (because there is so much of it).

That's why you turn to gold IMO. It's a finite resource and relatively immune to inflation (also very dense (easy storage) and almost indestructible - no natural devaluation as with food)
Currencies are really only a means to facilitate the exchange of goods (well, they used to be, before people started speculating with them...).
It's perfectly possible to exchange goods without the use of a currency (trade the meat of a cow for six and a half hours of your consulting work...).
But it's complicated.
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  #156  
Old 13.10.2010, 21:43
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Re: Gold Buying

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Not sure why you would define LME copper as a financial asset. Certainly not my understanding. If you hold it to expiry they will give you the copper in a warehouse.
N.B. I said an LME contract. I didn't realise that you were advocating taking delivery. Not something I'd mortgage my home for either.

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PS your implied negative comment about anonymous poster was uncalled for - I simply asked you to explain how it is a default or catastrophe hedge. you replied because others think it is...ironic.
You are an anonymous poster - I was merely saying that I personally weight the views of all the central bankers of the world over yours. One could describe their view of gold as default/catastrophe insurance, or gold as money, as anachronistic or even delusional.

That doesn't really matter. These views have been in place for thousands of years and seem highly unlikely to change in the immediate future.
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Old 13.10.2010, 21:58
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Re: Gold Buying

I forgot another interesting reference WRT gold, specific to gold in Switzerland and the SNB sales.

Ferdinand Lips' book 'Gold Wars' is pretty out there, but worth reading for anyone interested in the subject.

http://www.amazon.com/Gold-Wars-Batt.../dp/0971038007
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  #158  
Old 13.10.2010, 22:24
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Re: Gold Buying

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Bank-notes can be printed. Gold cannot be printed. It can be mined, yes. But only a finite amount in a specific time-period.
Paper-money is only worth something, because people belief they can buy something in exchange for it (that's why the grocery store accepted the note).
Nowadays, there is concern that all the money that has been printed by governments around the world cannot buy as much as it used to do (because there is so much of it).

That's why you turn to gold IMO. It's a finite resource and relatively immune to inflation (also very dense (easy storage) and almost indestructible - no natural devaluation as with food)
Currencies are really only a means to facilitate the exchange of goods (well, they used to be, before people started speculating with them...).
It's perfectly possible to exchange goods without the use of a currency (trade the meat of a cow for six and a half hours of your consulting work...).
But it's complicated.
agree with all you say... but my thought is you are better off being short paper money if you think it will fail. thus take on debt and buy 'things'.

perhaps a farm?
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Old 13.10.2010, 22:32
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Re: Gold Buying

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N.B. I said an LME contract. I didn't realise that you were advocating taking delivery. Not something I'd mortgage my home for either.



You are an anonymous poster - I was merely saying that I personally weight the views of all the central bankers of the world over yours. One could describe their view of gold as default/catastrophe insurance, or gold as money, as anachronistic or even delusional.

That doesn't really matter. These views have been in place for thousands of years and seem highly unlikely to change in the immediate future.
An LME contract ultimately can be taken to physical delivery - thus is not a financial asset.

Central bankers got us in this mess.
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Old 13.10.2010, 22:33
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Re: Gold Buying

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agree with all you say... but my thought is you are better off being short paper money if you think it will fail. thus take on debt and buy 'things'.

perhaps a farm?
Much more sensible than taking delivery of 25 tonnes of copper!

Jim Rogers (who started the quantum fund with Soros) has been advocating this for a couple of years:

Jim Rogers: Youtube Get yourself a tractor

Jim Rogers: Youtube Become a farmer
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