Speculation & Gold

[essence]

Moved the posts

A huge discussion about the speculation of gold and the merits or not of same, which I thought deserved it's own thread.

Keep posting guys, most interesting!!

[Steve Netwriter]

Ahhh, so that's what it's for. Golden bullets. I had wondered.

I think you'd be better using silver for bullets. Much cheaper and they kill vampires

(Thanks essence, sorry to keep getting back to gold )

[Steve Netwriter]

Of course another point is "how much gold do they really have?"
Maybe not as much as they claim:

The second element of the supply and demand leg of the commodity paradigm is the ominously large amount of gold held by the central banks, some 32,000 tonnes, according to the World Gold Council’s most recent compilation.[15] Now here’s where the dissident message would kick in. We think the reported holdings of the central banks are bogus, because they include gold that has actually been leased or swapped out. Take Portugal. The bulletin shows Portugal holding 517 tonnes
.....
But the Bank of Portugal’s Annual Reports for the past few years show they actually hold, in the vault, about 173 tonnes, about 33% of the reported figure.

Gold Is Money - Deal with It!
[Remarks by Robert K. Landis to the Association of Mining Analysts, London, England, October 2, 2003]

http://www.goldensextant.com/LandisAMA.html

That's what happens when you start double accounting gold

[Steve Netwriter]

Wow, I think this is interesting !!!!

Bill,
STUNNING REVELATION FROM GS TOCOM POSITION
In the July 29 session on the TOCOM Goldman Sachs COVERED a substantial 233 short contracts to bring their net short position to 5600 contracts. This brings their net short position to the LOWEST EVER in the last 30 months (the time I have been keeping records). The chart below is astonishing. There is almost a perfect descending trend channel in the net short position of Goldman Sachs which it has followed for over two years so it can hardly be called a coincidence. If this trend continues then the very latest that GS can reach a net short position of zero is when the top trend line meets the X axis. That extrapolates to November 25 2008!! Now isn’t that amazing? That is almost exactly the same date as the expiry of the MASSIVE COMEX Call option position in the DEC08 contract. I had already predicted from the Call option structure that gold will make a huge move sometime between now and the expiry of these options. We now have further confirmation because it looks as if Goldman Sachs will no longer be net short gold by that date!

Cheers
Adrian
Gold action…
Bill,
It is very significant that the cartel best efforts to bring down gold on Monday on the day of option expiry failed. They have been able to bring gold down $30 since then, but when it mattered to take call options out of the money the buyers were in control. The massive DEC08 call option position shows there is some very big money moving into gold. They have no interest in stopping the cartel from taking down gold now that the option expiry is over. Their interest will be to pick up as much gold as they can at the bargain basement price financed by the cartel. As I write this we are only $10 above the 200 day MA…we can expect some very strong buying to emerge shortly. This is the killer move down that makes the final capitulation of those who just can’t take it anymore.
Cheers
Adrian

[Steve Netwriter]

I thought I'd check what the gold price in NZ$ has been doing recently, considering this:



and the result is:



So in US$ terms, gold is still quite near it's recent bottom price. But due to the sliding NZ$, gold is now back up near the all-time high price.
It is obviously more volatile short-term than things like property, but you can see how since May, property prices have been going down, the NZ$ has been going down, which has made a lump of metal a better holder of wealth.

Edited to add:
I find this quite strange because at the moment the "goldbugs" are buying gold at what they see as a bargain low price, hoping to buy before the price shoots up.

[outspoken]

Anyone got a spare $50M??

Diamonds, like art, are a commodity that is gaining attention as an alternative investment.
Increases in the price of the rarest colourless and coloured diamonds are attracting wealthy investors and structured funds as stockmarkets and real estate values decline.
The price of five-carat gems with the potential to be sold at US$1 million ($1.35 million) or more has risen 76.5 per cent in the year to May 2008, according to www.idexonline.com, the website of the International Diamond and Jewelry Exchange.
"There's a group of very savvy, tremendously wealthy people who have put a small portion of their fortunes aside to invest in diamonds," says Francois Graff, managing director of London-based Graff Diamonds International. "They've made incredible returns."
Five years ago, dealers were paying US$70,000 per carat for colourless diamonds of 10 carats and more, says Graff.
"Now we're paying over US$200,000 per carat."

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10524704

[Steve Netwriter]

Anything but property, the stock market and fiat currencies it seems !

