Yeah, and with all that gold they are going to mine (what a joke) they will cut their own throat and flood the market with cheap gold. Who runs that company anyway? That kind of talk belongs in the "boiler rooms". Whoever wrote that press release needs to be selling penny stocks on the internet.
In an insane society, a sane person will appear to be insane.
Gold production has been lagging behind demand for years...and the run to $500 has done NOTHING to increase production. If anything, the strength in currencies like the South African Rand have hurt gold miners, as has the increase in oil and other supplies needed for mining. Almost no infrastructure work has been put into gold mines for the past 10 years. It will take 5 years to make any real dent in current production rates. The miners were too busy making money hand over fist in the "gold carry" trade. There was no need to mine during that period. Well now, someone wants that loaned out gold back, and it's not going to be easy to get it.
If someone doesn't get the value of gold in the world, I doubt they ever will. Greenspan got it in 1966 and still understands it. But as a FED mouthpiece he sold his soul and must now speak the party line. It's better than the majority not get this until it's too late in the gold move. This way the longer term gold bugs can profit more handsomely. If everyone thought it was the thing to do, the price would head down. The general public is still a few years away. It will take gold at $700-900 to get their interest.
I don't think gold is a good long-term investment. I hold a little gold and gold mining stock as a hedge against economic, social and political apocalypse. In times of uncertainty when other financial markets panic and sell off, gold rallies, keeping my overall portfolio from getting completely slaughtered.
Gold is a great investment in troubled times and during inflation. How many people do you know planning on holding gold for 30 years? I don't know anyone planning to be in it for even >10 years.
Bottom line is that 2006 will be a banner year for the gold market as it shifts into 2nd gear following a stealth run-up of 4 years. The vast majority still see gold as useless. Hold on to your hats, as 2006 is going to get scary. In the meantime I will strengthen my position in Jan-March as gold bottoms out. The further gold falls from here the better for me to buy it back.
The fact that gold was $500 nearly 25 years ago, and still is priced less today while other "investments" or "asset bubbles" have gone up 4X or more only points to how underpriced gold is today. Central Banks saw to that. Unfortunately for them, they have lost their stranglehold. Gold is at give-away prices based on 25 years of history.
Gold is at give-away prices based on 25 years of history.
Tsk tsk tsk! You know I agree with much of your analysis regarding our country's financial position ... but to take a point in time and say that gold is undervalued because it is the same price as that point of time doesn't quite stand to logic.
Are tulips undervalued because they cost less than they cost several hundred years ago in the Netherlands?
Both gold and silver are going to end the year right about where I felt they would last January.
The precious metals market is strong.
A year from now, this thread is going to be mighty interesting to re-read.
2006 and 2007 are going to be a wild ride. I say buy all you can at these prices while you can.
Those who do will be smiling from ear to ear in 8 months and jumping for joy in 18.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
TDN, tulips have never been a backing for currency by the leading nations in the world. Nor have tulips been considered cash for 5,000 years. Central Banks take gold ownership very seriously. Central Banks also have not made it a major fight to control the price of tulips for the past 15 years...but have done so for gold. And right now, many of them wish they had more gold than they do. Just as Great Britain who sold half of their stock at $260/oz. Russia, Argentina, China and others are out there looking to add gold.
One can relatively easily (do we care?) determine how many tulips are out there in the world and who owns them. Not so for gold. It's a big secret. Central Banks will not divulge what they actually hold in gold. CB's have been leasing gold for years but are also keeping leases on their books as an asset....when they no longer even have it. There's no trail open to the public to know who owns the gold. The US gold stock has not been inventoried since the 1950's. What's the big secret? Are govt's afraid to let the people know how much gold is really in their hands? You bet. The 8,000 tons in US gold (if all is still there and it all belongs to us) covers only 1 percent of our currency floating about. It only covers about 0.2% of our total obligations going forward.
