Engineer

Gold Cannot Be Inflationary, But the Dollar Sure Can

One old argument against buying gold was that it did not earn any return.

Well guess what?...

...neither do treasuries anymore.

Just pointing out the obvious here.

Oil Majors Should Just Buy Real Gold

As a shareholder in several oil and gas companies, I would be completely fine with managment using 1% of current assets to purchase gold as a hedge against long-term inflation.

After all, this used to be the case by default for all current assets before 1971.

What Does the Recent Saudi Gold Rush Mean?

The mind reels at what would have happened to the silver market had the Saudis deployed all (or even part of) the $3.5B into physical silver.

At $10/oz, they would have been able to pick up 350M oz., more than twice the amount in the COMEX warehouse (in theory).

A question I'm wondering about (and I don't know the answer), is why - knowing that the silver market is so tiny compared to the gold market - someone doesn't take a stab at being Hunt 2.0?

Sluggard Silver

You should look at both sides of the recession equation: demand destruction AND supply destruction.

With respect to silver production, approximately 60% comes from other metal mines as a byproduct.

When commodity values drop below the cost of production, these mines will simply shut down.

In a normaly recessionary environment, the existing surplus warehouse stockpiles will be drawn down unitl the price rises above the cost of production and the mines then reopen.

However, In our bizzare recessionary environment, the existing stockpiles of silver (and all metals by the way) are by all historical standards...LOW. It is estimated that there are now approximately only 1 billion oz available to investors compared to 20 billion oz in the 1970s. This is the result of decades of skewed trading to the short side making silver almost not worth the effort to mine and produce.

Watch this market closely to see if Adam Smith eventually triumphs.

Gold in a Credit Crisis

That there is no commentary on the recent unusual & overwhelming short positions taken by the largest 2-3 traders in gold and especially silver, leaves one wondering who is speaking the truth anymore.

A speculative short position is NOT A FUND LIQUIDATION, it is capital at risk. A speculative short position in a silver secular bull market - equal to the entire COMEX warehouse stockpile - is an INSANE level of risk...

...unless one knows it is a sure thing.

For an alternative view on these matters, check out www.investmentrarities...

Gold's Relationship with Real Estate

Here's another way of looking at it.

In the early 1970s, shortly after the US defaulted on its gold standard, you could buy an average home in the US for 200 to 300 oz of gold. However, during the subsequent crisis of confidence of 1979/80, the ratio dropped to around 100 oz per home, simply because the value of gold skyrocketed.

In 2001, the average US home in gold peaked at a valuation of around 700 to 800 oz. Since then it has declined steadily to around the 300 oz level. If we are to see a re-test of the 100 oz mark, either homes would have to decrease in value another 2/3 (!!), or gold would have to increase in value by three times, or some intermediate combination of the two.

I'm not sure if this 100 oz valuation will be retested anytime soon, but I do get the sense that Gresham's Law (good money goes into hiding when bad money appears, en.wikipedia.org/wiki/...) will act even stronger in the years to come until we can figure out some way of putting ridges on "paper money".

Precious Metals: Scapegoats to Skyrockets

I wonder if the paid bashers we all know and love were smart enough to have taken their gains and invest them in gold and silver?!!

Gold Futures' Dirty Secret (Part I)

Thanks for sharing this Nicholas.
I too have experienced the same thing: the dealer that I have dealt with for the last three years is completely out of silver, and is running low on gold. And this is a MAJOR dealer in my area.

Obviously, the recent rigged "long squeeze" has given someone a chance to unload their paper to buy the physical before the next collosal short squeeze.

Is This the Death of Gold & Silver Stocks? Part II

Good article Mark,

I must also admit I am somewhat mystified by all this talk of the juniors collapsing. Collapse from what? You can find good adequately capitalized juniors now for a lower "metal in the ground" price than you could in 2003!

Independence Day: Decoupling Gold and Silver from the Dollar

Some people miss the point of the whole article:

When real estate is down, stock markets are down, commodities are down, bonds are down, and savings are paying a negative real rate of return, what can the average person turn to preserve their wealth?

Like the author says, I think you know the answer to this question.

Sorry, There Is No Silver Conspiracy

"It's different this time" in that this past shorting event has seen the RSI for all bullion investments pushed down to all-time, even ridiculous, lows. All this at a time when the bullish fundamentals remain completely unchanged.

I find it telling that during this event, the buying in the bullion ETFs has skyrocketed. You know, it is possible to have short and long postions at the same time, through separate entities.

Gold Speculators Rushing In?

If you want a truer view of things, try this graph with a y-axis log scale and you will see that compared with the 1970s, today's "parabolic" rise is just getting started.

Gold, Silver and the Great Unwind: No Conspiracies Here

MIchael, could you please address the following question for your next post?

"Why is physical silver nearly impossible to obtain in the midst of a price collapse?"

Thanks.

Gold's Finest Hour: How to Buy Now

Andyn, yes gold accumulates, but people accumulate too. An important indicator is the amount of gold available per capita, which is probably now less than one ounce per person.

The Gold-Oil Ratio Approaches All-time Lows

I would argue that gold would have to rise in this current environment. I disagree with those who argue that gold has no value. Physical gold has value as a STORE of energy in that 1) it takes a discrete amount of energy to extract and refine (which is becoming more expensive incidentally), 2) it resists corrosion, 3) it is easily divisible, 4) it is recognizable worldwide and is to some extent incorruptible and 5) it is beautiful. I challenge you to find me another store of energy accessible to everyone on the planet that has these unique qualities (aside from other PMs).