Gold Demand

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yobob1's picture
yobob1
Status: Silver Member (Offline)
Joined: Apr 20 2009
Posts: 132
Gold Demand

 About that gold "demand' .......  Easy to buy ....... Easy to sell.  To ( and "too") many, a gold ETF is just another equity.

ETFs were the largest contributor to the spike in gold sales . Demand rose a staggering 414% in the period, the second-highest growth in quarterly demand on record. The council said that investors favor ETFs when it comes to getting gold exposure because they're a more accessible way of doing so. [ Hedge Funds Buying Gold ETFs; Should You? ]

vvolf's picture
vvolf
Status: Bronze Member (Offline)
Joined: Jan 3 2009
Posts: 29
Re: Gold Demand

http://www.bullionbullscanada.com/index.php?option=com_content&view=article&id=14750:gld-director-holds-physical-bullion-not-gld&catid=48:gold-commentary&Itemid=131

One more reason, maybe the best reason, to be able to stack and hold.  I'm doing all silver, not quite in the gold players league.

yobob1's picture
yobob1
Status: Silver Member (Offline)
Joined: Apr 20 2009
Posts: 132
Re: Gold Demand

Of course silver has its own ETFs. 

I'm not anti-gold or silver.  However at these price levels, I'm cautious about extrapolating into the future.  Silver in theory should have more potential based merely on historical gold / silver ratios, but my experience over the last decade leads me to believe that those historical ratios are unlikely to return in the foreseeable future.

If you assume the dollar has lost 98% of its value since the creation of the Fed (gold then $20 ), simple math gives you a current price of $1,000. To further reinforce that notion, a Model T Ford during the depression was about $400, so in 1932 a Model T was 20 ounces of gold.  Today 20 ounces of gold will buy yo a nicely equipped compact car - we can chock up all the improvements an additional equipment to increased production efficiencies.  The old standard was an ounce of gold would buy you a "good" suit.  I think you can easily get a "good" suit for $1,000.

Of course if you backed off the loss of value factor to 95%, then the "calculated" price of gold becomes $400.  I suspect the truth lies somewhere in between the two numbers for the current "value" of gold on a purchasing power basis.

My belief is that the ETFs are the largest risk to causing a potential collapse in PM prices should the stock market collapse (which it should since valuations by any honestly calculated metric - real P/E , real price to book, dividends, etc. are off the chart).  GLD alone holds more tons of gold than all but a few countries.  If the stock market nosedives, many may be "forced" to sell to raise cash - never lose sight of the high leverage present in all markets.

The other thing to keep in mind is your reference point of view.  Those of us here do not represent the typical persons.  That can be both a salvation and a hindrance.  We can easily believe something should happen based on what we know, but if the other 98% are thinking otherwise, the outcome is more likely to be what the majority believe and act on.

As a disclosure I hold both gold and silver in physical.

Jager06's picture
Jager06
Status: Gold Member (Offline)
Joined: Dec 2 2009
Posts: 395
Re: Gold Demand

One thing that you may not have thought of is that amount of dollars in total, divided by the amount of gold in total....granted these are VERY extrapolated numbers anymore....

Leaves a price on gold that is somewhere between $6500 and $15000, per ounce, depending on whose numbers you use. I believe the real devaulation in FRNs is more than 98%, and about to grow substantially over the next 6 to 10 months.

SIlver, being less plentiful now than gold due to it's non recyclable industrial use, may one day return to it's historical ratio of 16:1. I think it may go farther though as a result of the pendulum swing of investment psychology (see .com bubble).

My plan is to trade the ratio between the two metals, in physical form, and do that for as long as I don't need them for a unit of account in the grocery store.

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