Couple all the above with the fact that gold was strongly linked to money stock for all but the last 30 years of the 20th century and you should get the picture that gold keeps M3 honest. Inflation was always pegged to M3 until the govt decided to change that. And gold was the way to keep M3 in check. The FED will no longer report M3 starting March of 2006. That's 40% of M3 no longer visible to you and I. The kicker is that M3 has increased 4X since 1981 yet gold is actually lower in price. You can't say that about cars, or stocks, or real estate, or coins, etc. Gold has not been allowed to keep M3 honest. And it took the CB's to help make this happen by selling off up to 50% of their gold reserves over the past 10 years. The time for equalization is at hand. This is exactly why gold will recover that 4X ratio vs. M3 over the next 2-10 years. The price of gold in 1981 has everything to do with what it should be now. The 35 year fiat experiment is getting long in the tooth.
The only factors in gold's price are supply and demand. If the Central banks don't want it anymore, a portion of demand is down and supply is up. Throw in a slightly strengthening dollar [ amazing, but true ] and you have a recipe for a price drop.
If the dollar tanks, then gold will go up because it's a commodity priced in world currency.
Your point is well taken on the tulips but GOLD has ALWAYS been and always will be money whereas tulips and Pokemon cards come and go with the wind....
I am a firm believer that 2006 will be most interesting.....
Being in the credit and collection business I can tell you there are only two ways out of debt....paying it and default.....Obviously our government is NOT going to default so they will pay it....The difference between the government and our debt is they have the legal right to PRINT money whereas if I do it....well....you know what happens...
More $$$ printed requires greater compensation to those seeking a return of a declining currency....Gold will store that value.....It has for thousands of years....
While gold is not officially backing our currency, or anyone else's, it is plain to see by the movments of gold vs. currency over the past 5 years that gold unofficially backs all currencies. And this trend is now more evident because CB's have lost a lot of their manipulative grip on the gold market. Even our own Fed is in gold day to day via major brokerages to help control the price. CB sales and 25 years of equity inflation has convinced Joe SixPack that gold is a relic that has no meaning in today's world. Well for something that has no meaning to our currency, it sure has been an perfect inverse image of the currency chart from 2000-2005. Only in the past 6 months has gold started to move independently at times compared to most of the world's major currencies.
Look at my sig. line. I put that down there 2 years or more ago. "Gold is currency once again." Unfortunately about 98% of Americans still don't buy it.
The price of gold (POG) is dependent on supply (trending down long term) , and demand (trending up long term) as well as outright manipulation and fraud. It's the last one of these that is hard to peg. Much like the Comex silver market where paper shorts outnumber the available supply of silver by many times, gold is very similar. It has been easy for a JPM or GS to drive gold down (esp in the US market) via paper sell orders. This is not a real loss of demand. But manipulation. They don't have the gold to sell and never will. But they can shift momemtum in the market and convince everyone else to sell paper contracts as well, as they step back, laugh about it, and then buy it back cheap. There is no true supply and demand going on here. Just supply and demand of useless paper. This maneuver has not been as successfull in the overseas markets where physical gold tends to trade. And you cannot bluff the market as well when you have to deliver actual bullion. The gold and silver markets have to be 2 of the most over-controlled and manipulated markets out there. Stocks and bonds are light years more compliant.
This game of selling paper bluffs has been slowly dying over the past 2 years. There are eager buyers for bullion in Asia for every ounce the CB's or Commercials want to sell at lower prices. This was not the case 2 years ago. The COT and bankers had their way. Someone has been slowly buying up that 15,000 tons of CB sales in the 1990-2003 period. Someone who appreciates physical value.
Traders are slowly demanding more and more delivery on Comex gold trades. And this is not good for the Banker brokers. Ultimately, most or all gold will probably be demanded on delivery, no more paper bluffs. This is why I say there is much more than supply and demand at play. It's a game of poker. The gold market was small enough to be moved on bluffs because the buyers for all that physical gold were not as many. Today there are more than enough to take whatever the CB's want to sell. Interesting that they have stopped selling...and some are now reaccumulating. Their own actions indicate which way they think the trend is going (lol).
