Gold quietly goes above $1900 again

Dropped $70+ this morning, now hovering around $1800. Gold and platinum inverted yesterday, that seems often to presage a steep drop in gold.

 

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Gold spot trades 24hours/day, except weekends, and isn't limited to a timezone. According to Harvey Organ, there was a pretty good bankster raid on gold, but even with that it's rebounded nicely to $1860, only 3% from its all time high hit earlier in the week. Everytime they do this, people just buy up physical and it goes back up.

For those paying attention, it was a chance to get some gold at a bit of a discount.

 

Oh the drama. I will gladly talk about gold in any time period you like, start a topic. All of us here know, or should know, the history of gold pricing. However, in the context of what was posted however what I said was correct. If you don't understand the context, then go back and re-read what I was responding to.

 

Precious metals aren't just about investing, they are about having a store of wealth that cannot be fraudulently expanded like everything else. I'm not saying you can't lose money on PM's, just that you can't trust anything else not to be cooked. For me it's not about profit, or else I would be selling at today's prices.

Precious metals were in a bubble in 1980 due to the Hunt brothers, but this time around they are the anti-bubble. Unlike that situation which had excessive buying, today's situation has excessive selling. There are way more shorts than longs in the paper trade which is artificially suppressing the price, and the price is as high as it is because of rampant money creation by central banks around the world. Stocks were a bubble in 2000, real estate was in a bubble in 2006, the currency bubble started in 1913 but went into the stratosphere in 2008, and bonds are probably the biggest bubble of them all due to quantitative easing by many nations (still doesn't come close to the derivatives bubble though). The law of ratios and the law of supply and demand both demand that things eventually go back to equilibrium. Currently neither of them are in effect or else we would be looking at $8,000+ gold based simply on monetary expansion, and there is no real demand for bonds other than by central banks. This fantasy is not sustainable, and only PM's are both transportable, fungible, everlasting, and cannot be created out of thin air so they are the de facto winners in this house of cards.

 

So the suggestion would be to sell the farm and hoard as much as possible? My house is 100% free and clear should i try and pull every dime out of it so I can transfer the wealth into PM's? Your scenario very much might come true...might be tomorrow, might be 75 years from now when I am dead and gone. As you said the currency bubble started 100 years ago yet it is still here.

My gut tells me to take everything with a grain of salt, people have been bemoaning the fall of civilization since civilization began. I am about as far away as you can get from being a conspiracy monger or survivalist, however if the house of cards does fall I would agree with them that dehydrated food/weapons/medical supplies would be just as valuable as PM's. If the system destroys itself there will be no products made, and it will be subjective to the person you are dealing with whether he wants to trade goods/services for that ASE 1oz round or a 1/2 dozen rounds of shotgun shells.

 

So if this is your belief, what about gold? It had no "Hunt Brothers" to blame for its fall from $800 to $300 or less over 20 years. So this was not a bubble, then what was it? Platinum was the same. Without the Hunt's I think silver would have been around $30 or so on 1980, since that is about when they actively tried to corner. $30 is still a far cry from the $4 I bought mine at 12 years later.

You mention shorts versus longs, but I believe they were also excessive shorts in 1980, 1990, 2000, etc. Do you have some numbers proving the shorts versus longs are overly exaggerated today versus other time frames?

I am not agreeing or disagreeing about other things, just asking you about these two points which seem critical to your absolute belief in PM. Beliefs not challenged aren't worth believing, right? I have heard the shorts versus long argument from PM prognosticators for 30 years now, they always argue this is "proving" PM has to go up.

Chris

P.S. Btw the wedding season is beginning in South Asia. I have relatives getting married and they are severely cutting back on gold purchases for the wedding, and there are new "gold rental" companies springing up. Traditionally most of the gold would have been kept, but now its just being rented and returned right after the ceremony. I also read about India and their cutbacks in gold this wedding seasons.

