Gold's near future

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capesurvivor's picture
capesurvivor
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Gold's near future

I am far from a skilled speculator but I do know that Feb./March through August is customarily gold's weak time. Today it is down and it has been in a slide recently. Like some of you I have purchased a few gold coins and hate to see, even short term, my investment (I know, long term store of value) decline. What I have done is bought GLL, an inverse gold fund that is about 2X negative correlated with price of gold.

JMHO and think this through for you. I used a stop yesterday to not give up my profits but was not stopped out. I will continue to watch gold as it (possibly) declines and then pick up another coin or two while knowing I continue to make $ on the downside.

Jeez, I almost sound like a someone who has engineered a great IRA!  LOL.

GLTA.

 

SG

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jerrydon10
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Re: Gold's near future

I'm afraid of gold because so many have bought it. I have some dollars that I need to do something with but I'm not sure exactly what. I would be interested to hear opinions on the subjects.

bearing01's picture
bearing01
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Re: Gold's near future

You're afraid that too many people have bought it?

Ask around your friends and community how many people have bought gold.  I am the only person I know in my circle of friends and neighbors that own some form of gold.

Gold is volatile.  I think it could break below $900 and can easily break up above $1000 again.  Long term I think gold will be higher.  If it hits low $900 I would suggest that is a good buying point.  I would only buy above $1000 if it breaks above $1000 and holds and closes the day at such levels for several days in a row.  That shows support at the $1000 level, a base where it can move higher.  Until that support is created, it could just go up & hit $1000 and bounce back.

At the rate the world printing presses are running gold can easily reach $2000 by the end of the year.

Davos's picture
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Re: Gold's near future

I'm only afraid of anything that they can create out of thin air. Until Bernanke can turn lead into gold I'm not worried. Gold could be for some considered a small insurance policy against a (even more) worthless "dollar." 

jerrydon10's picture
jerrydon10
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Re: Gold's near future

Well, I don't personally know that many people who have invested in gold but it did top 1000 so someone is buying it. More precisely, I suppose, is this question: over the past few months as the equity market began to slide, people converted their stocks into dollars and I don't know many savvy investors who would want to stay in dollars in this economy.

Gold began to soar toward 1000 during this period so did many of these people move from stocks to gold? Also, gold IRAs are all the rage right now. Is the gold market saturated for now?

One might draw that inference because the Dow is still plunging yet gold is retreating from it's high as well.

I agree, Davos. Inflation is the beast that scares me the most which is why I want little cash on hand. I'm looking at silver.

If times get tough, wouldn't it also be easier (more convenient) for trade to have $1000.00 in several silver coins rather than $1000.00 in a single gold coin?

Anyone on here invest in silver?

capesurvivor's picture
capesurvivor
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Re: Gold's near future

I think you could be right about silver but I have not yet sprung for the standard bag of coins they sell. I think it is the price of several gold coins.

 

SG

AZDan's picture
AZDan
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Re: Gold's near future
jerrydon10 wrote:

If times get tough, wouldn't it also be easier (more convenient) for trade to have $1000.00 in several silver coins rather than $1000.00 in a single gold coin?

Anyone on here invest in silver?

I have purchased several silver eagles and five rolls of walking liberty halfs for just this reason.

strabes's picture
strabes
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Re: Gold's near future

cape, I think that's a good move:  keep the coins you have for insurance, but for investing/trading make a 2x short bet because there's not much doubt gold is heading into a correction.  sentiment indicators put gold at over 90% bull.  that means there's not additional support to be found for it.  I'm personally waiting for it to correct to the $600's.

jerry, you don't know savvy investors staying in dollars?  the savviest/biggest investors in the world are indeed staying in dollars via Treasuries.  the noisiest folks on TV are saying we shouldn't do that, but the savviest bond traders and institutions are doing precisely that.  on the silver question, yeah I think they're both good to have for insurance.  but silver is moving into a big correction too.  I'd wait for it to drop below $10.   

 

 

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jerrydon10
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Re: Gold's near future
strabes wrote:

jerry, you don't know savvy investors staying in dollars?  the savviest/biggest investors in the world are indeed staying in dollars via Treasuries.  the noisiest folks on TV are saying we shouldn't do that, but the savviest bond traders and institutions are doing precisely that.  on the silver question, yeah I think they're both good to have for insurance.  but silver is moving into a big correction too.  I'd wait for it to drop below $10.   

