The Definitive GOLD's Near-Term Outlook Thread

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The Definitive GOLD's Near-Term Outlook Thread

This thread is intended to replace a previous thread titled "Gold's Near Future". The reason for a new thread is that the old thread had grown to more than 300 replies, and it was becoming difficult to navigate.

Please use this thread for future discussion of the price of gold and near-term speculation about where it's headed.

Thanks,
Erik

 

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Re: The Definitive GOLD's Near-Term Outlook Thread

Great idea. . . Thanks, Erik

 

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Re: The Definitive GOLD's Near-Term Outlook Thread

Thanks Erik, it was getting tough to get to the end and then not see which were new posts. Although I just realized you can list posts newest first which will preserve the 'new' tag, though you have to read from bottom to top to get it time ordered.

One downside about a new thread is it doesn't show up in 'My Posts' which is handy to track threads of interest - but I guess now that I've posted I've fixed that....

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Re: The Definitive GOLD's Near-Term Outlook Thread

 After reading Bob Pretcher's latest Elliottwave Theorist newsletter (I would link to it, but its a subscription service), I think I am pretty well convinced that Gold/Silver are headed down over the next few years. Though there are many, many reasons to feel that gold should rise, I'm going to have to side with the guy who called the top of the market in 2007, and who warned about the simultaneous drop in oil and commodities the same year.

Having established my "emergency" gold and silver reserves, I think I'll wait until there is a lot more pessimism in the PM markets to buy more. This thread ought to be a good source of sentiment and practical information over the coming years.

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Re: The Definitive GOLD's Near-Term Outlook Thread

What happens when this thread hits over 300 posts? Do we start a "Definitive Definitive Gold Gold" thread? 

On a serious note, there seems to be something trying to drive gold down the last two days as seen here:

Yet, there is also resistance driving it steadily back up again. Anyone have any thoughts on what's driving this?

Also, JAG said:

...I am pretty well convinced that Gold/Silver are headed down over the next few years.

With the dollar almost guaranteed to become worthless in the future, what would drive the price of PM's down?

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Re: The Definitive GOLD's Near-Term Outlook Thread

So what do you guys think of the reverse H&S pattern Turk identified in the (updated) chart I posted, and his interpretation?

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Re: The Definitive GOLD's Near-Term Outlook Thread

Chris K: wrote: The only logical interpretation of this reverse H&S pattern is that gold represents exceptional value, as if it were at a bear market bottom. A bold interpretation would be that a 3-digit gold price will soon be an historical artifact, just like the 2-digit gold price."

JAG wrote: After reading Bob Pretcher's latest Elliottwave Theorist newsletter (I would link to it, but its a subscription service), I think I am pretty well convinced that Gold/Silver are headed down over the next few years.

Chris K: After reading the above two comments, I don't know what to think. Let me turn the question back to you - what do you think?

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Re: The Definitive GOLD's Near-Term Outlook Thread

Yeah Sam, I’m with you. Us normal guys don’t stand a chance in figuring out what to do. The only way to know what’s going on it to look at past data and then say “I should have…” 

My current thinking is to wait another month or so and if there’s no downward trend, then I’ll just start buying. Yes, gold might start declining in the fall but I think the risk of a major event between now and then that could cause panic buying (and increase the price) is not worth the wait for the price to decline.

 

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Re: The Definitive GOLD's Near-Term Outlook Thread
SamLinder wrote:

With the dollar almost guaranteed to become worthless in the future, what would drive the price of PM's down?

I know this is going to sound outrageous, but Pretcher thinks the dollar is going up in the intermediate term (1-2 years) because of massive credit deflation. Of course the Fed will try to counter this destruction of "money" with quantitative easing, but Pretcher thinks they will fail for various reasons. Overall, I can't really argue with the ubiquitous arguments that the dollar will collapse and PM's will soar, they make sense. But I think Pretcher's perspective is that these events might be farther off than most people realize, and that there might be a better opportunity in the coming years to "invest" in gold.

Its just another possibility to consider.

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Re: The Definitive GOLD's Near-Term Outlook Thread

Sam,

I agree that no one really knows the answer.  Impossible to know for certain, except in hindsight.

