Trace Mayer

Peter Schiff: Outlook for the Gold Market

"For the gold bugs, the inflationary spike is OVER. ....All the Fed's quantitative easing will do is simply slow down the deflationary forces"

Gold is the ultimate form of deflation because it is the ultimate form of payment and is always accepted. When capital starts moving into gold there will be no chance of getting it out and then the economy goes into stasis.

www.runtogold.com/2008.../

T-Bills: Bubble, Bubble, Toil and Trouble

A good analysis because the FRN$ is the biggest bubble of them all and is in search of a golden pin and is going to find one. You raise a great issue with negative real returns and counter-party risk and just moving into physical FRNs. As the deflationary credit contraction continues and holders of capital continue seeking safety and liquidty then more capital will move into the physical FRNs and then eventually move from there into physical gold because gold is the safest and most liquid asset of them all because it is always accepted and is not subject to counter-party risk.

Peter Schiff: Outlook for the Gold Market

"At some point, the central bank selling is going to turn into buying. Who are these guys kidding?"

Between all the selling, leasing and other derivatives it appears the alleged central bank gold price suppression scheme may be ending as the central banks have less than half the gold they claim. Mr. Robert Landis, a graduate of Princeton University, Harvard Law School and member of the New York Bar, asserted in 2005, “Any rational person who continues to dispute the existence of the rig after exposure to the evidence is either in denial or is complicit.” When the market realizes this it will be very interesting for the gold market. While it would be unlikely it appears Schiff may not even be aware of what is really going on in the gold market.

www.runtogold.com/2005.../

Mac vs. PC vs. Gold

Gold is not fiat currency because it is always accepted as money and unlike fiat currencies it does not require immoral and unethical coercion against innocent people by governments through Legal Tender laws.

I really don't think there needs to be any type of Mad Max apocalyptic future. Perhaps apocalyptic for fiat currencies.

Gold cannot be in a bubble because it is commodity based. An ounce of gold is always worth an ounce of gold. It is fiat currencies that are in bubbles because their intrinsic value is nothing because they are not commodities but synthetic commodities. The FRN$ bubble Ponzi scheme is in search of a golden pin and its going to find one. As millennia of experience has dictated with countless fiat currencies in the fiat currency graveyard; the market is more powerful than governments.


On Dec 22 08:54 AM Johnnymack wrote:

> When you think about it, Gold is just a "fiat currency" too.
> Sure, it has a LONG history, but in some apocalyptic future, what
> will you be doing with that gold horde?

> Where does gold
> really enter into this? ok, instead of having a wealth of several
> pounds of gold, if we unwind the currency into gold (hey! that's
> creating a GOLD BUBBLE!) we all end up with a few grains of gold.
> So what?

Mac vs. PC vs. Gold

Very good points but considering opportunity costs being stocks trading with 1-3 P/Es that pay 5-20% yields and operate in other countries and currencies ....


On Dec 22 10:23 AM Roger Knights wrote:

> As Andy Zaky has pointed out, AAPL's P/E is a poor measure of its
> priciness, because it doesn't account for the fact that most of the
> profits from iPhone sales are counted as deferred revenue, in accordance
> with GAAP rules. Cash flow gives a better picture of the situation.
> In addition, Apple has no debt, $25 of cash per share in its piggybank
> (and growing fast), and a very attractive PEG figure.

Mac vs. PC vs. Gold

Well, whether the nominal share price will be $39; I do not know but the ratio is what I would consider important. It is similar to my 'buy' zone for the DOW being when it crosses with 1oz of gold. Whether that is DOW 850 or 40,000 I do not know.


On Dec 22 09:22 AM bluemarlin1402 wrote:

>
> Do you really believe that AAPL is going to hit $39 a share?? Thanks
> for going out on a limb and stating that AAPL is a buy at 39.

Rioting at the Gates of Thermopylae: The Fed & Central Banks Shudder

Good article. There is an alternative to the current banking system. Using it as an alternative and eventually substitute for the current system is a wise course of action also.

www.runtogold.com/gold...

Oil Majors Should Just Buy Real Gold

bricki, I think you missed an important argument. "Unlike the current nomenclature I consider gold cash and fiat currencies such as the Federal Reserve Note Dollar, Euro, Yen, etc. to be ‘like-cash’ which will eventually evaporate just as other ‘like-cash’ assets have such as Auction-Rate Securities, Asset Backed Commercial Paper, etc."

"For example, footnote 14 of the 2007 Annual Report for the Bank for International Settlements states, ‘Gold is considered by the Bank to be a financial instrument.’ "

Because the oil majors operate in so many different countries they hold many different currencies. My assertion is they should buy the only currency that does not contain counter-party risk. Additionally, the 5 oil majors could drain the entire COMEX warehouse with an immaterial 0.36% of current assets. How is the cash portion of their balance sheets currently allocated between $, A$, NZ$, C$, Euro, Yen, etc.?

Oil Majors Should Just Buy Real Gold

toomuchgas and bricki, I suppose we differ on our view of a critical issue and underlying premise with which I begin which is: whether the current economic environment is a deflationary credit contraction. If yes then 'when demand rises' and 'economic growth' returns may be a looooong ways away.

Skate where the puck is going to be not where it is and it appears we are skating in opposite directions and only one can be right. Markets are great though because they financially reward those who choose correctly.

dieuwer, exactly my point. The reason why what Shell is doing is wrong is because oil is not money, as such hoarding decreases rather than increases price and the negative interest rate for oil is too expensive relative to gold (which is cheaper to store 20 barrels of oil or 1 ounce of gold?). Shell should stop buying oil and start buying and hoarding gold.

