Is anybody still buying silver and gold?

I'm not banking on the collapse of any currency, but it's clear to me that the value of all currencies is being eroded. The USD is the preferred currency because it is the world reserve currency. China, Russia, Nigeria, Zimbabwe, and others (formerly Libya and Iraq before regime changes) are working to transition this role away from the US, because the consequences of our money printing (inflation, higher prices) effect every nation in the world when oil must be bought and sold in US dollars. So I would not want to be holding USD at the time of this transition if and when it does happen, but until then it will easily be the most attractive currency. There's no guarantee this change has to happen, but nothing lasts forever either.

I don't really base my precious metal projections on what anybody thinks is going to happen, because nobody knows the future and people can be wrong. What I try to base them on are the supposed laws that govern the relationships between all these things. It's not possible to print money indefinitely without the price of commodities rising. It may not happen right away, there may be bumps along the way, but eventually the gold price has to catch up with the money supply. This is why some analysts say that gold should be between $6,000 and $10,000, because for a long time it tracked the money supply, and if it were doing so today that's the price range it should be in.

The thing about today's markets is that these fundamental laws can be bypassed by controlling the price of real commodities with paper contracts that don't necessarily have what they represent in the real world, so the skewed dynamics we have could and probably will last as long as the current market systems are in place. There's no telling what the timeframe will be, but what I am banking on is that one day we will see fair value in precious metals. A market cannot be withheld from equilibrium indefinitely. As long as market dynamics are not driven by the physical commodity I will have no expectation of price movement, because real life supply and demand are of miniscule relevance, and my goal will be to accumulate as much as possible regardless of price.

 

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I would put it another way..,. The gold price has to track the cost of production. I'm not sure a $10K per ounce price would hold in a world where it can be produced between $1K - $2K [total cost, not cash cost]. Gold tracked the money supply because historically it was part of the money supply, but as that relationship fades into the past, so might the price relationship.

 

It is apparent to me that without any gold backing that currency will not be able to retain its value, so the logical conclusion is that it must return to a gold backing at some point in order to keep peoples' faith in it. Otherwise I would agree with you, but if what you describe were the primary factor in price then it doesn't make sense why global demand is so high right now. I would be more inclined to agree if we were talking about silver.

 

Markets rarely move in a straight line. Various asset classes like real estate, commodities, PMs, stocks, and bonds move into and out of favor depending on the perceptions of investors [but eventually return to their intrinsic value]. Gold was the hot investment for the past decade. It remains to be seen if it will remain hot through the end of this one.

 

All true, but what makes gold unique is that its primary function is a measure of currency value. Homes don't have to rise with inflation because that market is more determined by supply and demand which depends on jobs, income, and other factors. Where as gold price is driven by whether banks expand or contract the money supply. Sure there is the occaisonal swing one way or the other based on sentiment or currency strength relative to other currencies, but neither of those do much to sway the longterm trend based on money supply. If money supply contracts then I would expect gold to cool off under normal circumstances, but since gold never really took off in the same manner that the money supply has I don't know how well these rules will hold true until paper trading doesn't dominate physical price.

 

If the demand was that high, the price would be increasing also. I think that the price of gold reflects well the demand for it ( for what ever reason). The demand for gold ( as I don't buy the suppression theories) as reflected by price seems to be stable to decreasing. IMO.

Jim

 

I traded some miscellaneous silver for a 1/10 AGE. I only have so much room in my safe deposit box.

 

It was an open secret that European central banks were manipulating the gold price before the advent of the Euro. I think it is no coincidence that the price of gold really started to take off after the Euro became official in 2002, and limitations were placed on annual gold sales from Eurozone countries.

Today, with all the ETFs, the price can be manipulated even if demand for physical gold is there.

Also, one should always wonder what is actually being discussed at G-7, G-8, and G-20 meetings. Basically, the only information we get from these meetings is in the form of posed photographs, with little actual information about the nitty-gritty. If they ever agreed to try to limit or control the gold price, we would probably never hear about it.