<< <i>Would somebody please talk to me like I'm a six year old and explain to me why gold is so valuable? Tell me what diseases it cures, how much interest it pays, what product does it make that helps society.
I just don't see the hype about gold in today's world. It makes nice jewelry but thats about all. You can't eat it if our economy tanks (as gold bugs always promote). I'm sure some of you remember all the gloom and doom that was forcasted in the late 70s when interest rates on CDs was near 17%. Buy gold was the mantra then because the world as we know it is coming to ... >>
This always seems to be a popular agument why it is not worthwhile to physically own gold. "what diseases it cures", "you can't eat it...." etc. But... this is so immaterial to me!
Neither can you 'eat' your greenbacks when/if the dollar devalues into less and less.... neither can you 'eat' your house when the housing bubble breaks, and you lose your job, etc... etc.... etc...
Of course you cannot eat gold! It is just another tool to keep in your toolchest to help insure in times of trouble. Will it pay off? Will you need it? I don't know. But I do know that I spend thousands of dollars on various insurance every year.... and have nothing of the amount that I get back at the end of the year. Does that make it a bad product... of course not. It also is a tool... and essential.
Point I am really trying to make is that it is wise to diversify.... gold is another way to do that.
Gold is no protection against catastrophe but it would provide protection against inflation. When it again becomes common wisdom that some of investors' wealth should be in gold, the price will be at much higher levels.
<< <i>Gold is no protection against catastrophe but it would provide protection against inflation. When it again becomes common wisdom that some of investors' wealth should be in gold, the price will be at much higher levels. >>
Hmmm--- Or, "When Gold is at higher levels, it will again become common wisdom that some of investor's wealth should be in gold". At that point I'm selling my few common Saints-- Meanwhile it has strong support at $475-$485
<<Gold is a great investment during troubled times and high inflation>> Roadrunner, we have neither of them. Look at my "Dow vs. Gold" thread. Where's your wager????
I'm sure some of you remember all the gloom and doom that was forcasted in the late 70s when interest rates on CDs was near 17%. Buy gold was the mantra then because the world as we know it is coming to ...
And gold as well as silver (coins too) did a fine job of protecing one's assets during this tumultuous period (1971-1979).
Gold is a great investment during troubled times and high inflation..... Roadrunner, we have neither of them. Look at my "Dow vs. Gold" thread. Where's your wager????
Lloyd, we differ greatly on how we see the economy. There is both deflation and rabid inflation at work. Money supply has been pumped at 7-9% average for the past 10 years. That's inflation! And it's not at 1-3% as commonly published by the BLS over those same years. Its effects are slowly being brought to the surface. The only delay has been the cheap cost of labor from overseas (and that's changing also). If you don't see it that way there's nothing I can do to change your view. The fact that commodities and coins as well have been moving up for years should imply that there is something to do with inflationary effects going on.
I already answered your bet in that thread. Please re-read it. Come up with something for 2006 only if you'd like to bet. I'll bet you that gold exceeds its recent 2005 high sometime in 2006 (let's put an MS65 Saint on the line). I made several such bets as well in 2004 and 2005 that you didn't respond to. It's a free world, and you don't have to respond (nor should I expect you to if you do not). Nor should I want to inquire each time why you didn't take the bet. A 3 year bet? The logisitics on that is a bit too much imo considering all the changes that can occur in our lives, this forum, the world, etc. in that time. One year's about my limit. I'll be happy to bet to your heart's content on each move in gold, considering that there is "no inflation" driving it....even if the money stock increasing at nearly double digits is the very definition of inflation. Price inflation will follow in earnest, it always does.
I think the one aspect that is being slightly overlooked is the demand for gold for jewelry. As the economies of China and other asian countries begins to grow, their demand for gold jewelry increases proportionally to the middle class. Gold is not relevant as far as the economy goes as their is just not enough of it (paper excepted). If everyone decided to hold gold (the actual metal, not rights to it), the price would be astronomic. But this is not the case. All that said, I think gold will trend higher over the next few years, regardless of what the budget deficit becomes or when the war ends.
