Why gold now glitters for investors

Christian Science Monitor ^ | December 06, 2005 | Mark Trumbull

[jokar]

Gold

[mr_hammer]

http://www.kitco.com/charts/livesilver.html

[hubbubhubbub]

You are one of the few posters who make economic sense.
Many others just spout opinions.

[hubbubhubbub]

What happens when all the naked shorts of Gold have to cover? Will the Fed bail them out?

[JTHomes]

I'm no investment big shot, win some/lose some. But buy low sell high works with gold just like it does with a stock, yet it has instrinsic value, where stocks have none (just ask Kmart investors of a few years ago). One of the luckiest decisions I made was to taking about 30% of my money out of stocks in early 1999 (yes I felt like a chump most of that year) and invested about half in physical gold and half in gold funds. Still holding all the physical and some of the funds, and they have way out performed almost anything else I have been "invested" in the last 6 years while the Dow has basically traded between 9000-10800. I may start peeling those positions off and get heavier in stocks soon. I think if you are patient, buying anything that represents value at a historic low will make you money.

[Toddsterpatriot]

The central banks and the bullion banks are short 12,000 to 16,000 tonnes of gold, and the price of gold will equal the price of the Dow Jones Industyrial Average.

They've borrowed gold and sold it? You have a source?

[arthurus]

Very few of the folks who opine on economics, including those on the right side, have ever read an economics text.

[arthurus]

Buy low sell high works with gold in that the dealer has maintained his value. He has not lost money other than a % or two of transaction costs. If he is lucky and hits the tops and the bottoms in speculative mode he increases the value of his investment.When the gold price is moving rapidly there is an element of speculation involved and it tends to be, as in this case, catchup to increased number of dollars. The inflationary addition to the money supply has been fairly even since 1999 but gold has risen in steps. Gold mining stocks can be a good investment in a sharper than "normal" inflation because buyers bid up the stocks faster than inflation when the nominal gold price is increasing faster than other commodities.

The Clinton Fed actually began the inflation for some reason. The existence of that surplus should have precluded inflation as the debt was necessarily decreasing if the surplus was real. There was no necessity to inflate out of the debt. Bush gets the main blame for the inflation, though. He was explicit that that was what he was doing but he called it by its other name-Devaluation.

[arthurus]

• Central banks, especially in Asia, are buying to diversify their reserves beyond dollars and euros

Central banks in Asia are trying to maintain the value of their holdings as the major currencies of the world get pumped full of helium. They are not gaining by holding gold except relatively. As the piles of euros and dollars get smaller and smaller the pile of gold retains its dimensions. It does NOT grow but it doesn't shrink as dollars and euros do.

[Chewbacca]

We will have to wait and see, but I doubt it as the Feds will need the money elsewhere.

[onyx]

and the price of gold will equal the price of the Dow Jones Industyrial Average.





I don't quite understand.

[Movermike]

GATA has been saying this for some number of years. Go to their web site and read all you can in a free trial and then subscribe. Nobody else is telling the truth like Bill Murphy at Le Metropole Cafe, http://www.lemetropolecafe.com/index.cfm?CFID=1924704&CFTOKEN=71350891 Here's a quote from yesterdays Midas:

A Gold Cartel suppressed the price of gold for nearly a decade, and did so in surreptitious fashion. This was accomplished by deceitful lending of central bank gold in order to add price-depressing physical supply into the market. The IMF, to accommodate The Gold Cartel, instructed the central banks to account for this gold as gold reserves in the vaults, not as lent/swapped gold they cannot retrieve. As a result, the central banks have less than half the gold they say they have. Since the supply demand deficit exceeds 1500 tonnes per year, they will not be able to get even part of their gold back without driving the price to the moon. There is a massive gold short position out there with billions of derivatives of short side exposure, enough to send gold stunningly higher at any time when a gold derivatives neutron bomb goes off. Traditional gold shorts, ones who played along with The Gold Cartel, are running for the hills. It is only a matter of time before we begin to see smoke re a Commercial Signal Failure as some short is forced to cover in fast market panic buying conditions.

Mover Mike http://www.movermike.com

[Movermike]

The last time gold peaked at $850, the price of gold equaled or exceeded the level of the Dow Jones Industrial Average. I expect that to happen again. In other words, I expect gold to be at $5000 per ounce and the level of the Dow to be at 5000, or some level. I expect them to be equal;
Mover Mike http://www,movermike.com

[Freedom4US]

There are a lot of people who bought gold at almost 800 dollars per oz. _twenty five_ years ago. (as an aside it took the DJ average twenty five years to break even after the crash of '29)

More than a few dealers almost lost their shirt on Silver too. It briefly touched 50 bucks iirc. A lot of common date coins were melted, along with scrap and such.
They were paying almost 20 bucks for '64 dated and earlier kennedy halves!

[onyx]

Thank you. WOW! :)

I knew gold was undervalued when I bought it because at that time, the spot price for an American Gold Eagle was about $70 below the cost of mining one ounce.

[arthurus]

The extremes of the gold price don't count. That's why we use moving averages. And silver doesn't count at all. It is not a true monetary metal. I bought a motorcycle with a couple of rolls of silver dimes back then.

[bert]

.....some central banks are buying gold.....

Which central banks?

[bert]

Your link doesn't work

[William Terrell]

There is a rash of "Buy gold!", "Buy gold!" on all the radio stations, breathlessly predicting it will top $1000/oz. Spots are bought on all the conservtive radio stations.

Bite not. These are people that bought heavily 5 years ago when gold was $311/oz. You don't buy gold now; you sell gold now.

[Movermike]

Sorry Bert, it should be http://www.movermike.com/