Posted on 03/12/2009 10:20:49 PM PDT by Professional
This linked article kind of explains what I'm referring to.
Doing some research last night, I stumbled across something quite interesting. Something I never knew existed, Central Bank Gold Agreement came up as a discussion about gold prices.
Apparently, 15 mostly European nations signed a pact in 1999, then renewed the deal in 2004. This agreement limits the central banks of those countries ability to sell their gold reserves. Back in 1999 this was meant to stabilize the price of gold, which was unusually low.
I personally find this very interesting, as a finance professional, because it is an artificial element to the natural supply demand equation. Essentially, they are in a way, hoarding gold with the intent of keeping the price high, if not at least from being low.
Now, here is where it gets interesting. This agreement is set to expire in September. Considering how high gold prices are, and how much these central banks are spending, would it not be prudent to sell off gold? And since you suspect another nation might just do that, at your financial and political expense, what makes you think they are not all motivated to act?
After finding this, I've searched high and low for more information. Surprisingly, wikipedia has nada, zippo, zilch. And if you do a web search via google or yahoo the only mentions are in gold sales pushing related websites. The ONLY mentions are that the agreement will probably/hopefully be renewed, or some wild spin tale of the like that is gold BULLISH. Reality says, that if EVERYONE is bullish, the opposite must really be the outcome.
Following the gold charts, it appears that it is resting close to a support line, that if broken, could mean a very large fall in price.
The bubble of gold in my opinion is about to burst, much like the oil bubble burst in late last year. At 147 here last summer, i said it would crash, and would hit 20 very soon. I got lots of guff on that... 2 yrs ago, I compared the chinese stock bubble to the nasdaq of 1999, and sure enough, kaboom. Look it up, I assure you both are true. I'm not trying to brag, but my opinions should not be dismissed as unfounded or simple guesses. I'm willing to back my thoughts with rational facts.
Our stock market now, is more than likely on the verge of an up move not seen since early 80s, or 1975. I'd think that many gold investors might realize that they need to change assets as well, providing a real motive for leaving gold.
Our stock market, and the world for that matter, were manipulated primarily via the removal of the uptick rule and mark to market accounting laws. This week, both are essentially being dealt with, causing the market to rise nearly 700 points. IMHO, the bear market may very well have died today.
I welcome your thoughts, and debate. If anyone can provide more details, neutral please, on CBGA and CBGA II, I'd love to read more.
Gold is real money and has stood this test for much of human history.
The FRN, meanwhile, has been around since 1913, and the complete fiat FRN since only 1971, and has lost, what, 95% of it’s value in relation to gold?
Gold may indeed be due a correction, it’s been bid up and perhaps overbid in expectation of inflation, but as a safe store of wealth it’s hard to beat, and for safety beats the current stock market hands down.
After the gold rush
http://us.ft.com/ftgateway/superpage.ft?news_id=fto042820081014071159&page=2
If anyone works, or owns, in the retail business of selling buying gold, and precious metals please let me know. I’d especailly be interested in your thoughts. Private reply if you would like.
The reverse correlation angle seems almost more important. Stocks often have bad sell offs when the dollar is weakening. Treasuries are dollar denominated, gold is essentially neutral. Stocks/bonds, treasuries, gold, cash do make a good combination. Again, normal diversification did not work very well at all in this major correction, and I assume the same could have been said in 29, 37, 74, and I know for sure in 2002. In 2002 corp bonds stunk, while munis did well. This time munis stunk right along with corps.
Rewarding winning regional banks is a plan that should have been instituted right away, but with GS running things at Treasury we got first Bush’s turkey and now Obama’s.
It’s probably wrong, in this day and age, to expect people to act rationally, but all I can see are the many rational reasons pointing to the expectation that stocks won’t be booming again any time soon (and so gold will hold it’s own if not blow higher.)
1. The economy stinks and returns in the form of dividends stink and will continue to stink for some time.
2. Many people, many of them boomers, just saw huge retirement nest eggs turned into paltry ones in the crash. Will these people be eager to return to the scene of the crime any time soon? I’m guessing not... except the gamblers and the desperate.