Retired United States Mint guy, now working on an Everyman Type Set.
<< <i>"...is both deflation and rabid inflation at work. >>
Yes, this is how I tend to see it too. For a number of years I've been warning friends and family that the cost of everything we use daily, things like: food, gasoline, housing, and medical care have been rising in cost at a blistering rate. This is not only inflationary but probably hyperinflationary. In the meantime, wages have not budged at all and in fact have probably declined in real terms. The minimum wage is still a pittance and many jobs have gone overseas or have been trumped by technology.
In addition, the world is awash in cheap goods and services created by former third world and communist entities which itself tends to create a deflationary taint to this whole mix of bad economic brew. As I see it, there is no crisis of supply. Yet, the current economic horizon might be suggesting a real possibility for a crisis in demand.
So, it might be that gold has rallied for reasons different than just inflation (if that were not enough). It is quite possible that the U.S. dollar is simply not presently viewed as the "defacto" world currency; a distinction that it has enjoyed ever since Bretton Woods and probably before that. Too much debt at home (many Americans are drowning in it) and too much printing of greenbacks from the nation's printing press has devalued dollars. Furthermore, since October, there are now in place new bankruptcy laws that virtually assure debtors economic bondage here in America. Taken together, and with the declining status of the USD in recent time, I can only hope and pray that we are not looking at a "stagflation" scenario - which could have the potential to be horrendous for the economy. matteproof
The rise in the money supply is precisely one of the major reasons why gold has risen. And it is inflationary, very much so. Price inflation is another matter entirely. Prices can behave on their own for periods of time regardless of monetary inflation.
<< <i><<Gold is a great investment during troubled times and high inflation>> Roadrunner, we have neither of them. Look at my "Dow vs. Gold" thread. Where's your wager???? >>
I can't find that thread anywhere. I thought it was pulled and finally gave up.
I'm certainly in for a piece of that action. By the time I had a chance to get back to my PC(sometimes I actually have to work)I couldn't locate it anymore.
Please point it out. I'd be very happy to put my money where my head is at. I've done it before, I'll do it again and I think your bet is easy money.
I think you will be paying off by June of '06 if not before.
Lloyd, link me up to it, please. No meager $50-$100 bet from me, either. I honestly thought the thread was pulled, I really did look for it.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>The only factors in gold's price are supply and demand. >>
So which one will influence the price first. The current production that is the lowest in 10+ years or 1 billion Asians with a history of failed paper money rising in prosperity??
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>The only factors in gold's price are supply and demand. >>
So which one will influence the price first. The current production that is the lowest in 10+ years or 1 billion Asians with a history of failed paper money rising in prosperity?? >>
Supply and Demand is easy for all of us to say and comprehend. I don't see any mention of this stuff though.
Good for you deadhorse. I have enough action right now with the 1955 DDO wager I proposed (and in progress). Maybe I'll take Lloyd up on his next gold wager or maybe I'll offer him one.
There were no takers at the gold closing over $400 and then $500 in previous years. The $600 level is next, just may not happen by the close of 2006, but I think it will. By 2007 it is a sure thing imo. But rather than hold on to bullion gold I will continue to side with generic $20's.....especially MS65 saints.
The $600 level is next, just may not happen by the close of 2006, but I think it will. By 2007
I am one of those in your corner RR. I do believe we will see $600 an ounce in '06. Although I can not pinpoint the drive of the PM market, my indicators point north. I have also started buying bullion because I am becoming attached to my St. G's. However, every man has his price and I am waiting for mine then the St. G's are gone.
Tom, you may want to hang on to those saints for a while. Or hold a core position of 2/3 of them. But Saints have years to go imo. Some gold gurus really don't see the gold fireworks reaching crisis levels until 2012-2017. That would be a long bull market in gold, and something unfamiliar to all of us.
