Posted on 09/30/2010 6:57:03 AM PDT by SeekAndFind
Paulson, who is considered one of the most successful hedge fund managers worldwide, has made statements that the double digit inflation will “kill” the bond markets by enhancing the prestige of the gold markets. He expressed the estimation that the price of gold can easily pass the $2,400 per ounce limit reaching up to $4,000 an ounce within 2012. The billionaire hedge fund manager was speaking at an event in the University Club of New York.
At the same event, Paulson said that currently more than 80% of the placements are associated with gold, either in the form of ETFs (SPDR Gold Trust), either in cash or in shares of the industry, including shares of AngloGold Ashanti, Barrick, Gold Fields, IAMGOLD, Kinross, NovaGold and Randgold Resources. During his speech he said that the price of gold is in close correlation with the monetary base since he began to follow the path of gold. The monetary expansion alone could lead the price of gold at $2,400 an ounce while he said that is likely to see it reach up to $4,000 / oz. To support his assessment, he said that in 1980 gold prices rose 100% more than the dollar’s decline would justify.
At the same time, the ascending rate of gold continued on Thursday reaching the $1,314.80 an ounce after the closing yesterday at $1,310.30. In the spot market, gold traded at a new historic high while the price of the December contract was found up to the $1,316.20.
Silver also displays similar trends as it remains on 30 years high levels and for the first time since 1980 it “touched” the $22.02 an ounce on the spot market. The price of December contract was found up to $22.05.
At the same time, significant gains made for platinum and palladium. Specifically, platinum traded at $1,653.00 an ounce and is only 5.9% below from the year high of $1,752.00 which occurred on April 26th. Palladium is trading at 565 dollars per ounce, $6 below the year high of $571.
So you buy gold as a hedge against worthless dollars but until they get to a point where you can go to the store and trade clothes for gold the only thing you can do with your gold is trade it for worthless dollars.
Or exchange it for goods. Or exchange it for silver or other commodities. Kind of like what people have been doing for oh 5000 years.
I understand the idea that gold is a ‘dead money’ investment....
But I look at it not simply as a medium of exchange, but as a store of wealth also - the second quality that makes money, money.
If you want to store wealth for the long haul very few things can be compared to gold.
I think of it like a savings account and I am saving to create generational wealth...It’s not a trade. It’s a long, long term investment.
To each his own, right...
He also makes excuses for the fact that its buying power will (in fact) be reduced to one quarter of what it is today, by citing a largely fictitious parallel with 1980.
Yeah, it makes no sense. Now, if you bought your gold during the EQUITIES boom, when it was 200-400 oz, then you'd be doing what with it now? Buying more? Methinks not. Methinks you'd be SELLING it. Then you'd have successfully hedged.
The inflation fear that is driving this gold bubble is in full swing. It's too late to hedge. Anyone who buys now is merely speculating. I was just reading Deutsche saying it's not a bubble yet. When it gets to 1450, they say, it'll be extreme. OK, so that means there's 150 bucks left of gains before it becomes risky? For a 1300 investment? Equities are doing as well as that, if not better, plus dividends.
The people who smartly hedged against inflation with gold did it 10 years ago. Now they are cashing in.
that makes sense....
I wonder if Howard Ruff is a freeper.
What we’re seeing here is worldwide COMPETITIVE CURRENCY DEVALUATION. Gold isn’t rising, people are simply LOSING confidence in their currencies !!
With governments such as Japan, the US, Switzerland, the UK, Brazil, Korea, Taiwan, China and many others internationally devaluing their currencies there is a growing risk of inflation and indeed stagflation.
Free markets are becoming less free with manipulation of currencies and bond markets increasingly common and the likelihood that there may also be intervention in equity and precious metal markets.
The financial crisis is spreading from the private sector and into the public sector as massive private sector debt and liabilities is socialised and monetised.
