Investing in precious metals 101

For those of you interested in gold . . . .

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  • Mon, Aug 24, 2009 - 04:44am

    #1

    Lemonyellowschwin

    Status Silver Member (Offline)

    Joined: Apr 22 2008

    Posts: 210

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    For those of you interested in gold . . . .

Gary Tanashian knows his stuff.  He is not a hack and he is not half-crazy  His site is biiwii.com. 

Here is a guy who follows markets obsessively, who knows his limits, who thinks in terms of technicals and fundamentals and who trades and I daresay wins more than he loses.  And he is a nice guy and a good writer.

Here is what he has to say about gold:

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Friday, August 21, 2009

Gold, weekly chart

Well, I rest so easily about gold – over the span of years, never mind days, weeks or months – that I do not check on its nominal USD price very often. But I know that many market participants micromanage the hell out of it (really folks, is it worth the energy expenditure?), so this morning I thought I’d give it a review, by weekly chart.

All good… okay, analysis over. Next!

Just kidding.

You know, I tend to become a little irritated about the jocks and TA wizards peering into the price of gold, making grandiose statements (whether bullish or bearish) and getting people all stirred up, lumping gold with silver, oil and the rest of the inflation trade and contributing their part to the massive mis-information hype machine that adds to the general confusion out there. So much so that I realize I border on antagonism and have annoyed (at best) more than a few gold bugs and inflationistas. I can’t help it. I am a sort of perfectionist and disgruntled non-joiner.

Here is the situation on gold. Blahhh. And that’s good! This monetary metal needed to work off the excess. It needed to decline in relation to the positively correlated world of assets and if I existed in some kind of fairy land instead of the real world, I’d say that I hope it remains in a downtrend against all the other stuff. That is because it would show me that I live and operate in a sound, healthy and honest financial and economic system. Unfortunately however, I live in the real world.

Gold is coming along nicely as it continues to under perform. The next advance can only happen from a solid base, which is what is being built here. I have not ceased being bullish since 2002 and there is certainly no reason to change now. The question is, will the bottom line of the ascending triangle be hit first at around 800? I have not shown the lower probability line that intersects the 700 area, but I suppose that is a possibility as well. No matter, the weekly chart of gold is bullish and there is a shelf life on the opportunity to get aboard the good ship Safety.

The intermediate term target remains 1300 and one day, when the public becomes fully alarmed about the degradation of the financial system, well, will gold’s price even really matter?

Some people think there are evil criminals at the controls of the monetary system. I think there are idiot bureaucrats at the controls. Either way, they are doing what they always do (destroying value) and so is gold. It has retained its value, as always.

  • Mon, Aug 24, 2009 - 02:58pm

    #2
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

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    Re: For those of you interested in gold . . . .

Thanks for sharing LYS,

I very much appreciate his analysis and I will definitely follow his work.

  • Tue, Aug 25, 2009 - 03:13am

    #3
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

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    Re: For those of you interested in gold . . . .

I crunched these numbers tonight using USGS data

Data can be found here:

http://minerals.usgs.gov/ds/2005/140/

The chart is the ratio of cummulative stocks Silver:Gold from 1900-2007 and accounts for depletion of stockpiles due to industrial usage.

Interesting. How is it again that the official paper ratio is 65:1?

One flaw is that it doesn’t account for minerals mined before 1900. But still, even if those numbers were equal to the gold and silver mined in the industrial age, we’re talking about merely doubling the ratio. Something’s rotten in Denmark.

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