Nikhil

Gold/Silver Ratio Is High, But It's Been Higher

"deleveraging is process where higher prices are opprtunity for the funds and inverstors" ??? can you explain this


On Jan 08 06:18 AM Rakesh Varasia(Sr.Research Analyst) wrote:

> Ya but you miss one point which is very important and matter to discuss
> , why gold to short and why silver to long............. so my answer
> is simple is DELEVERAGING PROCESS ........ DO you know guys what
> is impact of deleveraging on gold and silver ..........deleveraging
> is process where higher prices are opprtunity for the funds and inverstors(Those
> people who bought at US$690 to US$600 level. now what is meaning
> of this the reason is simple that the people who forgot to book profit
> at higer prices and if prices are under their value can make profit
> at higer prices.... but they wont book profit in silver since silver
> is silver poor, rich everyone has reason to smile on silver.......
>
>
>
> So long term i see Silver between US$14 to US$17 , in Rs.terms it
> can touch at Rs.21200/Rs/24000/Rs.2... are my targetsssssssss..........
> so guys see you at that prices.

Is It Time to Buy Gold?

Gold is considered a hedge against inflation primarily since it did well in the 1970s inflationary time and since it didn't do well in disinflationary (mind you not deflationary) 1980s people extrapolate that gold would not do well in deflationary times. I read a very interesting paper which talks about golds behaviour in deflationary times (there have been 7 of those since 1800s). The one in 1818 is not documented well, so omitting it, in the rest of the deflationary times gold mostly (5 out of 6 times) outperformed paper currency (irrespective of whether we were in a fixed or floating rate exchange regime). The critical factor in determining golds performance is the credit quality of the issuer of the paper currency, if that deteriorates people tend to choose gold as a hoarding vehicle over paper currency.

Am not a gold bug, in fact have started studying the market recently but tell me something, even if inflation doesn't show up sometime soon, all the measures that the gov is taking to tackle the deflation are directly/indirectly going to cause the devaluation of the dollar (even the gov would like a gradual devaluation since that would work against deflation) and hence will be good for gold. Hence I think the conventional wisdom that gold would do well 'only' in an inflationary environment is flawed, a deflationary environment has been really good for gold.

Is It Time to Buy Gold?

CLH, could you please go back to 1930s and see what happend to the dollar, it was devalued against gold to tackle deflation.


On Dec 05 08:27 AM CLH wrote:

> The best article I have read on "should I buy gold". We are in the
> worst deflation since 1930s and the dollar is soaring, however most
> think gold will save them. Dumb dumb. Keep your money in dollars
> not gold.

The American Crisis and the Case for an Inflationary Depression

i think you should read thru this.. www.federalreserve.gov...

there would be deflationary pressures in the short term but with a fiat currency system it can be taken care of easily.. and chances are one could overdo the fight against deflation..


On Dec 03 08:42 AM CLH wrote:

> You are delusionary. There is no possible way to make a deflation
> into inflation by magic. Print money? Not possible because no one
> will borrow it.
>
> This is a deflation (like Japan had) which is caused by the elimination
> of debt which causes the disappearance of money.

The American Crisis and the Case for an Inflationary Depression

nice article.. though dow at 3300 is too extreme for my apetite.. not that its impossible.. i tried accessing your fund www.gothamfund.org/.. doesnt work ?

Gold: The Next Reserve Currency Player

Why is GLD an end game scam ? And why do you think gold stocks will outperform gold? I agree they are supposed to be a leveraged play to gold but compare GDM (gold miners index) vs GLD (gold etf) on google finance or bloomberg and you willl see gold has clearily outperformed the stocks.


On Nov 30 09:37 AM relmor wrote:

> Dont buy the GLD. Its an end game scam. When a rush of investors
> ever demand there gold, they will be in for quite a surprise. Also
> could crash any day because of that. Physical gold cant crash. Gold
> stocks will outperform gold for a while anyway, as the charts are
> dipicting.

Gold In Backwardation? Not So Fast ..

Prof Lewis talks about gold being in backwardation whereas this article by hardassetinvestor very cleary discerns that not being the case. Where do see gold being in backwardation ?

I agree dollar weakness could imply (as it has historically) positve movement of gold prices, but when will the dollar start weakening is anybody's guess. So far all the arguments about flight to safety seem to be holding up and $ has been rising steadliy since July (see DXY index ) And infact in the short term most of the financial analysts expect this trend to continue (I am not saying they will be correct) and that makes timing an entry in gold tougher.

On Nov 26 11:29 PM User 307894 wrote:

> Pay attention to professor Lewis at minyanville.com/
>
> Read this article on Gold potentially hitting 1200 this year and
> 4000 to 5000 next year. These guys have been damn accurate on predicting
> these last two years.
>
> www.minyanville.com/ar...
>
>
> Buy Gold NOW!!!!!!!!

Gold In Backwardation? Not So Fast ..

Shouldnt the net rate one earns by borrowing and selling it be LIBOR - GOFO = 1.4 - (-0.08) = 1.48 and not 1.32 as you calculated, (assuming I invest the cash proceeds from selling gold, and get Libor on that cash deposit)? Please confirm

And I infer that there are also two opposing forces on gold prices:
1. Low gold forward rates putting downward pressure: Implying that there are institutions willing to lend gold and there is easy availability.
2. Historical -ve fwd rates implying a possible upmove: though I dont think this is a strong point, since there can be lots of external factors affecting gold price. In sep 99 gold didnt rally. It went from 300 to 325 in the short term (oct 99) but ended the year at 288. Secondly in Mar 01 again there was an immediate rally and infact gold moved up more when Spx moved down in those recessionary days.

Hence I dont whether to read this as a +ve or -ve for the gold prices? Though I might lean towards -ve pressure on the prices in the short term since I think the first point mentioned above is more logical.