[Baron Silas Greenback]

Steve netwriter is like the RM of gold.
Gold is just a commodity like nearly any other, dont over egg it.
A driver for gold for a few years was the growing middle class in China and India for jewellery, thats evaporating fast. Now the driver is simply speculation, personally I can think of many other commodities I would buy if I was interested in pure speculative without normal consumer demand commodities.
But if you ahve plenty of cash and widh to speculate, knock yourself out, it might be a winner. Good luck!

And yes I work in commodities trading, which means I recognise how much I dont know.

[Steve Netwriter]

Gold Is Money - Deal with It! - [Remarks by Robert K. Landis to the Association of Mining Analysts, London, England, October 2, 2003]
http://www.goldensextant.com/LandisAMA.html



I've heard the view that gold is just a commodity some many times.
It's not a view I agree with.

IMO a lack of understanding of the monetary aspects of gold & silver means a lack of appreciation of the potential safe haven flows into gold & silver as fiat currencies become less trusted.

Now the big question is:

"Will monetary inflation and demand result in continual commodity price rises, or will demand shrink as the world goes into recession, resulting in lower prices, and a move from commodities to gold & silver ?"

I am on the fence on that one.

[Steve Netwriter]

By the way, I take your accusation: "Steve netwriter is like the RM of gold" as a great insult. But I'll let that pass.

I think if you read what I say, I offer a far more balanced view.
I don't for example suggest borrowing money to buy gold & silver.
In fact I warn against it.

I don't suggest an overly large % of your portfolio being in any one sector.
Unlike those who claim property investment is the "only way to go".

I don't argue with the idea that gold & silver can go through bubbles.
Unlike those who advocate property investment.
I just don't think we are anywhere near even starting up the next bubble.

I have reached the stage where my conviction is such that I feel safe suggesting that everyone should hold at least 10% of their portfolio in gold & silver.

Oh, and I'm not selling anything

[Baron Silas Greenback]

You seriously claim gold is not a commodity? Jeez this is more scarey than I thought.

As for RM comparism, the signs are all there mate, if you dont like my perception of your posts, tough.

[Steve Netwriter]

The commodity paradigm, I submit, is not a paradigm at all, but rather a running fraud. It is the paradigm of a laboratory animal’s association of a bell with a dinner that never comes. I say this because the commodity paradigm is false in its conception, and false in its particulars. It is false in its conception because it did not arise as the result of a “paradigm shift”, in which the monetary paradigm was displaced by a newer model better able to account for anomalies.
Rather, it arose as spin designed to put lipstick on a pig, namely, the default by the United States on its obligation to redeem its currency in gold. Prior to August 15, 1971, the US Dollar was convertible, at some level, into gold. After that date it was not. The link between gold and the reserve currency was severed for the convenience of the United States. In connection with this default, the commodity paradigm was hatched as propaganda, to serve as suppressing fire for a raid on the global treasury.


Yet today, the notion of a monetary use for gold elicits derision from mainstream commentators. I quote one, in a dispatch dated September 9:

Gold is a currency nonsense
9/09/03 02:30 PM ET
Funny, don't remember the last time I saw someone paying for groceries with gold bars, or booking a plane reservation over the Internet with gold and not the gold card. This gold is a currency talk is nonsense. Nowadays it is a simple thing to move money into other highly liquid and interest paying real currencies with the stroke of a keyboard. Even backward Saudi Arabia puts money into bonds and other currencies rather than gold these days. Gold is about as much a currency as horse and buggies are good transportation. None.[6]

This is the sort of drivel you come up with when you labor under a faulty paradigm. Yes, it is the case that you cannot buy gas with gold in Little Rock. The same, of course, can be said of euros and yen. Wherever you are, you must use as currency whatever passes for legal tender within that jurisdiction. Big deal. This says nothing about the monetary nature of gold.
But this attack on a straw man is analytically helpful, as it points us to the correct interpretation of what actually happened in 1971. The Great Default was not the demonetization of gold. It was, in fact, the demonetization of the dollar.

[tricky]

Now you're shouting.
It makes you look desperate.

[Monid]

I suspect to be fair he is cut and pasting without removing the formatting rather than intentionally shouting.

[Steve Netwriter]

I suspect to be fair he is cut and pasting without removing the formatting rather than intentionally shouting.

Quite so.
Is there a way to do that without going via a text editor ?