Gold! WTF????

[azmike74]

IIRC, I made that post when silver was pushing 18 an oz. It closed at 20.71 today.

Sonofa....That day at work, I looked at the charts (and I never do that) and I thought I'd research hot to buy some and didn't.

LVG, do you have a link to a reference of how I can invest in precious medals? I think it's something I might like to try but I don't want to buy the actual metal if that makes sense (I don't want to become a hoarder of silver lol) Unfortunately, I'm pretty ignorant on that topic and have no idea.

I did Google it and read some things on Wiki, but I wasn't sure if there was more to it than that. The impression I got was to go to a place (Schwab, Etrade, etc) and buy a fund, is it that simple?

 

[jw7]

I think it's something I might like to try but I don't want to buy the actual metal if that makes sense (I don't want to become a hoarder of silver lol) Unfortunately, I'm pretty ignorant on that topic and have no idea.

Not LVG and I'm not going to offer any advice on whether or not it is a good thing to do. It's kind of controversial on whether you SHOULD do it.

But to answer your question on HOW, if you have an account like E*trade or other online brokerage funds, you can buy Gold (GLD) or SIver (SIVR) ETF (exchange traded funds) that track the spot price of the commodity.

From a transaction perspective, it is no different than doing on online purchase of Apple or Proctor and Gamble.

 

[LVG]

Not LVG and I'm not going to offer any advice on whether or not it is a good thing to do. It's kind of controversial on whether you SHOULD do it.

But to answer your question on HOW, if you have an account like E*trade or other online brokerage funds, you can buy Gold (GLD) or SIver (SIVR) ETF (exchange traded funds) that track the spot price of the commodity.

From a transaction perspective, it is no different than doing on online purchase of Apple or Proctor and Gamble.

 

[jefftheshark]

There is a lot of controversy surrounding gold, so it's probably important to hear the pros and cons, even if you are not sure what side of the argument you fall on.

I think it's safe to say these days that analysts fall into three distinct camps: Deflationists, Inflationists and Hyperinflationists. Who you feel is ultimately going to be correct should determine your appetite for gold.

If you are a Deflationist then you believe that the popping of the credit bubble is going to result in a widespread lowering of the value of close to everything, except for the dollar and bonds, which will go up. This is the scenario that played out two years ago when Lehman failed. The thinking then was "Since you could buy gold tomorrow for less than you can buy it today, why would you bother?"
The FED's biggest fear is deflation, as it results in deleveraging which basically makes them impotent.
For the average American, however, who wouldn't want to see the price of oil go back to $35 bucks a barrel, like it was at the end of 2008? But for those in the banking and financial industry, this would be death so it is being fought by doing everything in their power to weaken the currency, debasing it in effect, by reversing the course of deflation by replacing it with Inflation.

Inflation is equated to growth in the minds of policy makers in Washington and New York, as it is the natural consequence of demand. The catch is that the inverse might not be true, even though the country has bet several trillion dollars on it being so. Demand might not be stimulated by inflation that is caused artificially.
The example of this is, does anybody you know want to buy more gas - just because it costs 30 cents more a gallon today? The answer is only "yes" if you think the price is going to be 40 cents more tomorrow. The wholesale debasement of our currency makes this kind of economic decision making easy, and under this situation gold is either a buy or a neutral choice, as it would generally be range-bound within a narrow plus or minus.
Unfortunately, if the currency gets so weak that either the world or the American population loses faith in the ability for the country to live up to its debt obligations, you move into Hyperinflation.

Hyperinflation is a huge drop in the purchasing power for anything you need day to day to survive. Food, gas, liquor, ammo, you name it, everybody wants to purchase those things that have more value than the worthless pieces of paper in their wheelbarrow. So gold goes through the roof and you're sitting pretty unless you bought your gold with an ETF like GLD.

The reason you are sad in hyperinflation, if you bought paper gold, is that because of the magic of leverage, you might be holding paper that represents only a fractionaized portion of the physical gold held by the issuing bank. By the time you redeem your "gold" for paper (and that's what you would get - no matter what they tell you, if you read the fine print concerning emergencies you find out that physical redemption is at their discretion), the paper might be worth far less than when you asked for it. Under this situation, you want physical possession of the gold and silver, and possibly a gun or two to protect your safe.

Right now the first two options are the far more likely. The Mad Max hyperinflation is one to be aware of, however.

Everybody is free to do what they want, so this is only a suggestion, but just like earthquakes, tornados and other random emergencies, its nice to be prepared. If you think that the FED is going to win its battle, then you should be a buyer of GLD, but buy a few gold and silver coins to hide under your bed just in case. If you think that the FED's going to be unsuccessful, then wait to buy the GLD on a dip, and still buy a physical coin that you can pass down to your kids as a lesson in preparedness.

