pater_tenebrarum

Gold Is Not in a Bull Market

The 'well respected authority' obviously knows very little about how the gold market actually works and how it should be analyzed. Anyone who wastes time with items such as 'jewellery demand' or 'mine and scrap supply' (both are completely irrelevant to gold's price) can be safely ignored.

Did the ECB Save COMEX from Gold Default?

re.: 'I agree that gold is Barbaric.'

agree with whom? Keynes? if not for governments enforcing legal tender laws, gold would be our money.
no-one in his right mind would accept unbacked pieces of paper with ink slapped on them in payment. it only 'works' because it is enforced at gunpoint, basically.
due to the fact that taxes can be paid with fiat money there exists a demand for it, failing that there would be no such demand - and of course, taxes are anything but voluntary contributions.


On Apr 02 10:05 PM Francis Schutte wrote:

> What ever is written or said about Gold, history will judge like
> it did many times in the past. Yes, I agree that gold is Barbaric.
> However, each time the authorities did what is done today, people
> with Gold came out a lot better than people holding Fiat paper money
> and Govenment bonds. I still hold a lot of Reichsmarks, and even
> Gold guanranteed government bonds. An heritage of my grand father.
> I advice all wise noses to READ some history books. The Age of uncertainty
> by Galbraith is one I would advice for it explaines why we have the
> same cycles over and over again.
> In the end, whatever happens, there is no doubt holders of Gold will
> survive. Of course, I can be wrong...but in this case, they'll have
> to rewrite all history books.

Gold Economics Questionable; Facts Forecast Lower Prices

'I remain skeptical that the amount of currency in the system is actually increasing, since the velocity of money has fallen so precipitously.'

this sentence makes no sense whatsoever. the velocity of money is not an independent causative variable at all for one thing (it is merely a lagging symptom of the thrust of monetary policy at an earlier time), and the supply of money is increasing by leaps and bounds currently - which has nothing to do with velocity. it may have escaped your notice, but the monetary base has increased by 100% over the past year, while broader monetary aggregates are currently all growing at double digit annualized rates.
we can rest reasonably assured that Mr. Bernanke will keep it that way.
as an additional point, the prospect of the current money supply inflation resulting in higher prices down the road is not the only thing motivating buyers of gold.
the possibility of a wholesale collapse of the monetary system must be considered as well.
just look what became of the 'well contained' little problem of subprime mortgages. recent actions by the authorities, including the Fed's announcement of accelerated monetization of debt, all reek of increasing desperation. there can be no assurance the current system will survive, hence people buy gold.

Gold Price and the Money Supply

the problem with your study is its starting point - 1971. prior to 1971, the gold price had been fixed at $35/oz. for almost 40 years, but there was a lot of monetary inflation in those 40 years, which your study perforce ignores. therefore one could argue that the run-up in the early 70's merely corrected gold's undervaluation vis-a-vis those 4 earlier decades of inflation. it may be better to use the 1974 price - the first major price peak in the run-up - as the 'fair value' starting point , or move the starting point further back in time, to 1933 ,and use the amount of TMS extant then .

Gold and Silver Bells Are Ringing

the bell that is currently ringing the loudest is the alarm bell. gold and gold stocks have failed to make new highs for the past 12 months now, while paper assets have been soaring world-wide. it won't take much for the gold stock indexes to break long-standing uptrend lines.
the dollar is very oversold and widely hated - and has only just begun to bounce off support that has held for decades. you bet it's a 'drag' on the metals - and will likely continue to be one. every tiny bounce in gold stocks has recently met with selling , which has of late grown more determined.
this is not to say that the secular bull market is over, but it could be in for a rest, and that rest could be very painful for holders of precious metals shares. the 1970's mid-cycle correction produced a 60% sell-off in gold stocks between 1974 and 1976, if something similar happens here, one would do best to sit it out. in short, one should now wait to see if the supports actually hold, and only adopt an outright bullish posture when they clearly do.

Gold and Silver Bells Are Ringing

test