P.P.S. The article I read was in the NY Times, and it was saying the same as my inlaws were telling me from Thailand. I like to use first hand knowledge in place of my own thoughts, even though some like to label such information "personal anecdotes" and simply dream up their facts.

 

Gold did exactly what you said it would do in the previous post you just made. Gold ran to $800 because goverment was being irresponsible with money. What they did then that they are not doing now, is the Federal Reserve let interest rates rise to 16-18%, the market price of money. It had the intended effect and people sold their gold and re-invested it into the economy. Stocks had to compete with this high interest and thus businesses was forced to be responsible. We had a production based economy instead of a consumer based one. There was no reason at that time to hold gold to preserve wealth.

Contrast that to the present. The economy died because the huge industry around house building and real estate development collapsed. The debt based consumer economy is right behind it. It was fueled by unrealistically low interest rates. What did the goverment and Federal Reserve do to try and fix it? They made interest rates even lower, socialized a great deal of the private debt, and took every action to prop up the above industry that had collapsed. They are paying peple not to work and giving tax breaks to companies to move jobs overseas. It's a disaster in the making and getting worse. (oh and fighting 3 wars with no defined endpoint is hugely bad for $ currency)

It's hugely different than the gold situation of 1980.

 

Interesting. So given your insight on the current situation, if you could peer into the crystal ball in 1, 2, 5, 10 years from now, what would you predict the price of gold to be? (And yes, we'll come back here and check )

 

You guys keep forgetting that the world is ending on Dec 21,2012 or thereabout.

 

Anyone else miss Elaine1970?

 

Higher than it is now. Where this finally ends I have no idea. There is nothing in this country's history that parallels it. (there are in Western civilization)

However, you should not be concerned about what I think. If you don't believe what I said about the 1980s vs now, go look up the history yourself. It should be simple enough for you to accept it or discount as the cojutations of a quack. Most people don't do this, they want a comfortable opinion handed to them and when that doesn't come, that is they are told something they don't want to hear, but can't refute, it results in one-liners as we see now.

 

Quite a nice summary of the differences between now and 1980.
I should add that we have two big new players in the gold market now (who would have thought in 1980 that China and India would wield so much clout in the gold market today?), plus European central banks are no longer manipulating the physical gold price.

 

Thank you. Yes indeed about China & India. This is because we transferred our productive economy to these countries and replaced it with a consumption economy. Those places are creating the wealth now and thus can afford to buy gold. The modern "economist" will tell you there is nothing wrong with this just like they will tell you we are only a few months away from recovery (though they can't tell you why).

 

I would not suggest what you've indicated unless your farm or house is made out of paper. If you have a farm you are in great shape. I personally have many, many, many other things besides precious metals that I hoard, but none of them are IOU's which is what I was referring to in the context of my other post. I'm not saying we're going to see a fall of civilization. In fact I think we will see a rise in civilization once the oppresive manipulation is out of the picture. There is no way the current course can continue indefinitely.

 

$800 to $300 (gold) is nowhere near the magnitude of $50 to $3 (silver). That would require gold to have been at $5000 to be on par. It's just a matter of cycles for the rest of the PM's.

There was no GLD or SLV in 1980 so I don't have the data (there were no shorts and longs at the time), but it's common knowledge that the Hunt brothers ran up the price of silver by buying so much and ended up losing around 80% of their fortune. All I was saying is that today the shorts are greater than the longs, and back then there was more buying than selling otherwise the situation wouldn't have happened the way it did.

I only said PM's have to go up if the shorts and longs today equalize. Currently the shorts are greater than the longs, so if they were ever to be equal the price must rise.

 

Gadaffi reportedly sold 29 tons of gold from Lybia's stockpile of 144 tons, in order to fund his defense from the rebel factions. It might seem that this amount of gold entering the market would negatively affect the prices, but it apparently hasn't so far. The buyers are sitting on it untill things cool down.

http://www.ft.com/cms/s/0/85c0912a-da1e-11e0-b199-00144feabdc0.html#axzz1XVRyUNlC