And if you think the crap's about to hit the fan, then buy as much precious metals as you can get your hands on because it will be worth 5, 7, 10 times what you paid for it.

Which sounds good until you realize that you'll be paying $32 bucks a gallon for gas too.

JTS

 

[conraddobler]

There is a lot of controversy surrounding gold, so it's probably important to hear the pros and cons, even if you are not sure what side of the argument you fall on.

I think it's safe to say these days that analysts fall into three distinct camps: Deflationists, Inflationists and Hyperinflationists. Who you feel is ultimately going to be correct should determine your appetite for gold.

If you are a Deflationist then you believe that the popping of the credit bubble is going to result in a widespread lowering of the value of close to everything, except for the dollar and bonds, which will go up. This is the scenario that played out two years ago when Lehman failed. The thinking then was "Since you could buy gold tomorrow for less than you can buy it today, why would you bother?"
The FED's biggest fear is deflation, as it results in deleveraging which basically makes them impotent.
For the average American, however, who wouldn't want to see the price of oil go back to $35 bucks a barrel, like it was at the end of 2008? But for those in the banking and financial industry, this would be death so it is being fought by doing everything in their power to weaken the currency, debasing it in effect, by reversing the course of deflation by replacing it with Inflation.

Inflation is equated to growth in the minds of policy makers in Washington and New York, as it is the natural consequence of demand. The catch is that the inverse might not be true, even though the country has bet several trillion dollars on it being so. Demand might not be stimulated by inflation that is caused artificially.
The example of this is, does anybody you know want to buy more gas - just because it costs 30 cents more a gallon today? The answer is only "yes" if you think the price is going to be 40 cents more tomorrow. The wholesale debasement of our currency makes this kind of economic decision making easy, and under this situation gold is either a buy or a neutral choice, as it would generally be range-bound within a narrow plus or minus.
Unfortunately, if the currency gets so weak that either the world or the American population loses faith in the ability for the country to live up to its debt obligations, you move into Hyperinflation.

Hyperinflation is a huge drop in the purchasing power for anything you need day to day to survive. Food, gas, liquor, ammo, you name it, everybody wants to purchase those things that have more value than the worthless pieces of paper in their wheelbarrow. So gold goes through the roof and you're sitting pretty unless you bought your gold with an ETF like GLD.

The reason you are sad in hyperinflation, if you bought paper gold, is that because of the magic of leverage, you might be holding paper that represents only a fractionaized portion of the physical gold held by the issuing bank. By the time you redeem your "gold" for paper (and that's what you would get - no matter what they tell you, if you read the fine print concerning emergencies you find out that physical redemption is at their discretion), the paper might be worth far less than when you asked for it. Under this situation, you want physical possession of the gold and silver, and possibly a gun or two to protect your safe.

Right now the first two options are the far more likely. The Mad Max hyperinflation is one to be aware of, however.

Everybody is free to do what they want, so this is only a suggestion, but just like earthquakes, tornados and other random emergencies, its nice to be prepared. If you think that the FED is going to win its battle, then you should be a buyer of GLD, but buy a few gold and silver coins to hide under your bed just in case. If you think that the FED's going to be unsuccessful, then wait to buy the GLD on a dip, and still buy a physical coin that you can pass down to your kids as a lesson in preparedness.

And if you think the crap's about to hit the fan, then buy as much precious metals as you can get your hands on because it will be worth 5, 7, 10 times what you paid for it.

Which sounds good until you realize that you'll be paying $32 bucks a gallon for gas too.

JTS

I would argue that hyperinflation is simply the final nail and is nearly impossible to predict because it will signal a complete repudiation of our monetary system.

Between here and there, controlling the supply of credit insures that inflation will not rage out of control.

House prices dropping and food going up is not inflation, it's just a budgetary priority re-alignment.

Long term it's hard to argue against physical metals but in the short run you can get burnt bad.

You can't eat gold, you have to trade it or cash it in to get it back to a spendable medium.

If someone catches you needing cash at a bad time when gold has sucked wind or corrected you can easily lose money and later be proven right minus having your gold.

The demographics point to deflation IMO and the FED is not trying to win, they are already winning.

Deflation makes the value of all debts increase, as long as it can be reasonably paid back.

They have so far traded trillions in private garbage for government backed debt and so are literally crapping money out of every orifice not for themselves but for those that really own the FED.

Knowing the playbook and being able to change the rules of the game are almost impossible weapons to lose with.

