Skip to comments.Is this the end of the gold rush?
Posted on 04/04/2012 7:21:42 PM PDT by RC one
NEW YORK The price of gold, which has climbed for years like a blood pressure reading for anxious investors, plunged Wednesday to its lowest level in three months.
Gold fell almost $58 to $1,614 per ounce. It has declined 15 percent since September, when it hit a peak of $1,907. It had more than doubled from the financial crisis three years earlier.
The decline Wednesday came on an ugly day in the stock market. The Dow Jones industrial average lost 125 points a day that last year probably would have caused fearful investors to buy gold as a protective investment.
"It's difficult to forecast, but I think the gold bull market is over," said Cetin Ciner, a professor of finance at the University of North Carolina-Wilmington. He likened the surge in gold to dot-com stocks before they collapsed.
(Excerpt) Read more at cbsnews.com ...
it's just algebra.
it's gold is selling off, I'd be inclined to buy it all the way down to where ever.
...and yet there were several posts here at FR in the last week predicting this price drop.
Except, perhaps, more people are beginning to realize that, except for some specialized industrial uses, gold isn’t good for much of anything.
‘is this the end of the gold rush?’
pretty simple question. are they making the dollar stronger... or weaker? let’s see...
the ‘budget’ is around $4 trillion on revenues of $2 trillion with a debt of $16 trillion.
to bring that down to terms everyone can understand.... if you made $50k/yr but spent $100k while holding $400k on your visa... you’d wouldn’t just be considered a very bad risk... you’d be considered a deadbeat and jailed
therefore... is the dollar getting stronger? not only no, but HELL no.
hence... gold will continue to go up, excepting for obvious price manipulation which can only last so long
Could be time to BUY!!!
Obama is still there.. and might be THERE for 4 more years..
Romney will be so easy for Obama to kneecap.. eye poke.. and provide vicious SLAPPS..
Zerodamus has Not even STARTED to really campaign YET...
He can AND will BBQ Willard..
it tickles me pink to know that people think like this.
Wrong question (in the article).
The right question: Will the USA continue to spend and borrow and print dollars on a massive scale?
If the answer is yes, then the right question becomes: Will the dollar’s value continue to drop in value vs. the value of real assets?
Many other countries understand the the US is abusing the reserve currency status of the dollar, and understand that they can start engaging in international trade without going through the dollar as the exchange currency. Although the dollar may look better than the Euro and the Yen for a while longer, it is only a matter of time before there is a dollar exodus, interest rate hikes and a time when other countries refufse to buy US Treasury debt.
In 2011, the US Federal Reserve bought 61% of debt issued by the US Government. This is monetizing our debt. This will continue massively. It is false to assert that this is not QE... plus we’re ignoring the fact that Operation Twist - currently going on - is also QE in the form of the Fed buying more US debt...
Gold will hold its real value over time, but with these facts, the dollar will not.
It has been good for at least one thing for over 3,000 years though and plenty of people realize that too. If it weren’t good for that, it would cost $1,600 for an ounce of it. We require currency to engage in commerce. paper works for most people despite its overall weakness but gold remains viable.
They don’t call them SeeBS for nothing.
Sometimes gold needs to become food. Yield realized on sale, to a greater fool. Make sure you have one when hunger hits.
Future inflation has been setup - some trillions of $ generated without any production or value supporting them. When the flood is released by the FRB, when and if economic activity picks up, inflation in more than food, fuel, and services will rear up.
Leave it to CBS to ignore the obvious facts.
March was the largest Investment redemptions month since 2009. Must be because the economy under Obama is going gang-busters, right?
The sheeple are bailing from the markets, and need the money to BUY GAS to get to their new minimum wage Obamajobs.
Volume in the markets has been at, or near historic lows as retail investors have largely pulled out. the Trading Houses are selling gold to cover redemptions and market shorts.
As soon as Helicopter Ben mentions the phrase “QE3”, gold will SKYROCKET.