ANTS, if you did not read the article then why did you comment?

Oil was not an integral part of the economy 2,000 years ago. However, the commodity ratios were probably very consistent back then such as wheat/gold, etc. In the current case, the 70 year gold/oil ratio is extremely consistent.

To get to your pet question, I think a better question to ask is how big is yellow, but perhaps you should do some further research. First, the oil the 3 Magi delivered was not the same black gold we use today but a luxury good. Second, there is a historic gold/silver ratio. Third, Judas threw out relative prices for such luxury goods as oil and myrrh (this is the correct spelling). Therefore, you could derive the approximate price. More research would be needed to determine the long-term pricing ratio. However, because of the Roman inflation the pricing data may be inaccurate and need adjustments but that is a start.

Additionally, it is asserted the gifts were probably chosen for the symbolism not their economic properties or relationships. Gold is the Ancient metal of Kings; fit for the King of Kings. Frankincense when burned was believed to carry prayers to heaven which is fitting for the High Priest. Myrrh was an embalming ointment to signify his future death and was used in his burial (John 19:39).

The Safest Ways to Invest in Gold and Silver

The baby gold bull has sure starting romping around again!

Good article. I received lots of questions about CEF and because I have not researched it was unable to give an opinion. I will be able to point them here. It appears that CEF is safer than GLD or SLV and a relatively good investment vehicle.

"Of this bullion, 99.3% was in physical form and 0.7% was in certificate form."

However, it does seem to be slightly different from the more expensive allocated storage with something like Turk's GoldMoney where the bullion is actually titled in the Holding owner's name.

www.runtogold.com/gold.../

I suppose it all depends on how much risk an individual wants to assume. I came across one comment about my article which I think is applicable: "It does not matter until it is the only thing that matters."

Five Riskiest Assumptions for 2009

'Its hopeless.'

Interesting. The last billionaire I had dinner with had entitled his presentation 'The Greater Depression Arrives' and over dinner he told me 'The situation is hopeless.' Of course, I agree with him. There are plenty of reasons why Humpty Dumpty can't be put back together again. Sure there will always be money to be made but it is going to be extremely difficult with these headwinds. Just try finding a suitable investment when 'Greece' and 'Iceland' to come to America which may very well happen in 2009.

Own Gold? Time to Fold

"When I first wrote up my negative view on gold, the price was slightly higher and the dollar was 5% stronger vs the euro and 10% stronger vs. the yen. At any rate, it wasn't a day-trading view. I will be concerned with the technicals if we take out 860."

Well, after Lyle Gramley mentioned a possible Fed revaluation of gold it should scare just about everyone to buy some.

But slightly higher than the $860 spot gold hit today? Up about $90/ounce or 12% since the article was published last week. One of my friends bought about $200k of physical gold on the 5th so he treated me to lunch and offered some Sugar Bowl tickets :)

Anyway, I would not worry much. Gold is the 'smallest pool being played by the largest money'. The real way to play it is to accumulate physical on a regular basis with profits made trading other vehicles. The price is extremely manipulated by government players. Just look what happened when Bear Stearns failed; gold was down like $90/ounce. Actually, when the news is really bad gold always goes down and it is so blatant it is almost laughable.

www.runtogold.com/2008.../

The Problem with GLD and SLV ETFs

ozzy43, 'Purchasing and storing physical metals are not.' is a misstatement of fact and I did provide examples of alternative vehicles which include purchasing and storing physical metals and 401(k) or IRA forms are acceptable.

However, GLD and SLV are a fairly convenient vehicle for 401(k) and IRAs as the alternatives require additional paperwork.

The Problem with GLD and SLV ETFs

Hendi_alex, you are broadening the issue outside the scope as asserted in the article. The risks you raise do exist. Although the article does not contain the reasoning because of space it is implied and important to draw the distinction between tangential risks (exchange rate risk, performance risk, etc.) which assets are subject to because of relative valuation, pricing, property law, etc. and inherent risks (counter-party risk, credit risk, payment risk, etc.) which gold is not subject to because of its attributes.

Top Gun, I doubt you understand the definition of counter-party risk and consequently do not distinguish it from performance risk. The key distinguishing element is the financial ability of the counter-party to perform. The other issues are addressed in hendi_alex's answer.

Own Gold? Time to Fold

There is some fairly obscure information that appears lacking, or at
least unaddressed, in your article. It is unfortunate that most of the 'gold bugs' resort to ad hominem attacks with name calling. Resorting
to such tactics usually stems from intellectual impotence.

Issue 1: Whether the central banks still have the gold they claim. The assertion is made that the case has been pretty much cracked that
central banks have only about 33-50% of the gold they claim to have.
www.runtogold.com/2005.../

Issue 2: 'Conspiracy' to keep the price low. I addressed this issue
in a 2 minute interview on the Korelin Economics Report.
www.runtogold.com/2008.../

Issue 3: Gold's use as a currency in ordinary daily transactions. Currently the use of gold as a currency in ordinary daily transactions
is extremely low but it is gaining velocity at an exponential rate.
www.runtogold.com/gold.../

Issue 4: If you hold gold its time to fold. I assert the onslaught of a deflationary credit contraction. As such moving from physical gold would be against economic law.
www.runtogold.com/2008.../

Assuming you have not been exposed to these assertions, because they are not addressed in the article, they should be something interesting ideas for thought.