 

Well, to me treasury is bonds, not like the cash in my wallet (if I understand you). And I'm aware that people are investing there at negative interest. Why, I'm not sure. They say safety.

What if the house of cards comes down and the Feds have to issue IOUs as the state of CA is doing right now?

I'm no George Soros but I certainly don't understand how that investment helps a person in this economy. Doesn't common sense tell us that there can be no inflationary hedge in a negative interest investment?

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Re: Gold's near future

That investment is ideal because we're in deflation.     

The bond market rules the world.  It's the best "investment advisor" to watch.  It's real clear...we're in deflation.  The inflationists are incorrect.  

The house of cards scenario is a long way off...US govt debt is the pinnacle of the global monetary system (as broken as it is) so it doesn't make sense to compare it to the state of California.  It's certainly prudent to keep it in mind, but it's not on the horizon...yet.   

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Re: Gold's near future

Silver is good, David Morgan says better than gold in some periods, http://www.mininginteractive.com/videos/videos.php?link=camb200901dm

My take is there are 2 crimes listed by name in the Constitution, counterfiet and treason, and when I see Jefferson say if we let private banks make money our kids will wake up homeless I have to think that the most opposite of what got us in the mess will get people out.

Take care 

capesurvivor's picture
capesurvivor
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Re: Gold's near future

I'll need more GLL if gold hits $600!

Supposedly (Prechter) gold does well in a deflationary depression but that seems to be based largely on the perfomance of one old mining stock back then, as far as I can tell.

 

SG

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strabes
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Re: Gold's near future

Prechter is one of those who are predicting gold below $700 in a big correction before it goes to the next big wave up > $1000.

jerry, just to clarify since you wondered if T-bonds are cash. T-bills (current cash) and bonds (delayed cash) are the ultimate cash vehicle (though it is savings, not "money" that is pumped into the economy, i.e. inflationary)...more like cash than a bank account because the risk is lower.  

jerrydon10's picture
jerrydon10
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Re: Gold's near future
strabes wrote:

That investment is ideal because we're in deflation.     

The bond market rules the world.  It's the best "investment advisor" to watch.  It's real clear...we're in deflation.  

 

Hmmm.........I had to think on that a bit and do some Googling. You're right! Here's the way Forbes puts it:

[url]http://www.forbes.com/2008/12/09/deflation-lending-saving-fan-ii-in_ags_1209soapbox_inl.html[/url]

And although I really never looked at it this way it's pretty clear-cut when I do. There are fewer dollars chasing more goods. Interest rates are going down, not up. Prices on everything are decreasing, not increasing.

That also tells me that right now is not the time to buy bullion. We have closed this thread....lol

capesurvivor's picture
capesurvivor
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Re: Gold's near future

No, wait, buy GLL!

SG

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Re: Gold's near future

A while back Chris was recommending a 2/3 gold to 1/3 silver allocation in terms of precious metals.  Not sure if that still stands, but it makes sense to me.  A lot of people like the 90% junk silver for the reason you describe: easier to use in small increments.  It is, however, much bulkier and heavier.

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Re: Gold's near future

I just bought 5 kg silver ' pellets' (wholesale item for jewelry shops), i have some gold too. Percentage wise silver has a lot more upward potential. Gold being around $1000 is more of a psychological barrier, that one is difficult to break and hold. If we see gold trading 1 or 2 months above $1000, the movement upwards can start again. 

Now however gold is tempting, i am waiting for it to go under $900 to buy some more. My feeling is that any price under $950 is a buying oppertunity. My strategy is buy and hold for wealth preservation and hedging against inflation. If inflation starts to hit the dollar, and in my case the euro gold can be a livesaver. I don't buy coins but 96.5% jewelry and small blocks of 15 grams and 75 grams, the markup is low. It is easily available in Thailand where i have family, so i just send them an order once in a while. Smile  

My feeling for the near future is that gold will go a little lower this week, but after the weekend, when another bank is closed or some other plans are cooked, gold starts to rise again.

