Biggest Gold Drop Since December 2008 Send Metal To... Week Ago Levels

Zero Hedge ^ | 08/24/2011 | Tyler Durden

[SeekAndFind]

Gold this morning is plunging by the most since December 2008. For those seeking the reason for the sell off, it once again appears that the market is about 24 hours late in processing news that has been out for over a day.

One of the main catalysts for today's gold price is the realization that the Shanghai Gold Exchange hiked gold margins by 26%. Of course that this happened not one but two days ago (as we reported) is irrelevant. There are other factors to be sure: on Tuesday holdings of the SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell by nearly 25 tonnes, their biggest one-day outflow since Jan. 25.

Furthermore, there is another rumor that hedge funds that have been crushed by the market volatility over the past month are shoring cash ahead of Jackson Hole by selling their winners. Either way, at last check gold was down to $1770. This is the price it was on August 16: about a week ago. As for where gold will go next: we suggest investors consider what the options for the world central banking cartel are, and how many of them do not include diluting paper. We are eager to hear the alternatives.

[sickoflibs]

I wondered how gold price was skyrocketing so fast with the economy stalling, dangerous to buy when it’s moving up so fast.

[Admin Moderator]

For the last time - this is a blog. Post in the appropriate forum.

[demsux]

Sold my GLD this am...just waiting to get back in...it will go to $2000.

[GilGil]

Margin hikes are gold positive not negative.

This article is ridiculous.

[silverleaf]

Silver is still holding pretty good and interestingly, copper is rising

Seems like a buy opportunity for those who, last week, may have begun to realize that they missed a boat that may again rapidly leave the dock.. does anyone really think the investors of this world are beyond fear and panic for good?

Gold climb last week was just a taste of what hyperinflation will hold

[PMAS]

*

[agere_contra]

Well said.

I believe that tomorrow will be another down day for Gold, down to ~1720. But today or tomorrow, both have the character of being last-chances-to-buy-Gold-cheap.

My guesstimates FWIW:

by the end of September, Gold 2100 Silver 50
by the end of September 2012, Gold 6000 Silver 300
by the end of September 2013, Gold 15000 Silver 1500

[WellyP]

As was posted yesterday...All pigs get slaughtered!

[agere_contra]

Ouch! Please FRiend, don't buy GLD (or SLV). Get the physical metal.

One day there will be a sharp divergence between the paper price and the physical price. That would be a bad time to be holding (paper) ETFs.

There's a reason why there's a premium on physical compared with the ETF price. With an ETF you are only holding a piece of paper.

Sorry for offering unsolicited advice, I'll shut up now.

[demsux]

Always appreciate advice! I use GLD, UGL and USO as trading vehicles, not long term holdings. I like the liquidity and have the ability to track them day to day, so I feel pretty comfortable using them as a short term investment strategy.

I agree that physical is the way to go for long term holdings.

[dools0007world]

Gold is soaring because there is no other place to put one’s money. It has inherent intrinsic value that is pegged to its actual worth along with supply and demand. When paper currencies fail—and they will if we keep going with Onada—it will once again be used as legal tender—along with other precious metals. Manufacturing, and its consumption of precious metals, is a marginal component in determining their value right now.

As I said, where else can one invest their money today with a reasonalble expectation of return on that investment? The stock market has been a joke for years. The economy is in the tank and going down for the third time. Gov’t bonds, treasuries? Governments are broke. Assuming The Usurping Marxist Onada is kicked out of office next year, and his Marxist economic policies are scuttled, real estate is another good place to put your money. There is a finite supply of habitable real estate.

Whatever is happening to gold today is being manipulated. This dip will prove to be nothing more than a minor ripple. Reason: None of the things that csused it to go up in the first place have been fixed.

[darth]

When gold goes “tulip bulb”, which it has not yet, then it is time to sell.

FWIW, my investment strategy is to buy physical things that I can make money with in manufacturing. That includes things like chemicals, metal anodes, tanks, machine tools, trucks, forklifts, etc. I have purchased three plants at five cents on the dollar.

If I could I would be buying timber land since lumber is down right now.

The wealthy should be looking to buy out profitable small businesses that are in an operating capital squeeze. For example, I have a friend in that situation who would be thrilled to pledge his receivables for a loan at 18% right now. The factoring vultures want 30% which will put him under for good.

Note that under the new stimulus bill signed last year for small business your capital gains tax rate is ZERO for gains on money invested in small businesses.

Remember that even during the Great Depression there were plenty of profitable businesses.

[OneVike]

I agree with sickoflibs, the troubles that have sent gold through the roof has not been fixed. Not only are the problems still present, they will get worse, because Obama is not here to present liberalism in the sense that many think.

Obama is here to destroy the American dream. So he will do nothing to change the way the economy is going. He said himself that he would be happy with one term if he can accomplish his goal. His goal as I said is the destruction of America.

Now, gold will continue to rise and fall, and rise again all the way through 2012. When he gets defeated is when it is time to really watch for the time to sell.

Even then though, it could be that gold will continue to rise until he is physically out of office. We have learned already how dangerous this Muslim can be in lame duck mode, ie. between November 2012 to January 2013.

Gold is gold, and I will hold mine where it is, at least until I know the problems screwing things up are being fixed. Even if I unload after it begins to drop, I will have realized a profit of many times my original investment.

[OneVike]

I meant to say dools007world is correct, not sickoflibs.

Sorry, I was reading dools comment to sock and typed in the wrong name when giving credit to whom I agree with.

[douginthearmy]

Gold may be dropping now but I have to guess it will go back up. It might take a little while after QE3 is announced Friday. It doesn’t mean that gold can’t become a bubble though. Just like anything else, gold is only worth something because people think it is. It makes a good conductor and nice jewelry but other than that its not particularly useful. If people decide its not worth as much the price could drop like a rock.

[sickoflibs]

RE :"Not only are the problems still present, they will get worse, because Obama is not here to present liberalism in the sense that many think. Obama is here to destroy the American dream. So he will do nothing to change the way the economy is going......Gold is gold, and I will hold mine where it is, at least until I know the problems screwing things up are being fixed "

I don't have any faith in Republicans doing much positive either. So far their record of accomplishments is pretty thin, but lots of talk.

Gold should be good and continue to rise on the average. The Federal Reserve has made it clear cheap money will continue.

[OneVike]

I totally agree.

Until conservatives control the chairman seats and the Republican leadership, they will just pretend to be at odds with Obama.

RINOs are no better than the Democrats, and they have always been so.

We need to replace a lot more RINOs with conservatives as we did in the primary season of 2010.

[cornfedcowboy]

Take a look at CEF and GTU for etf’s with physical possession of gold.

[dools0007world]

Yo OneVike—I’ll be the first to admit I’m not the sharpest knife in the drawer. But I continue to be surprised at the otherwise bright folks here on FR who think they can look at todays economy the same way they did the pre-Onada economy.

I argued with my financial advisor almost four years ago about switching some of my stocks to precious metals. He wanted to pretend that the politically motivated (by both parties)sub-prime lending was just a passing storm. Subsequent to that The Usurping Marxist Onada took over the WH. Believe me, he gets it now.

A couple of weeks ago—in the midst of the budget fiasco and subsequent rating decline and plunges by the DOW, Nasdaq and S&P—people were talking about moving out of the stock market into the bond market. Do they not get that governments at every level are broke? Do they not get with real unemployment at 20-25% and climbing federal tax receipts will continue to go down? Do they not get that present tax policy, which excludes millions from paying fed income tax, further aggravates the situation. Do they not get there are not enough rich people to tax to make up the difference?