oldgoldbug

Eric Lemieux: Decline in Gold Price Goes Against Every Theory

Gold goes from $250 to $1030 in 8 years, compounding at something like 18% per year. Gold corrects from $1030 to (?). At $1030 everyone who ever bought it has a nominal profit. Stock markets, oil and just about everything else except Treasuries crashes. Margin calls everywhere due to overleverage. Reasonable investors take profits in gold, speculators sell gold to meet margin calls in stocks and other commodities. Gold may go down a lot further from $715, maybe not.
More remarkable to my thinking is that gold hasn't gone down much much further and faster. Just look at the major miners (not to mention the juniors). The majors have lost up to 70% of their peak value. There are enormous deflationary pressures and gold is holding up as well as it has? The dollar is up 20% and you can't buy physical gold without paying massive premiums.

The real story is gold's strength, not its perceived weakness.

I would assume in a major deflation gold will drop back to where it started. Gold is telling us a major deflation is not likely.

Countdown of Manipulated Gold Price Running Out

Gold here at $840+/- is under massive selling pressure as the only real source of funds for investors besides Treasuries. That gold has held up so well is truly remarkable. Even the mining stocks have taken terrific beatings. This looks like a normal correction in a bull market. Perhaps it goes to $650-$700, perhaps not. The risks of not owning gold far outweigh the risks of it falling another 15-20%. Besides, investors holding a diversified portfolio will be doing pretty well in their other investments if their gold drops. Right now holding gold looks pretty good compared to the performance of other investments.
The performance of the mining stocks and futures markets reminds us that nothing substitutes for owning physical gold.
Given the massive movement into gold, it is clear many investors are considering an integral part of their portfolio. As a bit of a curmudgeon, I wonder if we won't see a nice plunge just to test the "cojones" of new converts.

Challenges in Gold Mining

Wow! traderstaff "...just buy the paper stuff" OK, take the paper to the coin store and get cash. Oops, doesn't work. Gold (and to some degree silver) are the ultimate insurance policies. Today we take over Freddie and Fannie because the wheels are coming off the system; what will happen tomorrow? If everything continues to work then trading paper will be fine. If the system crashes or locks up (lots of people around who remember the bank holiday in the 1930's) you will need to have both cash and precious metals just to get through each day. When the capitalist system wipes out excess capacity for the purpose of moving productive assets into other uses, it can be a very messy experience. We want it to be easy, pretty and pain free - it isn't. Those who had capital to get into the game when the Dow hit 50+/- in the 30's have probably done OK. And remember, one of the keys to the revival of the economy was the arbitrary increase of the price of gold from $20 per ounce to $35. Physical gold's buying power was increased 70% at the stroke of a pen. Of course, the government forbid the owning of gold as well but I'm sure plenty was squirreled away "just in case".
I would recommend we all have some precious metals and cash put away "just in case".

Is This the Death of Gold & Silver Stocks?

Swing trading is great and someday I hope to be as successful at it as Paul&Shark..... but for long term money that you can't afford to lose, the author pretty much hits the nail on the head. As we used to say back in the day "hold your nose and buy it". Everything looks absolutely dismal for precious metals except their price. Not to say they won't go down from here, but this is a much better place to buy than $1030. If you think gold has 4 digits in it with a leading 2 or better, even $1030 won't look so bad 3 years from now. Good luck to all, if it was easy we'd all be rich.