My stockmarket strategy is buying puts with expire dates in 2011-2013 on a friday and sell them on monday. Until now that strategy seems to work. And if the shareprice not go down enough or miracles of miracles went up i just wait for the next weekend doubling down the positions.

 

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Re: Gold's near future

If the gold market is still subject to the whims of bond traders, then I'd have to think that things are still not as bad as some here would suppose.  Bond traders are betting that there is still time to stay in the dollar/treasuries beacause its a safer bet than gold and there is enough time to get out of paper money and maybe get back into cheaper gold?  Then that's normal market speculation, not a defining critical crisis moment in history.  Am I making any sense?  Gold is the only store of value and its going to get cheaper because we're in deflation of paper money?  Somebody smart please explain the logic to me.

capesurvivor's picture
capesurvivor
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Re: Gold's near future

Gold and the dollar usually move in opposition. Oddly, despite all of the long term problems we here at CM know about, the dollar, compared to many other currencies, apparently looks good (as the world's reserve currency), leading to a "flight to quality". So, gold is heading downward (a temporary bubble some think). There is also speculation that PTB are keeping gold low. In any event, when the trillions of dollars finally hit the fan here, they will probably start a rush back into gold, so the thinking goes. It's hard to see inflation spiking suddenly when things around us still look like they're going to hell. That suggests that we have some time to acquire gold as it declines a bit. Strabes, above, thought to $600; I have no idea. That would make my newbie purchases of several coins in the last month a bad short term investment but, unless you are a trader/speculator, it shouldn't hurt quite as much. We're in it for the long haul, right. That said, it hurts me enuf to hedge with GLL, from which I will bail should gold reverse itself.

 JMHO.

SG

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jerrydon10
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Re: Gold's near future
plantguy90 wrote:

If the gold market is still subject to the whims of bond traders, then I'd have to think that things are still not as bad as some here would suppose.  Bond traders are betting that there is still time to stay in the dollar/treasuries beacause its a safer bet than gold and there is enough time to get out of paper money and maybe get back into cheaper gold?  Then that's normal market speculation, not a defining critical crisis moment in history.  Am I making any sense?  Gold is the only store of value and its going to get cheaper because we're in deflation of paper money?  Somebody smart please explain the logic to me.

I'm not the sharpest knife in the drawer in here, but the guy that pointed out that T-Bills are not really bonds and are very similar to cash was correct because although they are not cash, the investments are so short-term  (they mature in 1 month, 3 months or 6 months) one might as well consider them as cash.

Gold is not the ONLY store of value. We have silver, dollars, yen, euros and I have a friend who has over a million dollars stored in.....um.....hay bales.

Gold is popular when the dollar is inflating, but the dollar is deflating. Good.....I have a few dollars and I want them to deflate so that less dollars will buy more goods.

If the dollar begins to inflate, I need to do something else. I really don't think the bond traders have much to do with the price of gold, they are just following the economy and  as such, used as an indicator of where to invest.

 

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Re: Gold's near future

I just though of something that might be a bigger influence on the goldprice then i thought.

The high gold price combined with fewer jobs, lower incomes, higher debts is forcing people to sell their gold. In Asia the price is a record high, forget about the dollar price in this instance. The Chinese, Indians, and what i know fur sure Thailand are selling their gold for a profit. Lines are forming in front of the shops. Some shops even stop buying as their cash is running out.

These sales combined are hundreds of tons that come into the market. 

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Re: Gold's near future

Sold all positions @ $950/oz here is what I plan next:

http://tedbits.blogspot.com/2009/02/mad-money.html

Just my HO

capesurvivor's picture
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Re: Gold's near future

Well, the commodities went up a bit today but seems early for those three to me. I've got RJA, MOS, UNG-down but not out.

JMHO.

 

SG

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Re: Gold's near future

But we are in a inflation cycle, just not a hyper one, least that's how I see it.  Oil is the only thing of value that's come down in price in my real life, and its only back to 2006 prices.  Not concrete, not galvanized metal products, wood some, definitely not food.  Manufacturer's are lowering prices, but they are also substituting lesser goods in their merchandise.  The only things deflating are artificially inflated housing prices, and "breaks" on automobiles, which are hard to determine their true price anyways.  Stocks are deflating, again from artificial highs, so our deflation is really just a real price adjustment.  That includes gold too?  I dont know about credit, I dont use it.