Again though for those who are kicking themselves for not buying gold, look at the chart for slv first.

 

[Yuma]

Long term it's hard to argue against physical metals but in the short run you can get burnt bad.

You can't eat gold, you have to trade it or cash it in to get it back to a spendable medium.

If someone catches you needing cash at a bad time when gold has sucked wind or corrected you can easily lose money and later be proven right minus having your gold.

When Y2K was looming, people asked me about buying gold. My take was buy liquor and cigarettes, and an AK or UZI. If the **** hit the fan, booze and cigarettes are trad-able commodities, but you need the weapons to keep people from taking your commodities! Seriously, if the **** hit the fan, most people will tell you to stick your gold up your wazoo and ask what you have that they want.

 

[conraddobler]

When Y2K was looming, people asked me about buying gold. My take was buy liquor and cigarettes, and an AK or UZI. If the **** hit the fan, booze and cigarettes are trad-able commodities, but you need the weapons to keep people from taking your commodities! Seriously, if the **** hit the fan, most people will tell you to stick your gold up your wazoo and ask what you have that they want.

Land, seeds, generators, gas, tractors, guns, knives, etc.

That's hit the fan stuff, gold would be just dead weight for the most part.

One place you do not want to be in Mad Max IMO is any kind of urban setting, a few days of being cutoff from supply chains and it will turn feral fast.

You may have a couple days to get out, after that it gets very ugly very fast.

Anyone thinking the government can protect people needs to review Katrina again, in any widespread fan moment, for the most part you are on your own or at least your core group of friends and relatives are IMO.

 

[LVG]

IIRC, I made that post when silver was pushing 18 an oz. It closed at 20.71 today.

Closed at 22.90 today. Going from mid August to today, you're looking at an increase of 27% over the last 5 1/2 weeks.

Gold to Silver ratio currently stands at 1:60.

Historically, the G:S price is 1:47, meaning 1oz Gold will buy approximately 47oz Silver. Right now, it's trading at 1:64. So, it looks like silver is undervalued.

If that stands correct, and gold holds it's current value at 1318 (ask) / OZ, it means that to go back to the historical ratio of 1:47, silver would go up to 28.04 / OZ.

Assumes, of course, gold doesn't go up, gold isn't in a bubble and the value is way overinflated. Of course, some people are making the prediction of $2,500 / oz gold in the next year. Not sure if I believe that.

I do think that silver is readjusting because it's been ignored for a bit, and this is price upswing is the result of major money moving into it. I think it will establish a new floor at $25 / oz.

 

[conraddobler]

Way back when it was pretty well established that approximately 16 ozs of silver = one ounce of gold.

That would imply a price of near $84 an ounce, but recently the actual supply of silver to gold is about 8 to 1 implying a price of about $168 an oz.

http://www.rapidtrends.com/silver-to-gold-ratio/

So there are a lot of ways to value a metal, and silver is sliver, it's not gold so it is in some ways on it's own but historically I believe it's very undervalued right now in terms of it's ratio to gold.

That's why I don't own gold and bought a lot of silver, I think it has more room to run.

JMO.

P.S.

I'd be careful about loading up the truck on silver at these prices, sure it could go higher or you could be buying at the tippy top for a while here too.

I don't really know for sure what's going to happen but I have silver I bought for 8$ an ounce, sheesh which I had loaded up the truck there and silver I paid $20 for, the two are quite different in terms of risk and reward obviously.

Paying today's prices hoping it will just keep rocketing higher, well that might work but it's got less of a chance than the $8 silver, if that makes sense.

Good luck, not trading advice.

 

[jefftheshark]

PM's, along with many commodities such as oil and agricultural products are moving rapidly up as the expectations of QE2 make the expectations of FED created inflation more likely. Yet we are also seeing historic low yields on treasuries which would seem to fly in the face of this mindset.

Guys like Denninger are thinking the bond market is usually correct and that we're looking at a 2008 type crash where everything goes down in value.

I don't know, but it seems that in the short run that the actions of the FED, especially their POMO purchases since early August, are causing a distortion in the marketplace which is causing all ships to rise, so to speak. If this is true then we should see an environment where all normal correlations are off the table, except for the DXY vs equities meme.

I wouldn't worry about Ag or Au until we reach 28 & 1400, or the mid-terms, whichever happens first and then I'd be thinking about hedging the position.

By the way there are two good articles on ZH that discuss the actual announcement of QE2 being the hugest "sell the news" event of all time. If GS is correct that we already have QE2 priced in today, then we could see an epic crash, which would happen quickly before anybody could head for the exits.

