Gold crash

[Chad]

@freebooks

For a useful commodity, yes, the lack of supply would increase price. The problem with gold is no one actually needs it. It's a want not a need, so it can go to zero.

[freebooks]

Hmm, I think that would be turning this into a philosophical argument, as everyone who reads ERE is aware the modern economy is built entirely on massive excesses over what anyone needs. Historical precedent though indicates Gold has always been valued highly as far as material possessions go. I could also just-as-well suggest that tomorrow everyone in the world except US-citizens might suddenly begin dumping dollars because they're nothing more than electronic entries and mass-produced paper with some ink printed on it, only useful because they're legally required to pay taxes with.

[altoid]

Gold had a big drop again today. Some rumor said GLD might go under $120, any thoughts on this for PP folks?

[Chad]

@freebooks

Exactly! Gold is not worth anymore than paper money. They are both psychological, as neither are actually worth anything with us giving it value.

[freebooks]

Yeah, I'm sitting on some big paper losses, but I don't intend to sell. I've tried to consider my position and don't think it is based on false beliefs (e.g. religious Goldbug?), but remains an educated guess and analysis of the present situation.
There have been no improvements in economic outlook or changes to the fundamental situation which would cause me to reevaluate the position. Every economic dataset release further confirms a negative outlook for the US economy.
I did sell a small-cap miner a couple days ago (per our earlier discussion, a further drop in Gold prices will severely hurt the company).
Gold responded much worse than stocks today to the "taper" announcement. Being completely objective, wouldn't today's drop confirm that there will be no taper, as it was all clothed in cautious-language predicated completely on a positive economic outlook?

[freebooks]

I admit, there is a possibility of taper, but this would severely harm the US economy (along with further crush the price of Gold), so I remain betting on the side of the fence that it is all empty talk from politicians. Like all the meaningless "action" surrounding resolving the debt ceiling - which will be an issue again very soon.

[tylerrr]

is anyone looking at SLV?
I just bought some because I love the long term chart on SLV...Look at char of 10 years or more....SLV is in a long decline...
I'm going to buy a little SLV each month as long as it keeps declining. I think it will start an uptrend once the stock market confirms it is in a long term correction.
In other words, I plan on SLV moving inversely proportional to the stock market.
Any seeing what I see?

[freebooks]

SLV does look like a good buy based on historical levels. It also has a lot more industrial exposure than Gold (which seems limited to jewelry and some electronics), including alternative energy via solar panels.

[tylerrr]

@freebooks,

yes, that's another reason i like SLV more than GLD right now....the increased usability of the metal in industry.

[workathome]

What Happens When You Buy Assets Down 80%?

http://www.mebanefaber.com/2013/06/25/w ... s-down-80/

[workathome]

Currency Wars fun from Wikileaks

"China increases its gold reserves in order to kill two birds with
one stone"

The China Radio International sponsored newspaper World News Journal
(Shijie Xinwenbao)(04/28): "According to China's National Foreign
Exchanges Administration China 's gold reserves have recently
increased. Currently, the majority of its gold reserves have been
located in the U.S. and European countries. The U.S. and Europe have
always suppressed the rising price of gold. They intend to weaken
gold's function as an international reserve currency. They don't
want to see other countries turning to gold reserves instead of the
U.S. dollar or Euro. Therefore, suppressing the price of gold is
very beneficial for the U.S. in maintaining the U.S. dollar's role
as the international reserve currency. China's increased gold
reserves will thus act as a model and lead other countries towards
reserving more gold. Large gold reserves are also beneficial in
promoting the internationalization of the RMB."

http://cables.mrkva.eu/cable.php?id=204405

This could be bad for the Gold investor, as look what happened recently. Do you really want to be fighting politicians with your life savings?

[workathome]

All miners are losing money at current spot. It seems GTU would be a very conservative buy with definite long-term upside, though buying into miners may be considered speculative at this point.

http://www.zerohedge.com/news/2013-07-0 ... old-prices

[Tyler9000]

"Do you really want to be fighting politicians with your life savings?"

Unfortunately stocks and bonds are no safer from political manipulation. Just look at the Fed.

The best you can do is to diversify assets so when one eventually crashes you won't be wiped out.

[leeholsen]

is anyone looking at SLV?
I just bought some because I love the long term chart on SLV...Look at char of 10 years or more....SLV is in a long decline...
I'm going to buy a little SLV each month as long as it keeps declining. I think it will start an uptrend once the stock market confirms it is in a long term correction.
In other words, I plan on SLV moving inversely proportional to the stock market.
Any seeing what I see?

thats me, i'm a silverbug; not a goldbug; but both are still in downtrends. i wouldnt buy either here, but they will become a buy again sometime over the next yr imo.

my current number is to wait until silver goes below 16, but if the trendlines change that(50 MDA, 200 MDA), i'll buy; but i'm not buying here; it's still going down.

[tylerrr]

@workathome,

thanks for the link.....That is precisely why I like GDX right now.....GDX has been hammered down.

[workathome]

For some of those who think GDX may have bottomed out:

08/17/13 PUTS are currently bidding 0.78.
Could sell contracts for a 3.4% ROI on your money over the next 30 days.

Bad possible outcome:

1. GDX could rise dramatically over the next 30 days and you miss out on bigger gains
2. GDX drops dramatically and you're locked into shares at a cost of $22.21/share (a 9% discount on the current bid)

Good possible outcomes:

1. You pick up shares of GDX at a 9% discount to current bid
2. You keep a 3.4% ROI (an annualized 40% ROI)

Did I get that right?

[workathome]

Time for some Gold shorts to cover. $1,300 soon.

[tommytebco]

my golden history.
Somewhere around 1980, precious metals were the rage. Inflation was high (10% return on CD"s) poohbah's forcast that currency would soon devalue with runaway inflation.
It all sounded logical to me. So I put some money in Gold Krugerands at $600. price was projected to rise to over $1000 soon.
Wisdom of the time was to also buy a bag of silver coins for making normal purchases. Thank God I tabled that purchase.

As often happens, the price of gold soon plummeted down to the 200's, where it stayed for decades. As each of my kids completed college, I presented them with 1 krugerand and the story of it's history as an investment. The gist of the story is that Poohbahs are full of "it".

I guess the "rest of the story" in my case is that if you hold anything long enough it may appreciate.
The underlying theme here is "buyer beware!!"

[secretwealth]

I guess the big question to ask yourself before investing in gold is this: what do you think is more valuable, something that can produce something else or a shiny yellow metal?

[rube]

With something that can produce something, I think about a farm, machines etc.
Digital numbers on a broker account can not be touched and can turn swiftly into nothing as happens daily.

Gold is not producing anything, but you can at least look at it

More seriously: I got what you mean and I am partly with you, but diversification has been shown a good method several occasions.