Yes, I am in paper gold, and now the winds seem to have suddenly shifted to where I am supposed to take my losses and go the other way until the dollar inflates to everyone's satisfaction?   There is herd mentality detected here, its the same old market.  Some SHTF...

 

 

 

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Re: Gold's near future

Be careful with the 2x funds and ETF's and be prepared to watch them like a hawk.  Volatilty is what eats up any profit from the 2x leveraging.  I'd recommend 2x funds only for the short term (less than a week).  

 A good lesson on how 2x leveraging can hurt you in times of volatility, is check out the histories of the ETF's DUG and DIG.  I bought DUG (2x short oil) when oil was $120 a barrel and despite a short spike (literally only 2 days), the share price is roughly the same now at $40 a bbl.  Volatility in the price of oil on the way down ate up all my profit.  Nearly all 2x leveraged funds work this way so prepare to hold them less than a week.    

capesurvivor's picture
capesurvivor
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Re: Gold's near future

Yes,

I put in a stop every day; hopefully, it won't blow through it. You can't know about sudden shocks like someone bombing Iran or some other big event.

I have had a tough time watching my several oil stocks lose $$$ thinking it was temporary.  I misjudged the deflationary effects occurring.

 

SG

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jerrydon10
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Re: Gold's near future
plantguy90 wrote:

But we are in a inflation cycle, just not a hyper one, least that's how I see it.  Oil is the only thing of value that's come down in price in my real life, and its only back to 2006 prices.  Not concrete, not galvanized metal products, wood some, definitely not food.  Manufacturer's are lowering prices, but they are also substituting lesser goods in their merchandise.  The only things deflating are artificially inflated housing prices, and "breaks" on automobiles, which are hard to determine their true price anyways.  

That was my mentallity until the guy above convinced me differently.

I messed up the link I posted above, but if you'll cut and paste you can find this entire article from Forbes:

*****Dell is offering 20% to 30% discounts on new notebooks. Nearly empty
Hawaiian hotels give free drinks and all sorts of discounts. Retailers
like Crate & Barrel have gained pricing power over vendors and are
getting 10% to 25% lower prices to pass on to customers. Kohl's is discounting Christmas merchandise up to 75% to attract shoppers.
Toys are being discounted 50% to 60%, and sellers are emphasizing
low-priced merchandise to attract frugal buyers. Just look at Wal-Mart.

Grocers
are also gaining pricing power over suppliers of branded goods, as
consumer zeal for house brands gives retailers more leverage with
producers of national labels. Upscale retailers are unloading excess
inventory on discounters who then offer designer apparel for 45% to 70%
off list prices. And luxury goods makers themselves are slashing prices
on apparel, shoes and handbags sold in the U.S. Of course, the strong
dollar makes that easy for eurozone-based firms. Don't forget that
recent auctions were disappointing and saw prices of contemporary,
modern and impressionist art drop 30%.

The Fed worries that in
deflation, offsetting monetary policy is difficult since its target
rate has to stop declining when it reaches zero. Of course, the Fed has
other tools, like quantitative easing (juicing the money supply).
Nevertheless, all these measures amount to leading the horse to water,
but he may not drink.*****

We are in a deflationary cycle!

 

 

 

capesurvivor's picture
capesurvivor
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Re: Gold's near future

I got stopped out of my GLL and am looking to reenter if gold seems to take a dive for a while which, historically (whatever that means anymore) is the next few months.

Will put my modest profit towards another Eagle.

 

SG

plantguy90's picture
plantguy90
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Re: Gold's near future

Well, gold didnt collapse, now what???

capesurvivor's picture
capesurvivor
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Re: Gold's near future

If I could predict the future I wouldn't be spending my time here, LOL.

There's no good news anywhere so gold is the haven. Maybe fear will overcome past cyclical trends. A few down GLD days, though, and I'll try GLL again. A $100. here, $100 there, pretty soon you have...inflation! I wouldn't mind inflating my trading account.

SG

plantguy90's picture
plantguy90
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Posts: 271
Re: Gold's near future

Why would you look for cyclical trends when this period in history is a rarer event that's counter to normal growth cycles?

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