There is a reason that retail money is heading for the hills and insiders are selling at 2000 to 1 levels, but you would never know this if you get your news from Yahoo! or CNBC.

This isn't trading advice, but it's good to keep an eye on the ball for the rest of the year because it could get interesting.

JTS

 

[conraddobler]

PM's, along with many commodities such as oil and agricultural products are moving rapidly up as the expectations of QE2 make the expectations of FED created inflation more likely. Yet we are also seeing historic low yields on treasuries which would seem to fly in the face of this mindset.

Guys like Denninger are thinking the bond market is usually correct and that we're looking at a 2008 type crash where everything goes down in value.

I don't know, but it seems that in the short run that the actions of the FED, especially their POMO purchases since early August, are causing a distortion in the marketplace which is causing all ships to rise, so to speak. If this is true then we should see an environment where all normal correlations are off the table, except for the DXY vs equities meme.

I wouldn't worry about Ag or Au until we reach 28 & 1400, or the mid-terms, whichever happens first and then I'd be thinking about hedging the position.

By the way there are two good articles on ZH that discuss the actual announcement of QE2 being the hugest "sell the news" event of all time. If GS is correct that we already have QE2 priced in today, then we could see an epic crash, which would happen quickly before anybody could head for the exits.

There is a reason that retail money is heading for the hills and insiders are selling at 2000 to 1 levels, but you would never know this if you get your news from Yahoo! or CNBC.

This isn't trading advice, but it's good to keep an eye on the ball for the rest of the year because it could get interesting.

JTS

I have a front seat row to the credit market since that's what I do, when it gets easier to get people a loan I'll let you know, so far, it just gets harder.

Rates are ridiculously low and qualifying for a loan gets harder every day.

Given the lions share of our economy has run on credit or at least a ton of the marginal economy does, I think deflation will win out long term but these huge swings are just a sign of a very sick market reaching for yield anywhere it can get it.

BTW very astute observation on the QE2 thing, I wouldn't be surprised if ZH isn't right about that one.

This is an insane market right now, you've got the worst fundamentals I've ever seen yet the market can't do anything but go up.

If you were trying to crash the thing you could hardly script this better.

I wouldn't be able to tell you what's going to happen, but generally the market does what it wants, that is when people aren't buying futures contracts with taxpayer money, not that they are

 

[LVG]

Silver has been bouncing around a lot since my last post, but today it closed at 27.90. It shot up from 24 after QE2 was formally announced.

 

[conraddobler]

Silver has been bouncing around a lot since my last post, but today it closed at 27.90. It shot up from 24 after QE2 was formally announced.

Oil was almost 150 per and then crashed 78% in 5 months.

The illusions out there are very powerful but if you don't know who's buying what how and when you are asking to get taken down.

My very best advice is to get out of debt, get rid of any debt, build cash, buy some precious metals, silver is still relatively good and then pray.

Look the amount of debt is monsterous and it will never be repaid and there will come a point where rich and powerful people will refuse to allow any more printing, the world is ruled more or less by a class of people who have more money than debt by far.

They are not going to allow the currency to be destroyed, at a crucial moment the money spigot is going to be turned off, those people who think we'll just print our way out I think are fundamentally wrong.

Whoever is right though, relatively the same thing holds, get small, build cash, get liquid, be nimble and think for yourself.

You can make a lot of money leading the herd but if you ever get behind the herd it's not a pretty place, not to mention the footprints on your back.

 

[jefftheshark]

Silver is going up because JPM (& HSBC + others as well) through its Bear Stearns acquisition has been artificially holding the price down with massive shorting, but a series of lawsuits and RICO charges are pulling the cork from the bottle. Since the traditional Ag/Au ratio has been way out of whack for the past several years, silver has a bigger upside than gold - irrespective of dollar debasement, et al.

The second issue is the chasing of yield we saw in 2008, the same forces that drove the price of oil to $150, has now moved on to other commodities. Think of this as the ZIRP gift that keeps on giving.

JTS

 

[conraddobler]

Silver is going up because JPM (& HSBC + others as well) through its Bear Stearns acquisition has been artificially holding the price down with massive shorting, but a series of lawsuits and RICO charges are pulling the cork from the bottle. Since the traditional Ag/Au ratio has been way out of whack for the past several years, silver has a bigger upside than gold - irrespective of dollar debasement, et al.

The second issue is the chasing of yield we saw in 2008, the same forces that drove the price of oil to $150, has now moved on to other commodities. Think of this as the ZIRP gift that keeps on giving.

JTS

http://market-ticker.org/akcs-www?post=171694

Yep but consumers have no buying power.

