Speculation & Gold

[chook]

what happened to the `gold and silver is going to skyrocket scenario` CD?

[Commercial Dan]

what happened to the `gold and silver is going to skyrocket scenario` CD?

Oh it will, don't worry about that. The Central Banks and Hedge Funds are manipulating the price at the moment. Back in the mid 70s it had a 40% correction then skyrocketed a couple of years later....history will repeat itself again.

[Badger]

what happened to the `gold and silver is going to skyrocket scenario` CD?

Patience!

Gold and Silver markets are volatile!

Remember this isnt about trading and making some quick profits its about preservation of capital in a hyper-inflationary period. A hedge against the bankers and your governments inept ideas and myopic economic's of nonsense...

[Perry]

One major factor is real interest rates. ie the deposit rate minus the real rate of price inflation. That is currently negative, which means you lose money supposedly making you money in the bank.

Don't forget the pleasure of paying tax
on the non-existent profits, either!

[Steve Netwriter]

I'm posting this to test the new spam filter settings.
Hopefully it will work.

These are really good videos.

Krassimir Petrov - Investment Analysis (part 3) - 32 min - Apr 9, 2008
http://video.google.com/videoplay?docid=976700141486118374 (75MB)
5% to 10% gold - to create a diversified portfolio.
10% to 15% - a more balanced portfolio in the current inflationary environment.
20% to 40% - a more aggressive portfolio.
50 to 80% - if you are expecting a crisis. (Krassimir Petrov holds about 50% bullion. Nothing else. No counter-party risk.)

Krassimir Petrov - Investment Analysis (part 4) - 13 min - Apr 9, 2008
http://video.google.com/videoplay?docid=1383332369012611726 (32MB)
Part 4 is a very good questions and answers. Excellent stuff from Krassimir. Unmissable IMO.

a. Manipulation of the gold market.
b. Valuing gold. You must use the REAL CPI figures. $800 now ? Noooo, closer to $3000.
c. Qu. "Most of the people involved in gold and gold investments said it would stabilise at $700"
An. No, no ,no. None of the gold investors said that. These are the mainstream media. Bombarding the public with data which is incorrect.
When did Wall Street EVER call a bubble BEFORE it burst.
So any time they call a bubble, you know it's got a long way to go.

------------

Fingers crossed

[Steve Netwriter]

It worked

Also these:

Krassimir Petrov "Gold - Crisis Analysis" (part 1) 75MB
http://video.google.com/videoplay?docid=2951993283818424891&ei=FZ2rSN0zory rA9mDsA0&q=Krassimir+Petrov+%22Gold+-+Crisis+Analysis%22&hl=en

Krassimir Petrov "Gold - Crisis Analysis" (part 2)
http://video.google.com/videoplay?docid=-263931392800692869&ei=FZ2rSN0zoryrA9mDsA0&q=Krassi mir+Petrov+%22Gold+-+Crisis+Analysis%22&hl=en

[drelly]

I still reckon if the shit hits the fan, I'd rather own a field full of something edible than gold

[Perry]

Interesting Times (9 Sept Article)

Comrades Bush, Paulson & Bernanke Welcome You to the USSRA
(United Socialist State Republic of America)

Nouriel Roubini | Sep 9, 2008

The now inevitable nationalization of Fannie and Freddie is the most
radical regime change in global economic and financial affairs in
decades. For the last twenty years after the collapse of the USSR, the
fall of the Iron Curtain and the economic reforms in China and other
emerging market economies the world economy has moved away
from state ownership of the economy and towards privatization of
previously stated owned enterprises. This trend was aggressively
supported the United States that preached right and left the benefits of
free markets and free private enterprise.

Today instead the US has performed the greatest nationalization in the
history of humanity. By nationalizing Fannie and Freddie the US has
increased its public assets by almost $6 trillion and has increased its
public debt/liabilities by another $6 trillion. The US has also turned
itself into the largest government-owned hedge fund in the world: by
injecting a likely $200 billion of capital into Fannie and Freddie and
taking on almost $6 trillion of liabilities of such GSEs the US has also
undertaken the biggest and most levered LBO (“leveraged buy-out”)
in human history that has a debt to equity ratio of 30 ($6,000 billion of
debt against $200 billion of equity).

So now Comrades Bush, Paulson and Bernanke (as originally
nicknamed by Willem Buiter) have now turned the USA into the
USSRA (the United Socialist State Republic of America). Socialism is
indeed alive and well in America; but this is socialism for the rich, the
well connected and Wall Street. A socialism where profits are
privatized and losses are socialized with the US tax-payer being
charged the bill of $300 billion.

