Institutional Gold Buying

Jim is right about 12 oz per Troy pound. I couldn't find any determination if yearly production of metric tons is measured in pounds or troy pounds, but I assumed regular pounds. If it were troy pounds then that would amount to a crisp 1%.

 

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lol I love it when people believe this. I heard the same thing about 20 years ago except it was real estate then. "Hurry up, jump on the band wagon or you'll lose out." " This is the hot ticket." " Property will always be worth something and money won't."
I waited, and as it always has with every "hot" investment, the bubble burst and people lost all they had. I was there to scoop it up at prices that made me blush. Hedges are short term gambles, nothing more. At some point the bubble bursts and others clean house on the losses of those who didn't see that. The only ponzi scheme I see here is perpetrated by those making a buck off bullion by scaring the uninformed into believing things that aren't true.
Guy

 

As always, I recommend people do their own research when deciding what to do with their money. This site offers little in the way of up to date news and analysis. There are no shortage of bulls and bears making guesses about what will happen in the future, but there are places where you can go that provide current information that can be used to form your own opinions.

A bubble will form in PMs and there will be a time to sell, but we aren't close to that yet. The difference between this bubble and other bubbles is the dollar. Holding your wealth in dollars is proving to be a bad investment as inflation soars. THIS IS NOT A PREDICTION. Inflation is a fact and you are losing wealth every day you hold your paper dollars.

The haters will be on here as Silver continues it's epic run. As worldwide demand continues to soar. As the rising dollar price of oil, food, and PMs continue to shine a spotlight on the

 

I agree that the US dollar does play a part in precious metals, but no one can be sure if it is the dominant reason. Since 8/8/10 ( limit of my chart ) until market close today 4/19/11, the USD index has fallen from 80.51 to 75.27, or -6.5%.

Gold futures have risen in the same period from $1208 to $1495, a gain of +23%, and there are many periods that could be chosen to show a reverse relationship, and where both fell or both gained. IMO, there are more factors playing a part that are not measurable or considered. If it was a direct relationship, gold would be $1286.

JIm

 

I got a real kick out of this, love it!

According to http://www.marketwatch.com/investing/index/DXY about a year ago the USD index was closer to 90, but you are right it's not proportional. You can also see that the last 2 bouts of QE seem to coincide with giving the dollar a boost initially (probably due to extending a sense of security), and then trailing off. (You can plug almost anything in for 'DXY' to get a nice historical chart of various things like stocks and bonds as well). I think speculation on future inflation coupled with safe haven demand accounts for a lot of the discrepancy.

 

One thing to keep in mind is that prices are NEVER stable in a free market. This goes for the price of gold, oil, food, and even the dollar. So you will never get to a proper understanding of the inflation rate [or devaluation of the dollar, whichever term you prefer] by watching the price of gold or by watching the DXY. Both can be clues to what is happening, but are not accurate measures the way a thermometer measures the temperature because there are too many moving parts. Inflation is an increase in the supply of money that exceeds the increase in demand for money. If both sides are not taken into consideration, you won't get to the correct answer. And it isn't that easy to measure, which is why alternative measures are popular [and perhaps necessary]. Right now, IMO, the supply of money is increasing fairly rapidly, but so is the demand for money [a lot going to recapitalize the financial system]. Much of the new money isn't making its way into the general economy, and prices of things like food and gasoline seem to be rising due to an increase in world demand relative to world supply, and not necessarily because people have more dollars in their wallet to bid up the price. Anyone who was around in the 70s will intuitively know the difference. Back then, the increasing supply of money was evident as companies were easily able to increase prices without hurting unit demand, handed out pay raises in the 7-10% range, and folks ran to the store and bid up or supported the higher prices by their spending more dollars. Now, people don't have more dollars to spend each year, and a case can be made that they have less. So a case can be made that we actually have a combination of deflationary forces in the US economy combined with rapidly increasing demand for things like food and oil out of Asia. You can call this "inflation" if you want, but I would argue that the problem is a little different and more difficult to understand or measure.

As usual, everyone is free to accept or reject any or all of the above. I'm just sharing what I know.