Seeking Alpha

Gold tumbles over the last hour, hitting support (as the technicians might say) of $1,610....

Gold tumbles over the last hour, hitting support (as the technicians might say) of $1,610. Beyond that, the next stop on the charts may be Dec. 2011's low of about $1,525. GLD -1.6%. The gold miners - as usual - taking it worse, GDX -3.2%.
Comments (27)
  • HSBC back up and running after a day off..
    8 May 2012, 09:50 AM Reply Like
  • I'll just point this out:



    I've claimed that gold will fall hard for a while already. And shorting the miners (GDX) has been my favorite way to profit.


    Buy my book!
    8 May 2012, 09:58 AM Reply Like
  • Short the miners until nationalization.


    Buy more phys on the dips using the proceeds.


    Keep your book.
    8 May 2012, 10:12 AM Reply Like
  • Agree with your points.
    Not sure when this will happen though, and not in a straight line. Wasn't aware of your work as I'm too busy enjoying the "gold goes to $12,000" BS articles...
    Keep up the good work, you're onto something. There's only a handful of us on that line of thinking now, but crowds will follow when the air comes out of the 12 year run-up.
    8 May 2012, 10:52 AM Reply Like
  • It isn't a 12-year "run up" in pre-inflation adjusted gold that has me as worried as the multi-decade long currency debasement. And the fact that it's no longer to the tune of a sane 3-4%, but to the tune of trillions of dollars printed in the past couple years.


    I'm not out there stocking up on PMs preparing for armeggedon. And I tend to subscribe to the Buffet view, which is that PMs aren't useful in economic creation activities, which is where I try to put my money. Simply, I don't buy into the "zero hedge" crowd, which appears to be a bunch of jewelers trying to pawn their metals on John Q.


    But betting for gold dropping to $700 is just ridiculous unless the entire world economy comes to a crashing halt, in which case holding gold at any price may look like a smart move, not that I am predicting or suggesting it.


    The bottom line is the USD isn't as mighty as it once was, and between the politicians and bankers, I don't see the trend reversing. So you can short gold all you like, but personally I'll buck the current short trend and use the opportunities to find deals, probably among the miners.
    8 May 2012, 11:49 AM Reply Like
  • 5000 years of history is littered with every single failed fiat currency.


    This time is not different..
    8 May 2012, 11:55 AM Reply Like
  • I am not in fundamental disagreement with your premisses.
    Reason I think the author's reference to $700 (I would say $800) is a possibility is that this is the approximate marginal cost of production (90th percentile of miners).
    If you accept that inflation is unlikely to hit double digits in the 3 to 5 coming years because of the magnitude of the de-leveraging shock experienced by the global economy, then gold's value should indeed converge toward the marginal cost of production as any other level is based on what one thinks others may pay for it ("Greater fool theory").
    As time passes and raging inflation does not materialize (again, if you accept my premisses, i.e. no double digit in the 3 to 5 years), then the ranks of "believers" should thin out and $800 would not look ridiculous: that's where gold traded as recently as 2008.
    Just a thought...
    8 May 2012, 12:06 PM Reply Like
  • I'll bet chartprophet thought Obama, Oblamer, Obozo, Oblunder, Oh No! would be a good president, too.
    8 May 2012, 01:44 PM Reply Like
  • Your point would be a lot more valid if current gold prices hadn't already baked in 400% inflation.
    8 May 2012, 01:53 PM Reply Like
  • Gold is not an investment. Gold is money. If you put fiat currencies and gold under your mattress, you may or may not be ahead of the game. It all depends on when you need it. Gold is money you hope you'll never need. In the long run, gold will outperform.
    8 May 2012, 10:43 PM Reply Like
  • Your comment assumes that the fiat currencies the debt is denominated in is true reflection of the value of the bad debt.
    8 May 2012, 10:45 PM Reply Like
  • $700/oz gold?


    Keep the book, sell me whatever it is that you are smoking.


    What's your take on silver? Heading back to $5/oz too?