 

With enough money and risk taking, manipulation of any financial factor can occur, but not for long if there is any force pushing the other side of the trade. If someone decides to try and push gold down $100 by themselves, they could do this by borrowing GLD stock and selling it short,over and over ;unless the demand for gold is there that enough someones says, I want gold at that price or better, then the short is stagnant. The more one shorts, they hope the tide turns downward, but if the demand is there, it won't. Eventually the short has to cover or they can lose everything. If the short guesses right, and there is no one who will step up, they can continue to drop the price. This is not manipulation, it is free exchange. People have the right to bet for their investment that a stock or commodity will go down rather than up. If enough want Gold at the going price, the price will increase. Options on GLD, SLV, etc. offset each other and should just be viewed as a side bet. We were down almost $300 from this year's peak $1923.70, where are all of the bullion bulls who were hoping for a drop so they could jump in? The volume lately is pitiful.

The good news is that many gold bulls got more educated, and stopped believing the $5000 oz by end of this year, and didn't throw their money into a loss. It is not good to blame the direction something is going (like gold) on manipulation, most often it covers up the active reasons.

I certainly am not saying the gold rush is over, I doubt it based on the geopolitical turmoil, The Euro squeeze, and such things as the problems in the BRIC nations ( especially China). This may be a minority opinion, but it is mine

Jim

 

so what do you guys think about the direction that gold and silver have taken now? silver is under $30 and the "support" price for gold of $1660 is broken off the wall in bits....

just makes me wonder if the bull went to sleep and or was eaten by a BEAR!

 

Meh...it did this at the end of Sept this year and by early Nov was up to 34.5, so it would be hard to make folly to make predications about bull vs bear, until it sits in this spot area for an extended period, or continues a long consistently downward trend.

 

China is importing 90 tons of gold/month. This is in addition to the gold they produce within their own country. Collectively the other countries of the world with Russia & Mexico at the top of the list, have imported another 400+ tons.

IMO the manipulation is there. Have a look at THIS CHART. This is what it costs a bank to "lease" gold from the Central Banks. Notice the two spikes into negative territory. This means that on those days, you made money simply by leasing the gold because the interest is negative. i.e. The central bank is paying you to lease the gold. Why? You and I can't borrow on these terms. The only reason for something such as this is to knock down the price of gold.

If this isn't a sign of manipulation, I don't know what is. It can't last lest the physical gold of the 1st world ends up in the 3rd world. It's a buying opportunity, take advantage of it.

 

Well, 1600 is history. 1515 may be the last line in the sand before we can call an end to the bull market.

Any thoughts?

 

An expert on this sent me this email a couple of days ago:

Gold is the last of the Euro Banks true reserve. As it declines their capital disappears. The results can be insolvency, bankruptcy (or default). A truly UGLY situation can result.
I expect gold to trade down perhaps to $1590s, if it breaks that level...then gold might go to $1500 of perhaps lower. Usually, nothing goes straight down or up.
If gold tops $1716 and stay above this, then an upside breakout sooner than later.


Inflationary or even hyper-inflationary depression? http://thedailybell.com/3339/BIS-Calls-for-Hyperinflationary-Depression

Zero Hedge has some of the best analysis out there too.

 

Yes,i am still buying! I just bought 2oz of gold and a roll of ASE. @ prices of $1590 and $29.12 respectfully i believe in the future yrs when i want to sell it will look like a steal??

 

Louise Yamada, who knows as much about these things as anybody, identifies 1515 as the long term trend line for the gold bull market. That's the important level to watch.

 

:thumb:Palladium is what to buy now!!
No one looking at it. I payed less that $100.00 for this 1980. see what its worth today!

 

The price of palladium in 1980 (monthly average) ranged from $150 to $270, meaning that spot price for that brick at the time would have been between $15.5K and $28K.

I'm not sure what the prices of silver, gold, platinum or palladium will do over the next few decades. But, yes, if I have the opportunity to buy a seven-pound brick of any of them at less than 1% of spot, I'll jump right on it.

 

It peaked at considerably more than what it is selling for now after that "cold fusion" experiment if I remember right.

 

This woman has also said $5400/gold, $2000/gold, $85/silver, 4000/Dow, and as usual, no time-lines lest she be held accountable for her predictions. I do agree with you that she knows about as much on where prices are going as all the others looking to get paid for their advice. I wonder how many listened to her advice about the 4000/dow and dumped their stock when it was down, only to get burned when the market got gamed back up.

As long as the government and Federal Reserve keep changing the rule, there is no longer a way to make reasonable predictions on where things are headed in the short term.