3. Along with their 401Ks crashing, so did the value of their other main asset - their home. Most folks are not feeling too flush.
4. People are also worried about losing their jobs, if they haven’t lost their job already.
5. People are saving money, not borrowing money. In order for credit to expand (and bid up stock and other asset prices) people have to borrow.
6. People are saving in three forms today; treasuries, cash and gold. There’s definitely a treasury bubble, and when inflation DOES pick up that bubble will burst and people will be fleeing cash as well. All of this is good for gold.
7. This week’s stock market rally sure looks like a classic dead cat bounce. If it is, and to the degree those gamblers and desperate boomers take still another hit, the stock market is not going to hold the recent lows.
8. Even international economies stink. The world desperately needs economic restructuring and that will take time. The broad stock market will be in upheaval.
So... I dunno... you may be right but it sure looks to me like - putting aside a possible moderate correction - the short range future is likely to be good for gold.
I still only have a small portion of my savings in gold. But I’m buying, not looking to sell.
You know, I forgot about Dorfman, but you are right. Cramer is a modern Dorfman. I never trusted Dan. Feel the same way about Jimmy.
That crazy act is a cover. It attracts easy money fools and if Cramer is wrong, well you know - he’s crazy.
Who invented that rule?
I've got a few tulip bulbs I'd like to sell you cheap. They're not in a bubble, really.
I won't charge you anything crazy like $43m/bulb. Just $5m/bulb. What do you say?
Anybody can say any commodity will be bullish and eventually be right.
What separates true predicters from the people just throwing out static noise is a timeline and numbers.
So when will the gold market crash, what and when will the bottom be...within, let's say, $100 on price, and a fiscal quarter (3 month period) on a timeline?
I'll bookmark this thread to see how you do.
I think your analysis is sound. Better than the backwards looking histories that prove gold is best. I think it is a set up for a black swan event.
2002 iirc, was also a bad year.
Now by bubble in re the Stock Market, we have seen the fmr standard for making money on Wall St. “buy and hold, stocks always appreciate in the long term” disproven twice in the last 8 years.
If one did that, one would have paid taxes on phantom gains, only to see that value erased, twice, when the market tanked. Add in Obama is serious about raising cap gains rates and stocks are losing their luster as a means of wealth creation, one must now sell when value is created in order to reap a profit, that much seems clear.
Over that same period one could have easily bought and sold gold and depending on whether one’s strategy is accumulation of gold, or realization of profits either would have paid off.
gold has outperformed the market over a 8 yr period.
gloom and doom ping list
If things get so bad that gold holders have to cash in, toilet paper and bullets would probably be a better "commodity" to own....
Interesting thread. Thanks for posting.
I listen to Rush, Hannity, Beck, and others and have been struck with the common theme....”Invest in gold, but don’t listen to me.” ??? (Mostly Beck)
I’ve been wondering how much is being spent to advertise and why is it necessary.
As for the “cash for gold” ads. It’d be interesting to know if they’re really seriously buying gold at reasonable prices or just low-balling to desperate sellers. And in so doing projecting the image that gold is scarce and in high demand.
Here’s the biggest red flag for me: I’ve been seriously considering buying gold. Why is that a red flag? Because I don’t follow the market and the last time I felt compelled like this was about 4 weeks before the Tech bubble burst! :-)
Yeah, Glenn Beck is gonna be pissed!
ROFLMAO Where has this "professional" been there are many markets limited by treaties and agreement. The stock market is artificially controlled and has limits. The agreement about gold is well known in gold follower circles. The currency market is controlled by the Fed - it is as artificial as can be.
One thing about gold that is rarely discussed (at least I've rarely seen it) is that nowadays gold is leaning towards being more of an industrial metal, as opposed to just being a precious metal thanks to computers and other high speed electronics.....that skews the market, too....
Please. Even toddsterpatriot isn’t that frivolous. Well, with me, anymore.
Cramer is a non-issue. A week later he could start hating it, either without acknowledging his previous position, or, as we see regularly, simply lying about it 1984-style by saying he has always hated gold.
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