I am in no hurry. I purchased the St. G's over a period of 6 years now. I have every intention of hanging on until my price comes around, and it will. Being gold is on its way up, I began to purchase bullion to turn it over in a year or two or three for some potential serious coin. At this point time is on my side, gold price is doing exactly what I had predicted (call it luck) however, I will continue to look for good prices on St. G's and during low points buy bullion.
I say the price of gold will be above $550 before the end of the year. And stay that way through the entire year of 2006. Gold will hit peaks of $820, then it will get pushed to $880. It will end the year 06 between $780 and $810. But definitely gold above $550 this year and very few days to do it!!!
<< <i>Dec. 22 (Bloomberg) -- Placer Dome Inc. agreed to an increased takeover offer from Barrick Gold Corp. valued at $10.4 billion, uniting the two Canadian companies to create the world's largest gold producer. >>
<< <i>The acquisition would make Barrick the world's largest gold producer, ahead of Newmont Mining Corp., with output of as much as 8.4 million ounces. As part of the transaction, Goldcorp Inc. agreed to buy some Placer assets for $1.485 billion in cash. Mining companies have been buying rivals as gold prices have climbed to a 24-year high and output in some areas has dwindled. >>
What effect will all of the mergers/production increases have on the supply/demand/price of gold?
Robert Scot: Engraving Liberty - biography of US Mint's first chief engraver
I have found that most mergers occur when the acquiring stocks' price is near highs. That is usually the result of a good market and economy for their underlying product. It also usually means the good times are behind them.
Where was Barrick when Placer Dome was $8 a share in 2000 and 2002?
Barricked still has a sizeable leveraged (hedged) position in gold derivatives. Placer does not. How that will mix will be interesting. Barrick may have been looking for a way to reduce their hedge.
Nice to see gold rebound in the $505 range so far today.
I still predict that with all the technology today that soon there will be an announcement that Gold, Silver, Platinum, etc. can all now be manufactured instead of mined. This will be first accomplished through radiation technology in small amounts sort of like Diamonds are now being produced. When that happens all metal prices will drop dramatically.
If we get to the point where we can make gold from lead, then we certainly will be making old coins from scratch as well. 1933 Saints and 1804 dollars will be showing up out of the woodwork.
<< <i>If we get to the point where we can make gold from lead, then we certainly will be making old coins from scratch as well. 1933 Saints and 1804 dollars will be showing up out of the woodwork.
roadrunner >>
They already are being made from scratch. Check all the eBay offerings from China.
Worry is the interest you pay on a debt you may not owe.
<< <i>I still predict that with all the technology today that soon there will be an announcement that Gold, Silver, Platinum, etc. can all now be manufactured instead of mined. This will be first accomplished through radiation technology in small amounts sort of like Diamonds are now being produced. When that happens all metal prices will drop dramatically. >>
It's already being done. This takes place on a daily basis in nuclear power plants. Silver isotope 110 is one of the by-products; if I am not mistaken, I believe that there are gold isotopes produced as well. The problem is that these are such minute quantities that are not realistically able to be captured and concentrated. Also, you would not want this silver, etc. It is quite radioactive, and contributes to the nuclear plant workers radiation exposure. (so they are 'bad boys' products!)
Another problem... once they radioactively decay.... they become another element! So if you were able to capture the silver and gold..... they would 'decay' on you and become another base element like..... lead (this probably is not the final product, but since I do not have my chart of the isotopes in front of me and cannot quote from memory, I cannot tell you the actual ones)
But.... alchemy is in action.... gold and silver can be produced!!
They already are being made from scratch. Check all the eBay offerings from China
Fake 1804's have been made since the 1800's. What I'm talking about are re-creations fully indistinguishable in fabric from the real McCoys. Coins that the US Mint, Secret Service, and the TPG's could not prove to be other than authentic. While that may not be a problem with 1804 $ and 1913 5c it would be a mess for 1933 Saints where an exact number is not known. If a reproduction or die process were created that fully duplicated the quality of the US Mint, that would be news.
