Dave G

The Manipulation of Gold Prices

Its not accurate or relevant to use peak prices when comparing financial performance of distinct asset classets. If average monthy prices were used, particularly in the late '70s and early eighties an entirely different picture would emerge.

Buyers at the top of price trend will undoubtedly lose. That's why dollar cost averaging is a sounder method of accumulation.

Of course since 2001, there has been no argument that gold has outperformed stocks and bonds.

Whiel your greater fool theory may be relavant here, it is entirely possible that beleivers in fiat are the real greater fools.


On Dec 06 07:05 PM Greg Weston wrote:

> Rob: as a store of wealth, stuffing $100 bills under your mattress
> would have been better 28 years ago. You would have lost 0% nominally
> rather than 12%.
>
> Also better stores of wealth would have been the vast majority of
> stocks and bonds; plus most any bit of U.S. real estate; plus most
> fine art and antiques.
>
> Gold needs to do better than inflation in order to be a true store
> of wealth. But that won't happen unless real demand for gold rises
> faster than supply. That very well may happen, but it is hardly a
> sure thing. You're better of with TIPS.
>
> For one thing, technology will probably reduce the amount of gold
> needed for industrial applications. And gold jewelry seems to be
> much less in fashion than it was in the age of Mr. T.
>
> All that said, I have a small long position in GLD, not because of
> any fundamentals, but because I think there will be a greater fool
> out there who will overpay even more in the near future, in part
> because of the credulous reaction of so many to articles like this
> one.

The Manipulation of Gold Prices

You've nailed it. Pay your mortgage off and whatever else with after tax capital gains. If you are convinced this will happen borrow to the max and invest now in real assets.

Question is, is this a yarn or not?


On Dec 04 03:23 PM gorml94 wrote:

> How can you take a REAL PROFIT in gold or gold stocks?
> You sell,and get back highly inflated dollars.
> Unless you are heavily in debt,and wish to pay up early,what do you
> do with the dollars you "MADE"?

The Manipulation of Gold Prices

GLD is a concoction of the World Gold Council. Their members are major gold mining companies. Their aim in creating GLD was to create a customer for their product. They have succeeded. It is implausible that WGC members are acting against their own interest by holding 'fake' gold. They would still be left with their product.



On Dec 04 12:13 PM Aikido wrote:

> I am suprised you hold GLD. I could never get documentation that
> says they hold the gold - I think they are part of the effort to
> hold the price of gold down.

The Manipulation of Gold Prices

GLD is a concoction of the World Gold Council. Their members are major gold mining companies. Their aim in creating GLD was to create a customer for their product. They have succeeded. It is implausible that WGC members are acting against their own interest by holding 'fake' gold. They would still be left with their product.


On Dec 04 12:13 PM Aikido wrote:

> I am suprised you hold GLD. I could never get documentation that
> says they hold the gold - I think they are part of the effort to
> hold the price of gold down.

Decoupling Of Physical Gold And Paper Gold Prices

The paradox evident from these these discussions is that for the past year or so holding any investment of any class - including cash - has been a losing proposition. This is a near impossibility, but actually has and is going on. The only explanation is massive, forced selling (aka deleveriging) on a scale never seen before to satisfy margin calls, bank regulators and redeeming hedge-fund owners. Further, there is no end in sight even though CB's have lent, swapped and printed more than $1 trillion with credit still getting tighter. Swaps, and lending are not doing the trick. Only real expansion of the monetary base will alieve this crisis.

This craving for liquidity has created a monstrous dollar shortage that is a total illusion.Yes, the demand is there, but it is like oxygen for a man stuck inside a box; he will do anything to keep the supply coming in so he can live; make any promises, give away anything he has to keep the oxygen flowing.

How can this end? Only one way. CB's will create more oxygen, more dollars, to allow the man to breathe. He needs only to satisfy his creditors with paper, not wealth. When this finally occurs, the demand for dollars will drop, credit will loosen, commodities will behave more like they have for the past 500 years, gold will rise and companies will start making money again and presumably their stocks will rise too.

So when will this occur? When the maximum point of pain is reached by the most amount of people. A 'political' event, when the pain of not acting is greater than following the inevitable course that they must.

One more cliche is appropriate. It's always darkest before the dawn.