I’m a “fan” of gold without being religious about it. I sold 1/3rd of my gold at $1750. and don’t plan to ever be all the way out of it. It has come a long way. Although I will buy a few hundred bucks of silver almost any time if I can get a good price relative to spot, I believe gold may have some resting to do. I could see $1350 as an interim low point for gold, but more likely about $1530. I believe that those who are looking to buy should wait to see how gold behaves should it lose $1600.
If you buy the inflation argument, which I do, to some extent but only after some further interim deflation of major assets, I believe stocks are going to be better for pure capital gains. Meaning, they rise, then you sell them. Many investors are not into gold for that activity. Capital gains are not easy to capture in gold, physical gold. Gold is not easy to time selling and buying, and of course the spreads are punitive. Right now, the metals charts look like pure crap. I’d be in no hurry to buy at this exact point. We enter a traditionally weaker time of the year soon and IMO you just wait up to 60-90 days and watch. I have a very low basis in my silver with an average price of about $13 but not so for gold.
I also think that if interest rates rise, gold could be punished. I’m kind of sitting on my hands at this juncture.
Evidence that we are not far from a bottom in the gold price.
I think silver is still a better buy than gold for the time being. But if gold comes down some more... It’ll get back into “buy” territory.
Buy from the dips (people who watch CBS news).
I dunno. My gut is that the bottom (for now) is around $900.
I have been buying silver and copper coins and bullion for my collection. Long term in the next ten years or so, we all know. How this ends.
The problem with gold is it is an expensive hobby item (jewelry, coins, etc.). Once all the easily influenced buyers have exhausted their disposable income buying it at its relative tops it has no where to go but down again, until another promotion resumes. As long as women want it in jewelry it should keep pace with inflation but it is not a necessity.
Silver/copper/gold coins are a good investment, although it seems the market is small. Maybe because people don't have money to spend.
I found a great site that charge barely 2 dollars over spot for coins and I add it as I have other assets.
I like silver more than gold for the sole reason being that silver has more uses than gold.
gold have the hypnotic effect on les femmes, something that cannot be said of silver.
Gold seems to be coupled with the stock market for now. We are still seeing a lot of wealth destruction in this country as evidenced by home foreclosures, stagnant housing prices, stagnant wages with rising prices of staples such as food and energy. Our current environment of wealth
destruction is also depressing gold. However, gold has historically performed well even in the most dire times such as the Dark Ages. There is simply too much paper out there that will eventually have to be reconciled with something of value. But what will do the reconciling? A barrel of oil? Farmland? The company with the latest and greatest gadget, that is supplanted by the company with the latest and greatest gadget? Some investments are hard to liquidate and others are difficult to predict. Bet on the historical record which has been precious metals.
The other strategy is to bet against the dollar with long term treasury shorts, TBT
Only an idiot would believe that inflation is under control. It hasn’t even started yet. When inflation is over 20% Holders of gold and silver will think about selling. That would be when silver is over $100 and gold is near $5000. Yes it sounds impossible but so did $1900.
If and when the economy heats up the inflation will go to the moon faster than a Gingrich colony. Our economy is sick, very, very sick.
Capital gains, estate taxes. Gold is a winner with the emerging underground economy. If I am on my deathbed, I can still slide some gold pieces into my kids hands w/o them paying estate tax. Want to go on Medicaid or other government assistance, slowly convert your cash to gold at a gold show.
If BO is in there again, you know that he will try to shut down gold and silver dealers for this reason.
“The problem with gold is it is an expensive hobby item...”
With respect, I believe this is a parochial view. This does not account for the idea that there are thousands of Chinese, and Indians who have massive cultural involvement with gold and newfound wealth from selling us their crap for so long. Prior to the recent era, there was no way for them to participate in paper markets (which are paper markets, yes, but are not insignificant elements in the global pricing scheme) There’s in essence a whole new world of investors and (for whatever reason) holders of gold and PMs around the world that did not exist before the current era.
Nobody can predict the future. Banks sold kilotons of gold at the $275-$350 bottom ten or so years ago. Word is that they are buying it again, but media reports mean utterly nothing and are typically misdirection. Gold will always have some appeal. It takes a lot of effort and energy to extract it from the ground. This was actually far more massively so for silver circa Y2K. At that time, even though I liked silver but was agnostic about it, it struck me that one could not extract silver from the ground, smelt it, purify and assay it, and strike it into a coin or ingot for $5 or $6 or $7. It wan’t a fetish item...it was simply an item that was selling below its cost of production.
