Gold prices

[Pete]

A friend has a lot of money in gold and gold stocks, and she is concerned about recent declines. A couple of weeks ago I advised her to hang tough because of fundamentals, but I'm starting to second-guess myself.

Isn't deflation a risk if we have a lot of bank failures that are not protected by the federal government?

Here's a long-term price chart. What do we have, a primary bear market in gold, or the bottom of a hellacious correction?

http://www.kitco.com/LFgif/au00-pres.gif

[Pete]

Hmm, just found this great thread about our current situation I will digest later. It seems to address my question:

http://www.ronpaulforums.com/showthread.php?t=155398

[Acala]

There may be deflation in the short term as a result of the collapse of credit markets. But the long term still looks inflationary to me.

Government revenue at all levels is in decline, and will continue to decline as unemployment depletes income tax roles, decline in economic activity depletes sales tax revenue, and decline in home prices depletes property tax revenue. At the Federal level the shortfall will be met by borrowing. At the State and local level, this will be met by Federal bailouts (this will begin over the next few months) paid for with Federal borrowing. This borrowing will increasingly be from the Fed as other lenders shy away. This borrowing is inflationary.

Government bailouts of banks (already underway) and big corporations (coming soon to a theatre near you) will also be paid for with inflationary borrowing.

The cost of Government domestic programs will continue to rise, culminating in the deluge of claims on the SS and Medicare systems. These increasing cost will be paid for by inflationary borrowing.

The Government will continue to stir up trouble in foreign lands so military costs will continue to increase, as will foreign aid like the $1 bilion to Georgia. This will be paid for by inflationary borrowing.

Foreign holders of dollars will begin to spend them here as inflation starts eroding their value, dramatically driving up domestic prices in goods and assets.

Foreign holders of US notes, under pressure from inflation, will redeem them rather than rolling them over, forcing the US government to borrow money to pay them off.

All of these forces are inevitable, highly inflationary, and will far outweigh any deflationary influence of a depressed credit market.

And the foregoing scenario discounts completely the vigorous attempts by the Fed and its cohorts to jumpstart the credit market. If they have some success, there will be even more inflation.

The dollar is doomed.

[Pete]

Very pithy analysis, Acala, thanks VERY much.

[jonahtrainer]

A friend has a lot of money in gold and gold stocks, and she is concerned about recent declines. A couple of weeks ago I advised her to hang tough because of fundamentals, but I'm starting to second-guess myself.

Isn't deflation a risk if we have a lot of bank failures that are not protected by the federal government?

Here's a long-term price chart. What do we have, a primary bear market in gold, or the bottom of a hellacious correction?

This is just a wicked correction. We have entered a Kondratieff Winter (http://www.runtogold.com/Run_To_Gold/Run_To_Gold_Blog/Entries/2008/2/1_First_snowfall_of_Kondratieff_Winter.html) and capital is for the most part stopping short of gold so far. Hope and Trust in the dollar will be lost though and then the capital will go even further down the pyramid.

http://www.runtogold.com/Run_To_Gold/Run_To_Gold_Blog/Entries/2008/2/1_First_snowfall_of_Kondratieff_Winter_files/droppedImage.jpg

[freelance]

A friend has a lot of money in gold and gold stocks, and she is concerned about recent declines. A couple of weeks ago I advised her to hang tough because of fundamentals, but I'm starting to second-guess myself.

Isn't deflation a risk if we have a lot of bank failures that are not protected by the federal government?

Here's a long-term price chart. What do we have, a primary bear market in gold, or the bottom of a hellacious correction?

http://www.kitco.com/LFgif/au00-pres.gif

Look at November '05. People were puking their guts up. I'm NO expert, but I don't think gold is anywhere through with its run. Do a search on Bloomberg + gold + %5000.

[freelance]

Gold smackdown started right on cue this a.m.

http://www.kitco.com/

SSDD

[Dr.3D]

Gold smackdown started right on cue this a.m.

http://www.kitco.com/

SSDD

That's nothing like they are doing to silver. But true, SSDD.

[youngbuck]

Yea I was going to mention, as Acala pointed out, that I've read before the inflationary tidal wave hits, there will definitely be some pronounced deflation. Probably during this time would be a good time to buy things that you know you'll need or want before the inflation. If we get lucky, ammo prices will come down too :D

[Bruno]

That's nothing like they are doing to silver. But true, SSDD.


Good. Time to buy more.