This biggest bailout and nationalization in human history comes from
the most fanatically and ideologically zealot free-market laissez-faire
administration in US history. These are the folks who for years
spewed the rhetoric of free markets and cutting down government
intervention in economic affairs. But they were so fanatically
ideological about free markets that they did not realize that financial
and other markets without proper rules, supervision and regulation are
like a jungle where greed – untempered by fear of loss or of
punishment – leads to credit bubbles and asset bubbles and manias
and eventual bust and panics.

The ideologue “regulators” who literally held a chain saw at a public
event to smash “unnecessary regulations” are now communists
nationalizing private firms and socializing their losses: the bailout of
the Bear Stearns creditors, the bailout of Fannie and Freddie, the use
of the Fed balance sheet (hundreds of billions of safe US Treasuries
swapped for junk toxic illiquid private securities), the use of the other
GSEs (the Federal Home Loan Bank system) to provide hundreds of
billions of dollars of “liquidity” to distressed, illiquid and insolvent
mortgage lenders, the use of the SEC to manipulate the stock market
(restrictions on short sales), the use of the US Treasury to manipulate
the mortgage market (Treasury will now for the first time outright buy
agency MBS to manipulate and prop up this market), the creation of a
whole host of new bailout facilities (TAF, TSLF, PDCF) to prop and
rescue banks and, for the first time since the Great Depression,to bail
out non-bank financial institutions, and a whole range of other
executive and legislative actions (including the recent bill to provide a
public guarantee to mortgage for banks willing to reduce their face
value).

This is the biggest and most socialist government intervention in
economic affairs since the formation of the Soviet Union and
Communist China. So foreign investors are now welcome to the
USSRA (the United Socialist State Republic of America) where they
can earn fat spreads relative to Treasuries on agency debt and never
face any credit risks (not even the subordinated debt holders who
made a fortune yesterday as those claims were also made whole).

Like scores of evangelists and hypocrites and moralists who spew and
praise family values and pretend to be holier than thou and are then
regularly caught cheating or cross dressing or found to be perverts
these Bush hypocrites who spewed for years the glory of unfettered
wild west laissez faire jungle capitalism (and never believed in any
sensible and appropriate regulation and supervision of financial
markets) allowed the biggest debt bubble ever to fester without any
control, have caused the biggest financial crisis since the Great
Depression and are now forced to perform the biggest government
intervention and nationalizations in the recent history of humanity, all
for the benefit of the rich and the well connected. So Comrades Bush
and Paulson and Bernanke will rightly pass to the history books as a
troika of Bolsheviks who turned the USA into the USSRA. Fanatic
zealots of any religion are always pests that cause havoc and
destruction with their inflexible fanaticism; but they usually don’t run
the biggest economy in the world. But these laissez faire voodoo-
economics zealots in charge of the USA have now caused the biggest
financial crisis since the Great Depression and the nastiest economic
crisis in decades. So let them be shamed in public for their hypocrisy
and zealotry that has caused so much financial and economic damage.

[Steve Netwriter]

I still reckon if the shit hits the fan, I'd rather own a field full of something edible than gold

I think there's a good reason to have a personal source of food & water.
But I don't think any one solution solves all the potential problems.

Sure, if there is a lack of food, will someone sell you their food for some gold ?

But likewise, suppose you want petrol. Is the petrol station going to accept $100 worth of food in exchange for a tankful of petrol ?
I think they might soon have too much food piled up in the store.
I think they would prefer to accept gold & silver as money, as it's much easier to store and transport, and subsequently use as money.

That is what has happened in the past, many times before.
So IMO as always, a balanced approach.

[Austrokiwi]

Balance is everything:

Some related observations re gold and markets in general.

As a hobby I collect coins. Since 2003 the coin market has exploded Coins Purchased back then are now effectively unaffordable for me now if I wanted to buy them today, but there are some interesting trends. This week I have recieved three different catalogues, two Auction catalogues, and on update shop catalogue........ One of the Auction catalogues is for an upcoming Auction in NZ. The introductory blurb spouts forth about another high quality auction. However going through the catalogue is a disappointment, there is very little quality available. I dragged out last years catalogue the difference is clear Last year there were 568 lots, this year there are 356 lots. Last year 73 lots were gold coins, this year 37.

NOw the Vienna Auction: 2420 lots. Obviously the NZ auction just can't match teh European one, but the interesting thing is both are showing some slow down in the market, there are no major rarities in either Auction. Eg: for Austria Coins with values in xs of €10,000.00) To me it looks like the coin Market is slowing down. As coins are on the pouter edges of the investing world they are perhaps a canary. As there are long periods between booms in numismatics I believe collectors are holding on to the good stuff perhaps not believing they will get the value they want out of a sale.

Other market comment: what is going on in Russia, the stockmarket has closed!!!!!