For the moment, I think silver is fully priced at $30.
I think there is an average world price to produce gold from ore. Goldcorp has some mines that produce $130 gold and $300 gold. Those are extreme outliers. My suspicion is that the avg world production price for gold is in the $600 range.
This is a 2011 report. With higher fuel costs, this could be closer to $700.
So gold could maybe decline to $1000-$1200 in a worst case scenario. Hard to say. Meanwhile world markets appear to be entirely dependent upon the fabrication of more money from central bank sources (the inflation argument)
By the time gold hits $5000 or $6000 like the big dudes say, life will be incredibly different from how it is now. I’ve heard all the arguments, I don’t subscribe religiously to any of them. I think of this as only one dynamic: When I buy gold or lettuce or a hamburger with my green cash, I am expressing a preference. I’d rather have a hamburger than my money. Nobody has to own gold, but not all people will be at the bottom of the economic ladder, and, the people at that economic stratum never did buy gold other than one-time purchases of jewelry and the like.
I agree with 'sten' in post #6.
You need to ween yourself off of the DNC kool-aid that you apparently are guzzling by the gallons.
Fiat currency has most of the attributes of money, but it does not act as a store of value. After a few years a dollar bill has only a fraction of its original buying power. However an oz of Gold from (e.g.) the time of the Incas retains its buying power.
Something that has the attributes of money is valuable because it has those attributes. Would-be barterers can use money to overcome the otherwise insuperable problem of discovering a Coincidence_of_wants .
Trade requires money. Let's examine this vital function of money with respect to the coincidence of wants:
Chicken farm example:
You run a chicken farm, and you need to buy a great many things to keep your farm and family going.
In a given month you need - for instance - to buy chicken feed, to hire someone to repair your generator, to buy a nailgun to allow you to mend chicken barn #9, to hire a midwife to help give birth to your widowed daughter’s baby, to buy milk and bacon - and so on.
Some of these resources will be buyable with chickens or eggs. And some of them will not - there's no coincidence of wants if the midwife or the nailgun owner don't want chicken meat or eggs.
But all or most of these resources will be buyable with money - with Gold or Silver. Because offering money in a transaction vastly improves the chance of a coincidence of wants
Chicken farm example - continued:
You’ve had a successful month at the farm, and you now have loads of chicken meat and/or eggs to sell.
100 people line up to buy what you’ve got.
* 50 of them have horribly devalued fiat money, food-stamps and a bad attitude
* 40 of them have plans for barter - some of which are better than others. One is willing to work on your farm for food: another is willing to sell you their body, another has a stack of AA duracell batteries, another has some miniature bottles of scotch - and so on, with dozens of variations. You have to gauge each transaction on its own merits - an exhausting process - and half of the barter offers are simply going to be unworkable.
* 10 of them have Gold and/or Silver.
Which customers will you prefer selling your produce to? They all want what you've got - but do you want what they've got? Again: real money vastly increases the chance of a coincidence of wants.
Only Gold and Silver fulfill all of the prerequisites of money. This gives them inherent value - useful (for instance) in a survival situation.
(Of course Fiat currency can also be used to run a chicken farm - but historically it breaks down the moment that price inflation reaches ~50% a month).
Hope this was helpful.
The Nightmare German Inflation
One day everything was fine.
The next day hell was unleashed
With $16 trillion in debt now, no prospect of staunching further accumulation and already $100 trillion in off books unfunded liabilities The BenBernank has no way out but to inflate. Problem is, the banksters, keynesians and politicians have all become addicted to debt, the “painless” tax. They will fight tooth and claw to keep gold from rising but it will, it must. As has been said, buy the dips.
[ You need to ween yourself off of the DNC kool-aid that you apparently are guzzling by the gallons. ]
Romney-Aid is not KOOL.. to believe a Massachusetts liberal is a conservative is brain washing not thirst quenching..
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