Unstable radioactive silver or gold is not quite my idea of a monetary substitute for the current metals. When they produce something that can be safely carried around in our pockets, and not deteriorate to a different form, then we should be concerned.
roadrunner, what you've said concerning the quality fakes, is one of the main problems that I believe our hobby/industry will be faced with. It is just a matter of time.... we will not be able to tell the difference between fakes and originals at some point. Maybe we are already at that point. How many fakes are now so good that they are slabbed, and we have no idea? Certainly the person(s) responsible for the fake will not normally be advertising the fact. I realize that we will keep improving our detection skills and methods... but at some point, more and more fakes will probably slip though.
Perhaps in future years provenance will be much more valuable than it already is. Perhaps slabbed coins prior to a certain date will be much more valuable... as one method to help ensure a genuine coin. Although faking slabs will then become the new methods for the counterfeitors!!
The fact that counterfeiting has been around since the dawn of money is no secret. I believe you can fool some of the people some of the time or all of the people some of the time, but not all the people all the time. Was it not last year, perhaps two years, that a PCGS was notified about the act of counterfeit coins that were slabbed (Morgan’s, if I am not mistaken) ? An outside collector stepped up to the plate and notified them. Point is that yes the pros were fooled but the fakes were found. It is simply a matter of time. One can only guess how many are still out there, but they will be found. From what I understand however, I cannot recall anybody pulling the wool over someone’s eye to determine manufactured gold from that stuff we pull from the ground. Please correct as needed.
Gold Freefall? Look at the gold stocks indices! Both are at record highs for this year today 12/23/05. Usually gold follows strength in gold stocks.
Those are some great points Tincup. Most here already realize the value to important pedigrees and older holders. But if at some point those holders can be faked too.....as was done in 1988 for a brief period (with little market effect), then we are in trouble. But I also think the TPG's can keep ahead of the counterfeiters just like the Treasury does with currency.
Coins are a fairly tight community. Wouldn't it be relatively easy to recognize a new player (whether on line or at shows) who all of a sudden has "stuff' that doesn't quite fit? Maybe there are better things for the counterfeiters to play with other than coins? Gem stones, jewelry, currency, paintings, collectibles in general, antiques, can keep them busy as well too. In our hobby you not only will have to fake the coin perfectly, but the holder as well. Guess that was one good side to the slabbing game. The fakes can show up in 3rd tier holders but they would have marginal effects on the PCGS/NGC side. If anything to bolster the prices of those coins as 3rd tiers get a bigger black eye. I'm surprised that since 1988 I haven't heard of any attempt to fake PCGS or NGC holders. Rather the counterfeiters can just open up their own "legitmate" slab company and sell to their heart's content. After all the coins are now "certified." But rather than sell fakes that can get them jailed quickly, just sell overgraded stuff which is easier and much less litigious.
No easy answer here. If Eliasberg or Pittman were still alive, they wouldn't have to worry one bit as to where their coins came from. Nor would any of us worry when we bought from such collections. I've always liked higher grade mint state seated coins because I've never heard of any decent fakes ever being made, let alone a gem UNC. But once you wander into 20th gold and silver the added mint marks start to show up all over the place. They just never bothered with the 19th century stuff. First you had to find the real coin (hard enough) then try to mess with the mint mark (hard too)....then you had to find someone who would want it (harder since the # of collectors in this area is very small).
Comments
supplies needed for mining. Almost no infrastructure work has been put into gold mines for the past 10 years. It will take 5 years to make
any real dent in current production rates. The miners were too busy making money hand over fist in the "gold carry" trade. There was no
need to mine during that period. Well now, someone wants that loaned out gold back, and it's not going to be easy to get it.