    What's the title of your book? The great economic recovery of 2012, co-authored by helicopter ben?
    8 May 2012, 11:03 PM Reply Like
  • I guess people are selling their gold to buy Greek bonds....that is what it looks like to world we live in
    8 May 2012, 10:02 AM Reply Like
  • Think the market has 'sell Gold' trade wrong. Any signs of Euro printing and a significant selloff in the Euro will trigger massive hard asset buying. Look for dips in Gold and buy.
    8 May 2012, 11:02 AM Reply Like
  • MA: we are with you on this, gold should be up $100 and when traders figure this out we will see it rise again, right now we are experiencing a fear trade in gold, which is counter to the asset....
    8 May 2012, 11:15 AM Reply Like
  • We bought our first ounce of gold for $29 in 1969 now worth $1600 pretty good return for us contrary to Buffet/Munger bloviators who cluelessly missed a 5000%+ run.Everyone dumping short term in the Macro Euro Concern "Sell in May" Trade. Helicopter Ben and QE should appear in mid May to rally Gold and stocks. We are entering (NUGT) down the most here for a short term "buy the dip sell the rip" trade. ( we will buy more at $1200-1400/ounce Fibonacci support if it makes it down there.Shorting Gold long term has been a bad idea for at least 50 years APD
    8 May 2012, 11:17 AM Reply Like
  • I hate to break it to you, but gold is a commodity, and so all other things being equal, its inflation-adjusted price will be flat over sufficiently long periods of time. This is borne out by reality, despite some people's attempts to deny that reality. Please inform yourself:



    You did not "make" 5000% because your purchasing power also decreased by upwards of 85% over this time period. By the same token that you have "made" money holding gold, you "made" even more in the late 70s. ...But then what happened? If you haven't sold for 45 years I doubt you will now, and when gold (eventually) does mean-revert again, as it did in 1980, you'll be left exactly where you started and with absolutely no capital gains to show for an entire lifetime of opportunity.
    8 May 2012, 12:45 PM Reply Like
  • Shorting isn't really a long term strategy in general.
    8 May 2012, 12:56 PM Reply Like
  • QE is off the table, which is negative for gold. Europe has been coming out with bad news which should be a positive for gold bugs, and it has not been. Technically it is in a bearish trend. Plus, too many "common" investors want it which means I should probably steer clear. If I really wanted to hedge against inflation, like all of us are trying to do, I would buy equities, which have made gold look likes its standing still since the early 1900's.


    8 May 2012, 03:43 PM Reply Like
  • If you want to hedge against inflation, don't buy anything: refinance your mortgage for a 30 year fixed rate below 4%. That'll be your best inflation protected "investment" decision, as that liability will melt away as fast as a snowball in a hot place if inflation returns. No need to tie your assets into PM with no yield and crazy volatility.
    8 May 2012, 03:57 PM Reply Like
  • That would mean that you are counting on the equity value of your house holding its value........08'? Though housing values are less volatile than PM prices I sure wouldnt call them stable by any means. I believe Buffett once said, treat your home as a home and your investments as such. I know I am not couting on the equity of my dwelling to hold any certain value.
    8 May 2012, 05:20 PM Reply Like
  • Point taken: don't do that with 10% equity. I have 40% equity at refi time.
    Pus, if inflation returns, I doubt house prices would not at worst stabilize, and probably rise at least some.
    8 May 2012, 05:41 PM Reply Like
  • Both equities and gold will be good hedges against fiat money inflation. Increased fiscal deficits are a foregone conclusion. Austerity in Europe is about to come to a rapid end!
    8 May 2012, 10:21 PM Reply Like
  • True that, assuming you have income when the shit hits the fan.
    8 May 2012, 10:47 PM Reply Like
  • Actually at the end stages of inflation, interest rates go through the roof and bury home prices (1978-1980). Better to have an inflation hedge that does not depend on nominal rates, and use proceeds from that to buy properties out right when rates peak.
    10 May 2012, 09:00 PM Reply Like
  • It's different this time. The financial system is toast. Wait for the reset.
    8 May 2012, 10:48 PM Reply Like
  • I agree right now QE is off the table for the elections...but it is working full speed ahead under the table.....
    9 May 2012, 08:30 AM Reply Like
DJIA (DIA) S&P 500 (SPY)