Posted on 08/19/2012 5:41:20 PM PDT by SeekAndFind
China's problems are gold's problems
Investors who love gold tend to think of it as a sort of bomb shelter. It's supposed to be a secure place to park your money when the rest of the financial world is blowing up.
So some may find it surprising that in a year when Europe's troubles have thrown the global economy into fits, gold has been a loser's bet. The price per ounce of everyone's favorite rock is down about 7percent for the year and is off 15 percent from its September peak. According to a report released yesterday by the World Gold Council, total demand for gold fell 7 percent in the second quarter of 2012 compared to the year before.
Let this be a reminder that, no matter how long it's been around, gold just isn't that special. It's a commodity that responds to the laws of supply and demand. Unlike commodities such as wheat or oil, which you can at least eat or burn for fuel, gold pretty much lacks any inherent value beyond what the market assigns to it. And in the past decade, much of the new demand that set gold off on a wild tear from around $300-an-ounce at the turn of the century to almost $1,900-an-ounce last year has come from two places: India and China. Combined, they account for 45 percent of the world's demand for gold jewelry and bars.
(Excerpt) Read more at theatlantic.com ...
Funny, I don’t remember it being in the $1900s....just in 1700s
Calm before the storm?
I've been watching economic experts for years now going back and forth on two topics: "Is Hyperinflation just around the corner? It sure looks like it!!" and "Are we in a Deflationary death spiral? It sure looks like it!!"
If the price of gold is dropping for no obvious reason, then I'd say that the odds of us being in a Deflationary death spiral are pretty good.
The most obvious reason is that higher prices make it more economically feasible to mine the ore, process it, and sell it on the open market. For the most part, it really is that simple.
Is gold going down or the dollar going up..? There’s a lot of people betting on the Kenyon getting the boot.
Because Soros said it 'is time' and so gave the signal?
It’s becoming a form of entertainment—like a shrieking circus—even for those of us who are not personally involved. ...couple days ago.
Soros Unloads All Investments in Major Financial Stocks; Invests $130 Million In Gold
http://www.freerepublic.com/focus/f-news/2919905/posts
Baltic Dry Index:
http://www.bloomberg.com/quote/BDIY:IND
My fire extinguisher isn't making me any money but I feel better knowing it's around.
(FWIW, silver's prolly a better choice for a stash.)
----
Send treats to the troops...
Great because you did it.
www.AnySoldier.com
(An entirely free service)
Surprise, surprise. The Atlantic is a leftist publication. So bashing gold and promoting paper money would be in their best interests.
I do not understand Atlantic’s statement that gold is down 7% year to date when it fact it is even.
We have had 10 years of positive price increases in gold. So it would not be unordinary for 2012 to be a price decrease in gold.
But I would not make bets yet. We still have more than 4 months of 2012 to go. The Central Banks are still printing gobs of money so it is likely to expect gold to rise.
Most likely Atlantic is trying to discourage the gold market so Soros can buy more at cheap prices.
Good bet here.Zero is out gold goes down.Zero stays around $2,500 dollar gold.
That’s my play. But I’ve turned 10k into 5k lots of times.
Gold more than doubled on price since Obama became President.It did rise to over $1900/oz before retreating to a current price of ~$1600. The main reason for the decline was the sale of gold in huge amounts by European Central banks and the IMF to provide funds for the bailouts and to provide liquidity for European banks. However the factors that caused gold to rise have not changed. Deficit spending, non sustainable huge debts, dollar printing and contraction of productive economies continue.The bailouts squander even more capital and further weaken Western economies. The Europeans are selling but Asian central bankers are buying huge amounts of gold. This underscores their lack of confidence in the value of the dollar. Would you want to be the Chinese central banker who has to explain to party hacks why China’s treasure of two trillion American dollars has declined in value?
Better to own gold in a deflationary time than anything with maybe exception to cash. If we truly have extreme deflation, absolutely everything in our economy is absolutely 100 % screwed.
We have a winner.
Either way, some gold or silver is a good idea. The depression is coming. But with Romney, at least the odds of getting hauled off to a FEMA "reeducation camp" are less.
Nothing could be better than to read a bearish article on gold in the Atlantic!
Measured from the arbitrary point from where this article starts its chart, yeah, gold is off from $1900. It’s off massively less than silver, which poked at $50, its old high.
Silver at 28 is 44% off $50. Gold at $1600 is 16% off its peak high.
I am a fan, not a worshipper, of both.
A little closer look at the chart of gold suggests that (and this, like any other interpretation, is just an interpretation) gold is probably building a base around here. The silver chart does not look anywhere near as healthy. But both of them have shown notable support near these levels. This is a time of year when these metals typically show weakness and tend to climb a little later in the year. I don’t necessarily say that these are going to rocket higher. Maybe they already have. Gold has put in a magnificent performance over the past decade or so. Silver, too. It’s entirely possible these metals were way out in front of perceived inflation and they are where they are for that reason and may go “not much higher”. I am somewhat agnostic on them in terms of loading up on them. I even sold some gold, at $1760....and I’m not unhappy I did. I see silver being sold anywhere above $28. But I see it being bought with gusto at any kind of $26.xx price.
These are very long term investments or “hedges” (definitely an incorrect term but many view as such) It is nearly impossible for a small holder to buy the metal and resell the metal, given the buy/sell spreads. At the same time, they are commodities, and commods can take breathtaking plunges. The essential question is: over and above “normal” market volatility, do either of these metals bear the possibility of taking giant plunges and holding down there for 10 or 20 years? I don’t know. I tend to doubt it. But....it only has to happen once!
Myself, I am happy owning modest amounts of PMs, regardless of what the price does.
As for buying metal at these interim highish prices; once you’ve made the decision to change some of your USDs into metals, dollar cost averaging, buying a little, at various prices, at various times, is a smarter decision, IMO, than thinking you can catch a price dip and really nail it.
Gimme a ping if you ever see anybody admit they lost money on gold. It seems that everybody bought at a nickel a pound and sold when it peaked.
There is almost no way we can escape without moderate deflation, followed by at least moderate inflation. And with the idiots in Congress they are unable to spend forty cents for every nickel they get in revenues.
Yes, the market may rally on Nov 7. But things are not even beginning to suck.
G
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