Margin compression bigtime, something worse than anything else for high flying stocks, it's the proverbial turd in the punchbowl.

It's very elegant in terms of watching it unfold, first we have the crash, then businesses react by offloading everyone and the balloon starts to rise, higher profits, increased margins, then the old disease goes dormant while Ben prints but the yield chasers run commods back up, demand is still way weak and there's the wall again.

Now all the savings have been wrung out in business and here comes higher input costs but they can't on balance pass it along without destroying demand.

Game, set, match.

 

[LVG]

My very best advice is to get out of debt, get rid of any debt, build cash, buy some precious metals, silver is still relatively good and then pray.

Always great advice, CD.

 

[LVG]

Silver has been bouncing around a lot since my last post, but today it closed at 27.90. It shot up from 24 after QE2 was formally announced.

Now here's why this market is weird.

Today, silver shot up to 29.27, then took a dive off the cliff to 27.31, where it's at this moment. Just real see-saw.

 

[jefftheshark]

Now here's why this market is weird.

Today, silver shot up to 29.27, then took a dive off the cliff to 27.31, where it's at this moment. Just real see-saw.

Very weird indeed. I just wonder if there's a little bear raid going on wiping out the stops for all the paper silver people who made a bunch of dough over the last week in order to get their positions.

Curious to say the least.

Lots of crazy stuff coming out from China about QE2 and an unusual bond offering today in the US. Today is a point on the side of the Deflationists.

JTS

Oh, I just read they changed the margin requirements on silver only to kill the run - here is why you can't trade this market - too much cheating going on.

 

[conraddobler]

Very weird indeed. I just wonder if there's a little bear raid going on wiping out the stops for all the paper silver people who made a bunch of dough over the last week in order to get their positions.

Curious to say the least.

Lots of crazy stuff coming out from China about QE2 and an unusual bond offering today in the US. Today is a point on the side of the Deflationists.

JTS

Oh, I just read they changed the margin requirements on silver only to kill the run - here is why you can't trade this market - too much cheating going on.

This market is insane because it's got people purposely trying to kill you off, not just the guy on the other side of the trade, that's a given, but also the entire system itself at times.

They're evil at it too, they don't just stomp you right out of the gate, the let you get all the way out on a limb, kidnap your family, steal your car keys, light you on fire and sabatoge all the fire extinguishers and put pirahnas in the nearest body of water you're likely to seek refuge in.

Then they hang your smoldering carcass out in front of the rest of the crowd as a leason.

 

[Gaddabout]

This PM bubble is really starting to tick me off. We now have billions of dollars invested in gold. This is money that could be going to job creation. PM doesn't do #### except collect dust in some institutional basement. It doesn't even assist institutional wealth. Gold and silver are vanity investments used by the uber wealthy to strip money away from the poor dogs beneath them.

People are being sold on this stuff as if it's some long-term bond market or retirement fund -- but with stock market returns. I would NOT want to be the last guy holding precious metal when this stuff hits the fan. I keep hearing "the end is nigh -- BUY GOLD!" commercials on the radio.

Folks, when it comes to that, there's only one kind of precious metal you will want to own:

You must be registered for see images attach

 

[conraddobler]

This PM bubble is really starting to tick me off. We now have billions of dollars invested in gold. This is money that could be going to job creation. PM doesn't do #### except collect dust in some institutional basement. It doesn't even assist institutional wealth. Gold and silver are vanity investments used by the uber wealthy to strip money away from the poor dogs beneath them.

People are being sold on this stuff as if it's some long-term bond market or retirement fund -- but with stock market returns. I would NOT want to be the last guy holding precious metal when this stuff hits the fan. I keep hearing "the end is nigh -- BUY GOLD!" commercials on the radio.

Folks, when it comes to that, there's only one kind of precious metal you will want to own:

You must be registered for see images attach

Yep,

Watch the Colony, it's a great show it covers living after a collapse and what you really want are solar panels, but you'll need guns first or people will just take all the neat stuff you collect.

 

[LVG]

Down to 25.46 today.

 

[Divide Et Impera]

Here's a HILARIOUS takedown of the current gold mania courtesy of one Stephen Colbert:

http://tpmlivewire.talkingpointsmem...ring-back-the-gold-standard-video.php?ref=fpb

 

[azsportsfan01]

Here's a HILARIOUS takedown of the current gold mania courtesy of one Stephen Colbert:

http://tpmlivewire.talkingpointsmem...ring-back-the-gold-standard-video.php?ref=fpb

He also did a great fake commercial mocking Glenn Beck and his gold commercial except Colbert's was for bananas.