That said, I tend to agree with Mish's theory (backed by historical analysis) that gold does well in periods of high economic stress.  We are certainly in one of those now, and I expect it to only get worse over the next few years.  Therefore, with the exception of some possible short-term downward movements, I think gold will do very well in the future.

A common misconception is that gold performs well during inflation, but not deflation.  That is easily contradicted, as Mish points out in his post Gold Continues To Act Well:

Gold fell from over $800 to $250 over the course of 20 years with inflation all the way. The reality is gold does well in periods of high economic stress (deflation, stagflation, hyperinflation, and periods of prolonged credit stress).

And while gold's performance is often inversely correlated with the dollar's, that pattern ended this year as Mish pointed out in You Can't Food Gold:

Many have not yet noticed, but recent strength in gold comes at a time of increasing strength in the dollar as well. Correlation between gold and the dollar has been near perfect since January 26, and more correlated than normal for quite some time.

Gold Daily Chart

US$ Index Daily Chart

Mish goes on to advance the more convincing theory that gold does well during severe credit dislocations.  

In 1971, Nixon Closed The Gold Window making the dollar inconvertible to gold and imposed wage and price controls. Commodity prices and interest rates soared for a decade. This was a credit event.

We are certainly in the midst of another major credit crisis, and it's much worse this time around.  If you buy this line of reasoning, and you agree that the age of easy credit is over, then it's hard to argue against PMs doing very well in the years to come.

 

 

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Re: The Definitive GOLD's Near-Term Outlook Thread
JAG wrote:

I know this is going to sound outrageous, but Pretcher thinks the dollar is going up in the intermediate term (1-2 years) because of massive credit deflation.

It doesn't sound outrageous to me.  Europe and Asia are in really bad shape, arguably worse off than the US.  It's not a stretch for me to imagine that the dollar may remain the safe haven of choice for a couple more years.  I wouldn't place my bets there, but I certainly wouldn't rule it out either.

Where I disagree is with the notion that gold can't rise right along with the dollar.  That already happened earlier this year, as I pointed out in my previous post.  I'm not certain this will happen, of course, but I think the argument that gold will fall because the dollar will stay strong is not sound on its own.

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Re: The Definitive GOLD's Near-Term Outlook Thread

Hi Erik,

Instead of starting a new thread because the old one became inconvenient for you, why not just change your setting to display "newest" post first instead of "oldest"?  

 I had the same problem with the Definitive Firearms Thread and applied that simple solution.

Just a thought.

 

 

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Re: The Definitive GOLD's Near-Term Outlook Thread

Screwed by success, that's what it was. They have it in for me! I start a thread, it gets too many posts so they stab me in the back! ARGGH. Et tu, Erik!

 

SG

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Re: The Definitive GOLD's Near-Term Outlook Thread

Oops. I inadvertently posted this in the old thread. Sorry.

In my recent experience, physical gold seems to be a bit easier (i.e., quicker) to obtain in recent days. Some time ago I decided on an appropriate percentage of gold in my investments. It was "paper gold", (iShares Comex Gold Trust and the SPDR gold trust - "GLD"). Then I read the prospectus and one word ran through my thoughts: SELL!

So, mom not having raised a total fool, I have been systematically converting my paper gold into physical gold. After some research and thought, I chose Kitco in Montreal. They have so far been reliable. My initial order seemingly took three forevers to arrive, but it did arrive in good order. My next order was in my hands within days after placing the order. Service is courteous. Bullion bars come with an assay certificate. The little one ounce bars are sealed in plastic and mine have the Credit Suisse logo stamped on them. Kitco has been using Via Mat in New York as their shipping agent. My orders came in tamper resistant plastic bags, shipped by registered, insured mail.

I decided against bullion coins because they command such a premium over the spot price. There are trade-offs involved so each of us must decide on the merits.

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Re: The Definitive GOLD's Near-Term Outlook Thread

 I have a question that I’ve been thinking about for about a week now and was hoping y’all could add some insight?

 I’ve hear arguments that silver has a much higher upside potential than gold. This is based on a few things: (1) The Gold/Silver price ration has historically been 15/1 and now it’s around 70/1. (2) Silver is a metal used in industry so the reserves become depleted from uses which makes it hard to recover (i.e. silver in electronics manufacturing). (3) The above-ground reserves of silver a getting smaller whereas gold is getting larger.  If I remember correctly, the numbers I heard said something like 5 metric tones of gold in 1980 and 10 metric tones of silver. In 2006 there were 10 of gold and 1 of silver. 
 
