Gold
11-24-2009 | 10:41 AM
#1
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From: SoCal
Gold
I realize that weaknesses in our dollar (shaky real estate markets, wars, economy/job woes) inflate the value of Gold...but I'm not reacting to that.
A year ago, gold was selling for between $700-$850/oz and last November we had many of the problems we have today.
As I write this, Gold has skyrocketed to an unbelievable $1170/oz.
It touched $1200/oz earlier today.
I see "Cash For Gold" adds on TV daily, even highlighted on the news as a new booming business.
But all my research, all indicators I can dig up suggest that Gold is over ripe.
We've seen these trends before -- A decade ago Joe Sixpack was throwing his beer money into the stock markets because it was all but GUARANTEED to increase in value.
Until the markets crashed.
And recently everyone who could borrow money tossed as much as they could scrape up into a seemingly fruitful housing market...which ultimately dried up when there was no one left to buy the over-valued properties.
My only thought is that Gold's inflated value has been driven so high by EMOTION. Not by justifiable, sustainable, reasonable evidence. Just people desperate to make money.
Just like the housing markets before it, and just like the stock markets before that.
See, there's nothing left for average, mom + pop investors to put their hard-earned money into anymore. Everyone's scared of the stock market and short-selling their "investment properties" back to the banks.
But suddenly here's GOLD. We like GOLD. It's...GOLD.
So my question is this: what is the top?
At what point does it topple?
A year ago, gold was selling for between $700-$850/oz and last November we had many of the problems we have today.
As I write this, Gold has skyrocketed to an unbelievable $1170/oz.
It touched $1200/oz earlier today.
I see "Cash For Gold" adds on TV daily, even highlighted on the news as a new booming business.
But all my research, all indicators I can dig up suggest that Gold is over ripe.
We've seen these trends before -- A decade ago Joe Sixpack was throwing his beer money into the stock markets because it was all but GUARANTEED to increase in value.
Until the markets crashed.
And recently everyone who could borrow money tossed as much as they could scrape up into a seemingly fruitful housing market...which ultimately dried up when there was no one left to buy the over-valued properties.
My only thought is that Gold's inflated value has been driven so high by EMOTION. Not by justifiable, sustainable, reasonable evidence. Just people desperate to make money.
Just like the housing markets before it, and just like the stock markets before that.
See, there's nothing left for average, mom + pop investors to put their hard-earned money into anymore. Everyone's scared of the stock market and short-selling their "investment properties" back to the banks.
But suddenly here's GOLD. We like GOLD. It's...GOLD.
So my question is this: what is the top?
At what point does it topple?
11-24-2009 | 11:43 AM
#2
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Joined: Jul 2001
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From: Yorba Linda, CA
Originally Posted by Mr Dave,Nov 24 2009, 11:41 AM
I realize that weaknesses in our dollar . . . inflate the value of Gold . . . .
How has the price of gold in euros or yen behaved lately? (I don't know; I haven't researched it.)
Gold is generally seen as an inflation hedge - hence, a currency hedge - and a safe haven. If the price of gold has risen dramatically against all currencies it suggests a generally bearish market / economy outlook. I, for one, don't see that as inaccurate.
Originally Posted by Mr Dave,Nov 24 2009, 11:41 AM
So my question is this: what is the top?
At what point does it topple?
At what point does it topple?
11-24-2009 | 12:40 PM
#3
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Posts: 9,845
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From: SoCal
Hmmm...
And then there's this:
http://www.telegraph.co.uk/finance/newsbys...y-runs-out.html
Barrick shuts hedge book as world gold supply runs out
Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world's top producer Barrick Gold.
By Ambrose Evans-Pritchard, International Business Editor
Published: 7:20PM GMT 11 Nov 2009
Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.
"There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London.
"Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," he said.
Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa's output has halved since peaking in 1970.
The supply crunch has helped push gold to an all-time high, reaching $1,118 an ounce at one stage yesterday. The key driver over recent days has been the move by India's central bank to soak up half of the gold being sold by the International Monetary Fund. It is the latest sign that the rising powers of Asia and the commodity bloc are growing wary of Western paper money and debt.