[Commercial Dan]

Gold, gold gold

Up 10% today, the highest dollar rise in history....is $2000 gold is not out of the question by year end

[Commercial Dan]

Bernanke-'we have lost control of the dollar and commodity prices

Bernanke: 'We have lost control'

Economist recounts talk with Fed chairman

By Joshua Boak | Chicago Tribune reporter September 17, 2008 NAPLES, Fla. — Several months ago, economist David Hale had a private meeting with Federal Reserve Chairman Ben Bernanke, who was trying to ward off a recession by lowering interest rates and increasing the money supply in the economy.

The problem with that approach is that the value of the dollar plunged against foreign currencies, causing crude oil prices to skyrocket because oil is pegged to the dollar. It affected food prices, gasoline and family budgets.

"Ben, you are playing a very unique role in world economic history," Hale recalled telling Bernanke, an expert in the Great Depression. "You are the first central bank governor of the United States to preside over a recession with no decline in commodity prices."

Bernanke could hypothetically limit inflation in commodities by raising interest rates, a policy that would restrict the flow of money but potentially lead to an avalanche of bank failures. At a financial conference in Florida on Tuesday, Hale, a Chicago-based economist for investment managers, hedge funds and multinational companies, paraphrased the Fed chairman's response.




"We have lost control," said Hale, quoting Bernanke. "We cannot stabilize the dollar. We cannot control commodity prices."

If efforts to stop a recession sent commodities to record levels through July, then the realization that a recession could be imminent has sunk oil prices by almost 40 percent during the past two months. For all the debate about foreign demand and financial speculators, one overlooked aspect of commodity prices is the health of the American economy.

With investment banks collapsing under the weight of subprime mortgages and the recent government bailout of Fannie Mae and Freddie Mac, commodity prices have retreated as the market predicts demand for oil will fall. October futures closed down $4.56 Tuesday, at $91.15 a barrel. And in response to inflationary concerns, the Federal Reserve responded Tuesday by holding the overnight federal funds rate steady at 2 percent as it has since April.

Hale believes the recessionary turns could keep oil below $100 a barrel, a consensus shared by many analysts who see oil staying in the $80 to $100 range.

But a problem for America is that much of the power it wields over oil prices is based on the strength of the dollar and economic demand. Russia, Venezuela, Ecuador and others have nationalized their reserves, stripping ownership rights away from private firms and complicating the global market for oil.

"While every other country is practicing natural resource nationalism, this country still pretends there is a free market in energy when, in fact, there is not," said John Hofmeister, the head of Citizens for Affordable Energy and the former president of Shell Oil Co.

If there is any relief for American consumers to come from global markets, it might emerge from China, a country that has successfully wrestled down inflation. China insulates its population from the market price of oil, a policy shared by Malaysia, Thailand and India.

As inflation in China dropped to 5 percent from 8 percent, the government has begun to pass actual commodity costs onto the public, said James McGregor, a consultant and author of the book "One Billion Customers: Lessons From the Front Lines of Doing Business in China."

"I think you're going to see them squeeze down subsidies," McGregor said. "They don't like them either because they distort the economy."

[Badger]

Have been following closely what you have posted there CD

I wonder if they really want to stabalise the dollar?

The AMERO lurks in the shadows...

[Commercial Dan]

Have been following closely what you have posted there CD

I wonder if they really want to stabalise the dollar?

The AMERO lurks in the shadows...

I don't think Bernanke will worry about the $, if you have read any of his papers on the great depression he is more of an advocate of inflating and debasing a currency to stimulate growth.

Everyone should remember that the first US currency called the Continental went to zero a couple hundred years ago.

Not saying that will happen this time, but my next prediction is that a lot of people are going to be toast even here in the NZ property industry, particularly highly geared players and developers we all thought were safe. In fact almost every medium to large scale developer is going under!

[outspoken]

You stalking too Badger? Haha

Hey. just a thought, but if you read alot of the articles on www.financialsense.com you see quite a few commentators talking about how Gold & Silver have dropped in value after events which should have seen them soar. I know, very recently G & S have shot up again, but doesn't this just affirm the fact that Gold isn't money? that they are both just commodities?
John Needham makes a good point here:

John Needham
Gold as protection against fiat currencies
The list of GATA and its fellow travelers’ litany of misdirection is crumbling. First, the “Gold is money” mantra is looking thin. If Gold was money at $1033 it is still money at $758, but it’s only a quarter of the money now. That of course can all change, but if ever there was a time for Gold to prove its worth as a hedge against fiat currencies, this week was it as $5 trillion was added to US taxpayer obligations by the Fannie and Freddie bailout. Gold didn’t rally and Silver sold off all week to be at $10.71 at lunchtime on Friday. That’s a loss of over 50% for Silver since the Danielcode called the March highs to a matter of ticks.
Tell me how that “Gold and Silver are money” story goes again.

I think you're all right about intervention and that it's value is underestimated at the moment, and physical gold has a value?

But please tell me how it's not just a commodity again?