My question is, if it’s true that there is much less silver above ground than 20 years ago, then why hasn’t silver increased in worth like gold?  What happened to the 15/1 ratio? (Yes, the accuracy of the statistics I heard could be the problem but I wouldn’t think there has actually been 5X more silver mined than gold in the last 20 years.)  I’m thinking that the answer might have something to do with gold increasing in value due to the cultural aspect of holding gold in countries like India where average family incomes have been increasing.
 
Obviously I’d like to get a handle on this to see if silver is positioned for a large increase in the event of a decreasing (or collapsing) dollar.

 

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Re: The Definitive GOLD's Near-Term Outlook Thread

BSV,

Thanks for your post - it finally got me to move off dead center. Based on your comments, I checked out Kitco and noted that their 1 oz gold bars were indeed priced better than 1 oz gold coins. I had been so focused on gold coins that I didn't really pay attention to any alternatives.

Anyway, today I placed an order with Kitco for two 1 oz gold bars with a sell price of $919.30 each. I decided to start small in order to see how the process went and to get a sense of timing for delivery. I'll post again when the goods actually arrive. If all goes well, I'll probably buy more.

Sell price at my local store today is $948.00 for 1 oz gold Maple Leaf coins (Kitco price is $963.00). However, with shipping ($30-), insurance ($7.35), and wire transfer cost ($30-), my net cost was $953.00 per 1 oz bar - still better than Kitco's coin price.

The advantage is that I don't have to drive into downtown Portland and worry about getting mugged going into, or out of, the retail store.

Purchasing more bars next time will also reduce my net cost per bar.

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Re: The Definitive GOLD's Near-Term Outlook Thread

And ...you can have all of your fillings replaced with gold!

Way to go, Sam, now you're set for the Collapse!

 

SG

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Re: The Definitive GOLD's Near-Term Outlook Thread
capesurvivor wrote:

And ...you can have all of your fillings replaced with gold!

Way to go, Sam, now you're set for the Collapse!

 

SG

You haven't looked in my mouth, SG. That's my ultimate reserve account (bought when gold was much cheaper)! 

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Re: The Definitive GOLD's Near-Term Outlook Thread
Chris Kresser wrote:

Where I disagree is with the notion that gold can't rise right along with the dollar.  That already happened earlier this year, as I pointed out in my previous post.  I'm not certain this will happen, of course, but I think the argument that gold will fall because the dollar will stay strong is not sound on its own.

Chris, 

Good point and I agree with your statement. Thanks for the information. I'm going to have to give Mish a little more attention. So much information and so little time....Thanks again

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Re: The Definitive GOLD's Near-Term Outlook Thread

Keep in mind, eight major currencies fell vs. gold over the last 8 years.

If I could find that table I'd post it.

 

SG

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Re: The Definitive GOLD's Near-Term Outlook Thread

Sam:

I procrastinated for the longest before I could decide to buy some physical gold. I had never owned any bullion before. Finally, after overcoming my initial fears, I placed a small order with Kitco. During the month it took for my order to arrive, my fears multiplied. I fully expected to receive a package of rocks with a "SUCKER!" label attached. But no, after what seemed an eternity, our little rural post office phoned and asked us to please stop by and sign for a registered mail package.

My wife and I eagerly tore open the package. NOT! We hacked away at it with scissors, a screwdriver and were considering a crowbar before we finally succeeded. When your package arrives, have a saw, tin snips, an assortment of crowbars and perhaps a jackhammer on standby.

Finally we got it open, to find our order wrapped in opaque plastic with various "DO NOT OPEN HERE -- OPEN HERE!" messages on it. This reminded me of a mattress tag message: "Warning: Do not remove this tag under penalty of law!" I always wanted to rip one of those tags off, fully expecting to hear sirens in the distance when I did. But I never did -- and I digress....