China has quietly doubled holdings to 1,054 tonnes and is thought to be adding gradually on price dips, creating a market floor. Gold remains a tiny fraction of its $2.3 trillion in foreign reserves.
Gold exchange-traded funds (ETFs) – dubbed the "People's Central Bank" – have accumulated 1,778 tonnes, making them the fifth biggest holder after the US, Germany, France, and Italy.
Ross Norman, director of theBullionDesk.com, said exploration budgets had tripled since the start of the decade with stubbornly disappointing results so far.
Output fell a further 14pc in South Africa last year as companies were forced to dig ever deeper - at greater cost - to replace depleted reserves, not helped by "social uplift" rules and power cuts. Harmony Gold said yesterday that it may close two more mines over coming months due to poor ore grades.
Mr Norman said the "false mine of central banks" had been the only new source of gold supply this decade as they auction off reserves, but they are switching sides to become net buyers.
Barrick is moving fast to wind down the remaining 3m ounces of its infamous hedge book over the next twelve months, an implicit bet on rising gold prices over time.
Mr Regent said the company had waited too long to ditch the policy, which has made the company enemy number one among 'gold bug' enthusiasts. The hedges oblige Barrick to deliver part of its gold into futures contracts set long ago at levels far below today's spot prices.
The strategy worked well in the falling market of the 1990s, but has cost the company dear in lost profits this decade. "Hindsight is always 20/20," said Mr Regent, who was appointed from the outside earlier this year.
Barrick bit the bullet in the third quarter, taking a $5.7bn charge against earnings on hedge contracts. Liberation is at last in sight. In 2001 the hedge book topped 20m ounces.
Mr Regent said the hedge policy has weighed badly on the share price and irked investors, becoming a bone of contention at every meeting. The financial crisis brought matters to a head as markets fretted about counterparty risk. "It was clear to me that there were a significant number of institutions who wouldn't invest in Barrick because of the hedge book," he said.
Barrick produced 1.9m ounces of gold last quarter, down from 1.95m a year earlier. Costs have been "trending down" to $456 an ounce, though rising energy prices pose a fresh threat. Total reserves are 139m ounces, far ahead of rival Newmont Mining at 86m.
The hedge book venture has not been a happy one, but those who predicted that Barrick would eventually "blow up" on its contracts may owe the company an apology.
And then there's this:
http://www.telegraph.co.uk/finance/newsbys...y-runs-out.html
Barrick shuts hedge book as world gold supply runs out
Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world's top producer Barrick Gold.
By Ambrose Evans-Pritchard, International Business Editor
Published: 7:20PM GMT 11 Nov 2009
Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.
"There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London.
"Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," he said.
Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa's output has halved since peaking in 1970.
The supply crunch has helped push gold to an all-time high, reaching $1,118 an ounce at one stage yesterday. The key driver over recent days has been the move by India's central bank to soak up half of the gold being sold by the International Monetary Fund. It is the latest sign that the rising powers of Asia and the commodity bloc are growing wary of Western paper money and debt.
China has quietly doubled holdings to 1,054 tonnes and is thought to be adding gradually on price dips, creating a market floor. Gold remains a tiny fraction of its $2.3 trillion in foreign reserves.
Gold exchange-traded funds (ETFs) – dubbed the "People's Central Bank" – have accumulated 1,778 tonnes, making them the fifth biggest holder after the US, Germany, France, and Italy.
Ross Norman, director of theBullionDesk.com, said exploration budgets had tripled since the start of the decade with stubbornly disappointing results so far.
Output fell a further 14pc in South Africa last year as companies were forced to dig ever deeper - at greater cost - to replace depleted reserves, not helped by "social uplift" rules and power cuts. Harmony Gold said yesterday that it may close two more mines over coming months due to poor ore grades.
Mr Norman said the "false mine of central banks" had been the only new source of gold supply this decade as they auction off reserves, but they are switching sides to become net buyers.
Barrick is moving fast to wind down the remaining 3m ounces of its infamous hedge book over the next twelve months, an implicit bet on rising gold prices over time.
Mr Regent said the company had waited too long to ditch the policy, which has made the company enemy number one among 'gold bug' enthusiasts. The hedges oblige Barrick to deliver part of its gold into futures contracts set long ago at levels far below today's spot prices.