But how can this be anything other than price manipulation when the U.S. economic situation looks so bleak and after Greenspans comments?

[Dr.3D]

Good. Time to buy more.

But how can this be anything other than price manipulation when the U.S. economic situation looks so bleak and after Greenspans comments?

Of course it is. Most people won't know that though or are too gullible to imagine such things happen.

[123tim]

Good. Time to buy more.

But how can this be anything other than price manipulation when the U.S. economic situation looks so bleak and after Greenspans comments?

How can the price be manipulated? Would it be through actual dumping of Physical Gold and Silver or through manipulation of the numbers on paper?

Silver is dropping like a rock.

I guess that you see the change more in Silver because it cost a lot less than Gold?

http://66.38.218.33/charts/livesilver.html

[Ozwest]

When AIG goes down, or another big player, I'm going to be very relaxed sitting on a pile of gold.

Hope some players don't shit themselves.

HaHa.

[freelance]

How can the price be manipulated? Would it be through actual dumping of Physical Gold and Silver or through manipulation of the numbers on paper?

Silver is dropping like a rock.

I guess that you see the change more in Silver because it cost a lot less than Gold?

http://66.38.218.33/charts/livesilver.html

They short the futures. They seem particularly intent on trashing silver these days.

Start here to learn more: www.gata.org and www.jsmineset.com. This should shed some light on it.

[Dr.3D]

How can the price be manipulated? Would it be through actual dumping of Physical Gold and Silver or through manipulation of the numbers on paper?

Silver is dropping like a rock.

I guess that you see the change more in Silver because it cost a lot less than Gold?

http://66.38.218.33/charts/livesilver.html

This article can probably explain it better than I could.
http://www.investmentrarities.com/weeklycommentary09-09-08.html

[Bruno]

Thanks for the question, 123Tim, and thanks for the answers, freelance and Dr.3D!

[123tim]

Thank you Freelance and Dr.3D.

Those articles really helped.

Here are two quotes:

"Readers already know my take on this: Someone with an untraceable link to Washington keeps the markets in line whenever they seem to be straying"

"The solitary reason for the price decline in silver (and gold), is the forced liquidation of leveraged paper long positions, primarily on the COMEX. This is the driving force behind the epic sell-off. "


It's going to take me a while to digest all of this.

Edit:
You're welcome Bruno1969!

[Ozwest]

Silver has out-performed gold for many years now.

At this moment, however, I am viewing silver more as another natural resource.

Gold is about to step up and renew its' intrinsic value.

[Dr.3D]

This guy seems to have a pretty good handle on what is happening.

Silver Gold Manipulation My Break with Reality (http://www.youtube.com/watch?v=Tl5o5BLgkqM)

This video may also help those who wish to know more about the manipulation.

Gold Manipulation by Central Banks (1 of 3) (http://www.youtube.com/watch?v=Okvztfu0-PQ&feature=related)
Gold Manipulation by Central Banks (2 of 3) (http://www.youtube.com/watch?v=3e0JncOTGxk&feature=related)
Gold Manipulation by Central Banks (3 of 3) (http://www.youtube.com/watch?v=qSoU8jiFFYU&feature=related)

[freelance]

Thank you Freelance and Dr.3D.

Those articles really helped.

Here are two quotes:

"Readers already know my take on this: Someone with an untraceable link to Washington keeps the markets in line whenever they seem to be straying"

"The solitary reason for the price decline in silver (and gold), is the forced liquidation of leveraged paper long positions, primarily on the COMEX. This is the driving force behind the epic sell-off. "


It's going to take me a while to digest all of this.

Edit:
You're welcome Bruno1969!

123Tim, Ted Butler is the "expert" when it comes to Silver, at least as far as manipulation is concerned. I totally forgot to mention him.

[Pete]

As 123tim said, there is a lot to digest here. I printed out the Butler article for a couple of friends and am listening to the video referenced by Dr. 3D right now, also very good.

I advised my lady friend to consider switching from gold to silver but she was happy with her current mix. I also suggested that she sit tight on the metals, but a bounce in gold to around 850 would be an opportunity to liquidate a little and take out some greenbacks as a hedge against a temporarily deflationary liquidity crisis.

Thanks, everybody!

[thechitowncubs]

This might be a case where those who lose the LEAST win.

[freelance]

This might be a case where those who lose the LEAST win.

YES. That's it exactly. That's the perfect way to put it. Thank you.

[Dr.3D]

Here is something that just dawned on me.