We "poured" the meager contents of our little package on to the dining room table. I would like to say that it landed with a resounding "thud", but it was more like the sound of a pin dropping. My wife said "How cute" as she picked up a little 100 gram bar. It came with an assay certificate and was stamped with a serial number. By then I was starting to realize that -- hey -- I was the owner of some genuine gold bullion. Okay, bullionette, maybe. It seemed little bigger than a commemorative postage stamp and my initial thought was that I've seen heavier hummingbirds. Hint: It is not suitable for a paperweight unless the fan is turned to the lowest setting.

Then came the problem of where to keep our "stash". For security reasons I won't get into that here, but we do live in the country and gold does not respond to a metal detector.... Heh, heh. You'd have a tough time finding it. I can just picture my grandkids -- if I ever have any -- muttering to themselves as they pore over an ancient set of instructions: "Let's see now, fifty paces to northwest; turn right and step 25 paces to the northeast..."

My next order was a bit larger and it arrived fairly promptly. It occurred to me that perhaps Kitco viewed my initial order with a curiosity so mild that it bordered on contempt. Apparently my subsequent order cleared the "Oh, bother!" hurdle and they filled it promptly. Anyway, I'm the owner of a tiny stash of what I hope is gold. Any day now I fully expect to read a newspaper headling along these lines: "SCIENTIFIC BREAKTHROUGH; GOLD FROM SEAWATER! GOLD PRICE CRASHES IN WORLD MARKETS!'

Hope I posted this in the right thread, but I could not find a "nutcase posts" thread.

 

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Re: The Definitive GOLD's Near-Term Outlook Thread
BSV wrote:

Sam:

I procrastinated for the longest before I could decide to buy some physical gold. I had never owned any bullion before. Finally, after overcoming my initial fears, I placed a small order with Kitco. During the month it took for my order to arrive, my fears multiplied. I fully expected to receive a package of rocks with a "SUCKER!" label attached. But no, after what seemed an eternity, our little rural post office phoned and asked us to please stop by and sign for a registered mail package.

My wife and I eagerly tore open the package. NOT! We hacked away at it with scissors, a screwdriver and were considering a crowbar before we finally succeeded. When your package arrives, have a saw, tin snips, an assortment of crowbars and perhaps a jackhammer on standby.

Finally we got it open, to find our order wrapped in opaque plastic with various "DO NOT OPEN HERE -- OPEN HERE!" messages on it. This reminded me of a mattress tag message: "Warning: Do not remove this tag under penalty of law!" I always wanted to rip one of those tags off, fully expecting to hear sirens in the distance when I did. But I never did -- and I digress....

We "poured" the meager contents of our little package on to the dining room table. I would like to say that it landed with a resounding "thud", but it was more like the sound of a pin dropping. My wife said "How cute" as she picked up a little 100 gram bar. It came with an assay certificate and was stamped with a serial number. By then I was starting to realize that -- hey -- I was the owner of some genuine gold bullion. Okay, bullionette, maybe. It seemed little bigger than a commemorative postage stamp and my initial thought was that I've seen heavier hummingbirds. Hint: It is not suitable for a paperweight unless the fan is turned to the lowest setting.

Then came the problem of where to keep our "stash". For security reasons I won't get into that here, but we do live in the country and gold does not respond to a metal detector.... Heh, heh. You'd have a tough time finding it. I can just picture my grandkids -- if I ever have any -- muttering to themselves as they pore over an ancient set of instructions: "Let's see now, fifty paces to northwest; turn right and step 25 paces to the northeast..."

My next order was a bit larger and it arrived fairly promptly. It occurred to me that perhaps Kitco viewed my initial order with a curiosity so mild that it bordered on contempt. Apparently my subsequent order cleared the "Oh, bother!" hurdle and they filled it promptly. Anyway, I'm the owner of a tiny stash of what I hope is gold. Any day now I fully expect to read a newspaper headling along these lines: "SCIENTIFIC BREAKTHROUGH; GOLD FROM SEAWATER! GOLD PRICE CRASHES IN WORLD MARKETS!'

Hope I posted this in the right thread, but I could not find a "nutcase posts" thread.

 

BSV,

I don't know about anyone else, but I thoroughly enjoyed your very descriptive accounting of your Kitco experience!

"bullionette" - hmmm, you might have coined a new word. I'll be looking in the 2010 edition of Funk & Wagnalls to see if it made the cut.