Governments internationally facing deflationary pressures, particularly from falling property markets, appear to be embarking on competitive currency devaluation battles in order to weaken currencies to stimulate export driven economic growth. This has profound implications for the international monetary system itself which is why some investors and many central banks are diversifying into gold.
The quasi demonetisation of gold seen in recent years has ended and gold looks set to again be appreciated as an important monetary asset.
The ‘Emperor’s clothes’ of today’s international monetary system are being questioned and markets are worried by what lies underneath the international fiat monetary system. The majority of retail investors remain unaware of the growing risks posed by the monetary system but this will likely change in the coming months especially when inflation takes off, which it inevitably will.
Ten years ago a bunch of us on FR would pushing gold as a good investment when it was $250. We were shouted down. Now gold is at $1300. We are still being shouted down.
I’ve kept putting off buying gold for a couple of years now because I kept thinking: “Geesh, it’s gotta be maxed out; it won’t go any higher”.....but it keeps going higher. Guess I need to get in on buying gold; huh? Is Goldline a reputable gold outlet?
Person A buys gold with 1300 dollars now, and then he gets to sell it again for 5000 dollars in 2012.
Person B hangs on to his 1300 dollars.
In 2012 Person A has retained his 2010 buying power, which is now three or four times the buying power of Person B.
This shows that Gold is a lifeboat for your wealth. It doesn't get you more buying power - it preserves your buying power.
Which is way better than losing ~ 2/3 of it.
If someone wants to increase his buying power by investing in Gold, I suggest buying shares in Canadian Mining companies.
But to hang onto what you've got, get the hell out of cash and bonds. Put your money into the usual domestic commodities FReepers love, and invest at least 25% in Gold (bullion) and other hard assets.
I agree completely.
Some people have a hard time digesting all of that at once.
Yes: there are two forces pushing fiat currencies down. In a worldwide debt-saturated environment both of them are implacable.
One is competitive devaluation to preserve exports.
The other is defensive devaluation to diminish debt.
I believe the defensive devaluation will 'inflect' soon, leading to a sharp devaluation of the dollar similar in kind (but not in cause) to the Argentinian peso devaluation in 2002.
Paulson dances around it. I don't intend to:
FReepers, get out of cash and into hard assets, or you will be wiped out. You will wake up one morning to find that the dollar in your pocket is worth 1/4 of what it was a month before.
Sigh.
Just sigh.
People are going to have a hard set of lean years.
I caught the last part of something on Fox this morning about the paperwork required by the seller for a gold sale/purchase. Though not as detailed or invasive, it sounded similar to buying a handgun paperwork.
Does anyone know about this? Has the fed always required this paperwork or is this something new?
I’ve been considering putting some of my cash into physical gold for SHTF time. My concern is, as the price of gold skyrockets, how are you going to get a few groceries at the local store and then “make change” with a Krugerrand, for instance?
A lot of FReepers more or less assume that a dollar collapse = a radioactive landscape with radiation ghouls, but it's simply not true.
We have the example of Argentina in 2002, and the PEMEX devaluation in Mexico. Neither of these events left the stricken country in radioactive ruins: both countries maintained roads, stores, access to the stock market etc. The middle class suffered but the country carried on.
The forthcoming collapse will be a currency collapse like in Mexico and Argentina. People's savings will be wiped out, non-commodity stocks will be wiped out, BONDS will be wiped out.
But commodity stocks will go way up - as people run to buy anything with their depreciating cash - and also because mining stocks carry some risk, investors get to buy them for a plausible profit.
One needs to pay attention to where the Gold mine is, of course. I wouldn't buy stocks in a Gold Mine on American soil right now - the political risk is too high and - crucially - is not priced in. Maybe after the midterms though.
But a goldmine e.g. in the rebel-haunted heart of the Congo? Hell yeah.
Most likely you can't or if you do, they will give you change in paper money.
For small transactions, there is always silver. A pre-1964 silver dime or quarter should be plenty for that loaf of bread.
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