Suppose the plan were to drive the price of precious metals down very, very low and then crash the economy?

This would make it appear the metals don't have any value so people would be not so apt to accept them in barter when the SHTF scenario pans out.

If for instance the price of silver were $5.00 and gold was $500.00. Those holding silver would be in a serious bind if they were trying to barter with it.

Could this be the plan?

[Mahkato]

Here is something that just dawned on me.

Suppose the plan were to drive the price of precious metals down very, very low and then crash the economy?

This would make it appear the metals don't have any value so people would be not so apt to accept them in barter when the SHTF scenario pans out.

If for instance the price of silver were $5.00 and gold was $500.00. Those holding silver would be in a serious bind if they were trying to barter with it.

Could this be the plan?

Or, it's being devalued in preparation for some new confiscatory legislation in the works.

[Acala]

Here is something that just dawned on me.

Suppose the plan were to drive the price of precious metals down very, very low and then crash the economy?

This would make it appear the metals don't have any value so people would be not so apt to accept them in barter when the SHTF scenario pans out.

If for instance the price of silver were $5.00 and gold was $500.00. Those holding silver would be in a serious bind if they were trying to barter with it.

Could this be the plan?


I think if the currency collapses, the true exchange value of gold and silver will be set by the market very quickly. You may even have gold or silver currencies launched by China, Mexico, or the Arab countires. Don't think the advantages of minting the world's currency have been lost on the rest of the world while we squandered our blessings. And the dollar became the world's currency BECAUSE of its gold backing. So a country that is plotting to take the dollar's role as world currency very well might try to retrace our steps and start with gold or silver. In that event, holders of gold and silver coin here will reap the benefit of those metals once again regaining their rightful place as the world's money.

In any event, the vast majority of people don't follow the price of gold and silver. In fact most of them think the dollar is still backed by gold. So it is unlikely that they will have been prejudiced by the spot market.

More likely I think is the possibility that the elites are using their tricks and fiat money to drive down the prices so they can personally stock up because they know what is coming.

[Dr.3D]

I think if the currency collapses, the true exchange value of gold and silver will be set by the market very quickly. You may even have gold or silver currencies launched by China, Mexico, or the Arab countires. Don't think the advantages of minting the world's currency have been lost on the rest of the world while we squandered our blessings. And the dollar became the world's currency BECAUSE of its gold backing. So a country that is plotting to take the dollar's role as world currency very well might try to retrace our steps and start with gold or silver. In that event, holders of gold and silver coin here will reap the benefit of those metals once again regaining their rightful place as the world's money.

In any event, the vast majority of people don't follow the price of gold and silver. In fact most of them think the dollar is still backed by gold. So it is unlikely that they will have been prejudiced by the spot market.

More likely I think is the possibility that the elites are using their tricks and fiat money to drive down the prices so they can personally stock up because they know what is coming.


Ahh... but suppose this is a global collapse and the entire world is changed to a new currency?
Suppose the new currency is just a plastic card or microchip?
And suppose you can not buy or sell without using the new plastic card or microchip?

If all of those things were true, then the metals would be useless except for their ability to be used in manufacturing.

[Josh_LA]

A friend has a lot of money in gold and gold stocks, and she is concerned about recent declines. A couple of weeks ago I advised her to hang tough because of fundamentals, but I'm starting to second-guess myself.

Isn't deflation a risk if we have a lot of bank failures that are not protected by the federal government?

Here's a long-term price chart. What do we have, a primary bear market in gold, or the bottom of a hellacious correction?

http://www.kitco.com/LFgif/au00-pres.gif


There's no point in owning metals in paper, it's as worthy as any other piece of paper, as long as people accept it.

Go on ebay and see how much "real" prices are, how much real people are willing to pay for such gold and silver.

[freelance]

Ahh... but suppose this is a global collapse and the entire world is changed to a new currency?
Suppose the new currency is just a plastic card or microchip?
And suppose you can not buy or sell without using the new plastic card or microchip?

If all of those things were true, then the metals would be useless except for their ability to be used in manufacturing.

Have you never heard of the black market? In Paris, way back when the franc was about four to the dollar, there was a Vietnamese man down the street who owned a little deli. He paid us 5.5 francs to the dollar. I don't know and don't care why he was giving us a better rate, but where would you have changed your dollars? For all we know, gold and silver are used for trade more than we suspect. I have no idea, but I suspect that some of the big boys use gold.