oneoldude

How the Gold Game Could End

Oh, one thing I forgot to mention. The author is indeed wrong in his basic premise. That premise being that the game in gold will end

The game in gold has been going on for thousands of years. And while its price has gone up and down in relation to all currencies, especially fiat currencies, the game has never ended. Indeed, gold has essentially maintained its purchasing power in real terms (inflation adjusted) since the beginning of time.

As an inflation hedge, it has historicaly had no equal. But that does not mean profits in real terms. So, the game goes on. Speculation on when it is relatively low and relatively high. Yup. Buy low and sell high if you are a bull and sell high and buy low if you are a bear. Yes, the gold game goes on.

Good luck all.

How the Gold Game Could End

Here we go again. It seems that when there are more than a couple correct answers to a question, serious polorazation takes place. Everyone is right in this discussion, including the author.

Should the investing public continue getting out of the gold trade, then GDX may have to start liquidating its gold holdings and that may happen at the same time that the IMF and others will be manipulating the market for lower gold prices. Should this happen, then the price will fall like a rock. $500 or lower gold prices might well be in the picture.

On the other hand, in the world wide fight to prevent a monster deflationary spiral, all the freshly printed fiat currency will produce massive inflation if, and only if, the money supply significantly increases velocity.

Indeed, both scenerios could easily occur. First, a massive decline, and then, a moon shot to $2000 plus per oz of gold.

Personally, I am not making predictions re what will happen. I was fortunate enough to ride AUY from gold's recent lows and after gold topped out at $1000 I got out at $950. Now I am waiting for the market to tell me when to get back in because I think there will be significant inflation in our future. I hope it will be much lower from here. It is all about timing. And both sides of the argument may well be correct.

Good luck all.

Plenty of Room for Gold to Go Higher

Well, I am one of those people who liquidated all his "productive assets" in his Roth IRA and bought AUY. Those "productive assets" are down more than 30% and AUY is up 60%. Not too bad for an unwashed, uninformed member of the masses.

Now I have a nice buffer for that account looking into the future. And the future of gold seems quite bright in the long term.

The last time I made a trade like this was in the early 1970's when Nixon closed the gold window. I bought actual gold then at $35 per oz (in the form of double eagles) and rode it to $300 per oz. No I did not ride it up to the $800 peak back then. But the profit was sufficient to pay my way through college, law school, a divorce and left me enough to set up my law practice.

Back in the 70's the danger was stag-flation and gold was being held to a ridiculously low price by the open window before the window closed. At that time there was little intervention in the gold market by our Fed and the common cry was that gold was a barberous relic. The trade worked perfectly.

Today there is a great deal of manipulation in the gold market by central banks. We are facing a deflationary future in the intermediate term and a potential stag-flation or outright inflation when prices settle down and industry starts to crank up again. This should be due to all the fiat currency being printed all over the globe. I feel the price of miners does not adequately value the current price of gold given the cost of production, especially in the more efficient miners. Also there is dilution in some miners due to some share offferings among a host of other factors that tug on the price of gold and the miners. So the situation is not as pure and as sure as it was in the 70's.

But it seems to me that the dollar is going to weaken on an absolute basis relative to gold and perhaps other curriencies as well although a relative decline to other curriencies is not necessary for gold to go up relative to the US dollar and all other curriencies at the same time. I also believe that Fed long bonds will carry a higher rate in the future due to all the money being printed and the worsening US economic situation. These seem to be a good bet to me and I will keep my longs in AUY and in TBT (TBT has also been good to me) for the time being. Of course I may change my mind at any time and take profits depending on how the fundamentals seem to have changed.

Good luck all!

Decoding What Gold Is Telling Us

Excellent analysis. Kudos!

I agree with you wholeheartedly. I got into AUY near the lows and have substantial profits in it. I did the same with PAAS.

But what bothers me now is the inrush of new money and all the talk that gold is the only trade that is currently working. Silver is of course gold's little brother but seems to have an excellent (low) valuation in relation to gold at this time. I start getting the heebie jeebies when there is such a large public discussion and rush into anything I hold. It smells like a topping process for the intermediate term is stirring.

Oh my! Whether to hold, or sell and buy lower down. Decisions, decisions!

Good luck all.

Is the Second Great Depression Imminent?

The real question is how to profit from the comming oil depletion. Any ideas as to what investments (companies) will be able to provide profit to investors with little risk that the local Gov will not apply an excess profits tax or nationalize the industry?

I guess the same question applies to gold and the comming decline in the US $.

My oh my, all these opportunities and where to invest.

Gold Equities Should Reward the Patient

GMiki,

Deleveraging by whom? Certainly not by the government. They are leveraging our country's future! Leveraging the future by printing money has always resuted in reflation (inflation).

So in principle I agree. The only real question is timing. I am probably getting in early but I am buying gold, silver, and commodities in general.