The strategy worked well in the falling market of the 1990s, but has cost the company dear in lost profits this decade. "Hindsight is always 20/20," said Mr Regent, who was appointed from the outside earlier this year.
Barrick bit the bullet in the third quarter, taking a $5.7bn charge against earnings on hedge contracts. Liberation is at last in sight. In 2001 the hedge book topped 20m ounces.
Mr Regent said the hedge policy has weighed badly on the share price and irked investors, becoming a bone of contention at every meeting. The financial crisis brought matters to a head as markets fretted about counterparty risk. "It was clear to me that there were a significant number of institutions who wouldn't invest in Barrick because of the hedge book," he said.
Barrick produced 1.9m ounces of gold last quarter, down from 1.95m a year earlier. Costs have been "trending down" to $456 an ounce, though rising energy prices pose a fresh threat. Total reserves are 139m ounces, far ahead of rival Newmont Mining at 86m.
The hedge book venture has not been a happy one, but those who predicted that Barrick would eventually "blow up" on its contracts may owe the company an apology.
11-29-2009 | 07:53 AM
#5
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From: Toronto, Canada
Gold will crash. When you see the general public investing heavily in something they don't understand then you know it's time to bet against them.
Same thing happened with oil. You had the price up to $140/brl then it crashed to $40 and settled back down to the "real" price of ~$70/brl.
The "real" price of gold I estimate to be about $650/oz. When it gets to double that, about $1300-1400/oz I expect the the people who DO understand gold will cash out, the price to plummet to $300-400/oz, the amateurs will get crushed and bail (buy high, sell low is the strategy of the average investor) before settling out at around what the real price should be as the insiders go and buy up the debris for $0.50 on the dollar.
Psychology is a far more reliable tool in investing than economics or trading skills. They are too close to the trees. This is exactly the chain of events as they happen, time and time again. Escape the trees. If you invest in gold here you stand a really good chance of staying poor and the rich will profit from your remains.
Bet against the stupid money. You can't follow the smart money because they don't tell you what they are doing until AFTER they have done it, at the same time everyone else finds out.
If you have gold, I'd advise you start selling. Be the smart money. Be the guy telling you to buy while at the same time he is selling. Be Goldman Sachs who was shorting the us mortgage business at the same time they were advising all of their institutional clients to go long.
Same thing happened with oil. You had the price up to $140/brl then it crashed to $40 and settled back down to the "real" price of ~$70/brl.
The "real" price of gold I estimate to be about $650/oz. When it gets to double that, about $1300-1400/oz I expect the the people who DO understand gold will cash out, the price to plummet to $300-400/oz, the amateurs will get crushed and bail (buy high, sell low is the strategy of the average investor) before settling out at around what the real price should be as the insiders go and buy up the debris for $0.50 on the dollar.
Psychology is a far more reliable tool in investing than economics or trading skills. They are too close to the trees. This is exactly the chain of events as they happen, time and time again. Escape the trees. If you invest in gold here you stand a really good chance of staying poor and the rich will profit from your remains.
Bet against the stupid money. You can't follow the smart money because they don't tell you what they are doing until AFTER they have done it, at the same time everyone else finds out.
If you have gold, I'd advise you start selling. Be the smart money. Be the guy telling you to buy while at the same time he is selling. Be Goldman Sachs who was shorting the us mortgage business at the same time they were advising all of their institutional clients to go long.
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11-29-2009 | 06:35 PM
#8
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From: Yorba Linda, CA
Originally Posted by QUIKAG,Nov 29 2009, 03:04 PM
. . . any mutual funds/ETFs etc. available to short gold?
12-01-2009 | 10:03 AM
#9
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From: Portsmouth, NH
Originally Posted by cthree,Nov 29 2009, 11:53 AM
The "real" price of gold I estimate to be about $650/oz. When it gets to double that, about $1300-1400/oz I expect the the people who DO understand gold will cash out, the price to plummet to $300-400/oz, the amateurs will get crushed and bail (buy high, sell low is the strategy of the average investor) before settling out at around what the real price should be as the insiders go and buy up the debris for $0.50 on the dollar.
side note: Silver just cruised over $19/oz spot and i'm cashing out.