Actually, your story is very useful for the rest of us and I hope mine turns out to be the same. The more of us who post our experiences, the better it will be for those who may still be sitting on the fence. Gosh knows I spent enough time sitting there - I think the rail has left a permanent mark on my butt!

BTW, I hope your prediction doesn't come true - at least until I have time to gaze upon my "massive" stock of gold for a week or two!

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Re: The Definitive GOLD's Near-Term Outlook Thread
BSV wrote:

gold does not respond to a metal detector

Seriously, is that a fact?

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Re: The Definitive GOLD's Near-Term Outlook Thread

Yes. To satisfy yourself on this point, do a little Google research C1oudfire. That's one of the fascinating characteristics of gold.

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Re: The Definitive GOLD's Near-Term Outlook Thread
c1oudfire wrote:
BSV wrote:

gold does not respond to a metal detector

Seriously, is that a fact?

 

Cloud and BSV,

No that is NOT a fact. Gold does sound off quite loudly on a metal detector. In fact metal detecting for both coins and gold nuggets is done by lots of people. I am one of them.

Do a Google search on Minelab, Fisher Gold Bug 2, Garrret, White metal detectors. You will find more than you can read.

 

Ken

 

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Re: The Definitive GOLD's Near-Term Outlook Thread

Well, then. I stand corrected. Sorry about that. But you still won't find my gold, heh, heh.

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Re: The Definitive GOLD's Near-Term Outlook Thread

This surprised me so I Googled it. I learned that there are metal detectors that can supposedly find gold, but it's not so simple. I suggest that you do a Google search and read the "hits" to learn more.

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Re: The Definitive GOLD's Near-Term Outlook Thread

We know you buried it 1 foot under ground in the corner of the north and west intersecting fence posts.

 

SG

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Re: The Definitive GOLD's Near-Term Outlook Thread

Hehe, mines in a fire safe. I guess you could blow it up if you wanted too.

I enjoyed your narrative as well BSV.

I went through Apmex. Don't know if anyone here has had experience with them or not? The mark-up over spot seemed pretty reasonable. I placed the order and it was received in less than a week. Everything was kosher. Its a nice comfort to know that its there if I need it.

 

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Re: The Definitive GOLD's Near-Term Outlook Thread
JAG wrote:
SamLinder wrote:

With the dollar almost guaranteed to become worthless in the future, what would drive the price of PM's down?

I know this is going to sound outrageous, but Pretcher thinks the dollar is going up in the intermediate term (1-2 years) because of massive credit deflation. Of course the Fed will try to counter this destruction of "money" with quantitative easing, but Pretcher thinks they will fail for various reasons. Overall, I can't really argue with the ubiquitous arguments that the dollar will collapse and PM's will soar, they make sense. But I think Pretcher's perspective is that these events might be farther off than most people realize, and that there might be a better opportunity in the coming years to "invest" in gold.

Its just another possibility to consider.

I would advise everybody make up their own minds about every investment decision.  While 'experts' can help nudge a decision, I still trust my own logic the most.

I will also note that Prechter has been calling for a gold crash since before the day I first bought some in 2002.  At that time he was calling for it to go to $200.  Ditto in 2003 when it rose.  He reiterated the same call when gold crossed $400.  I think at $500 as well but I'd have to check my notes.

Sooner or later he'll be right, I suppose, but I am certainly glad I did not heed his calls back then.

Lastly, the printing press has a mighty strong track record when placed in the hands of a reckless and determined government.

 

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Re: The Definitive GOLD's Near-Term Outlook Thread
cmartenson wrote:

I would advise everybody make up their own minds about every investment decision.  While 'experts' can help nudge a decision, I still trust my own logic the most.

I will also note that Prechter has been calling for a gold crash since before the day I first bought some in 2002.  At that time he was calling for it to go to $200.  Ditto in 2003 when it rose.  He reiterated the same call when gold crossed $400.  I think at $500 as well but I'd have to check my notes.

Sooner or later he'll be right, I suppose, but I am certainly glad I did not heed his calls back then.

Lastly, the printing press has a mighty strong track record when placed in the hands of a reckless and determined government.

Chris,

Thank you for your comments. Already I feel better about my first gold purchase - even though it dropped a few bucks after I bought.

Oh, well. I know it's going to fluctuate and I am buying it for long-term wealth protection - not for investing/trading.

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