If someone doesn't get the value of gold in the world, I doubt they ever will. Greenspan got it in 1966 and still understands it. But as a FED
mouthpiece he sold his soul and must now speak the party line. It's better than the majority not get this until it's too late in the
gold move. This way the longer term gold bugs can profit more handsomely. If everyone thought it was the thing to do, the price would head down. The general public is still a few years away. It will take gold at $700-900 to get their interest.
I don't think gold is a good long-term investment. I hold a little gold and gold mining stock as a hedge against economic, social and political apocalypse. In times of uncertainty when other financial markets panic and sell off, gold rallies, keeping my overall portfolio from getting completely slaughtered.
Gold is a great investment in troubled times and during inflation. How many people do you know planning on holding gold for 30 years?
I don't know anyone planning to be in it for even >10 years.
Bottom line is that 2006 will be a banner year for the gold market as it shifts into 2nd gear following a stealth run-up of 4 years.
The vast majority still see gold as useless. Hold on to your hats, as 2006 is going to get scary. In the meantime I will strengthen my
position in Jan-March as gold bottoms out. The further gold falls from here the better for me to buy it back.
The fact that gold was $500 nearly 25 years ago, and still is priced less today while other "investments" or "asset bubbles" have gone up
4X or more only points to how underpriced gold is today. Central Banks saw to that. Unfortunately for them, they have lost their stranglehold. Gold is at give-away prices based on 25 years of history.
roadrunner
Tsk tsk tsk! You know I agree with much of your analysis regarding our country's financial position ... but to take a point in time and say that gold is undervalued because it is the same price as that point of time doesn't quite stand to logic.
Are tulips undervalued because they cost less than they cost several hundred years ago in the Netherlands?
The precious metals market is strong.
A year from now, this thread is going to be mighty interesting to re-read.
2006 and 2007 are going to be a wild ride. I say buy all you can at these prices while you can.
Those who do will be smiling from ear to ear in 8 months and jumping for joy in 18.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
5,000 years. Central Banks take gold ownership very seriously. Central Banks also have not made it a major fight to control the price
of tulips for the past 15 years...but have done so for gold. And right now, many of them wish they had more gold than they do.
Just as Great Britain who sold half of their stock at $260/oz. Russia, Argentina, China and others are out there looking to add gold.
One can relatively easily (do we care?) determine how many tulips are out there in the world and who owns them. Not so for gold.
It's a big secret. Central Banks will not divulge what they actually hold in gold. CB's have been leasing gold for years but are also keeping
leases on their books as an asset....when they no longer even have it. There's no trail open to the public to know who owns the gold.
The US gold stock has not been inventoried since the 1950's. What's the big secret? Are govt's afraid to let the people know how much
gold is really in their hands? You bet. The 8,000 tons in US gold (if all is still there and it all belongs to us) covers only 1 percent of
our currency floating about. It only covers about 0.2% of our total obligations going forward.
Couple all the above with the fact that gold was strongly linked to money stock for all but the last 30 years of the 20th century and you
should get the picture that gold keeps M3 honest. Inflation was always pegged to M3 until the govt decided to change that. And gold was the way to keep M3 in check. The FED will no longer report M3 starting March of 2006. That's 40% of M3 no longer
visible to you and I. The kicker is that M3 has increased 4X since 1981 yet gold is actually lower in price. You can't say that about cars, or stocks, or real estate, or coins, etc. Gold has not been allowed to keep M3 honest. And it took the CB's to help make this happen by selling off up to 50% of their gold reserves over the past 10 years. The time for equalization is at hand. This is exactly why gold will recover that 4X ratio vs. M3 over the next 2-10 years. The price of gold in 1981 has everything to do with what it should be now. The 35 year fiat experiment is getting long in the tooth.
roadrunner
If the dollar tanks, then gold will go up because it's a commodity priced in world currency.
Your point is well taken on the tulips but GOLD has ALWAYS been and always will be money whereas tulips and Pokemon cards come and go with the wind....
I am a firm believer that 2006 will be most interesting.....
Being in the credit and collection business I can tell you there are only two ways out of debt....paying it and default.....Obviously our government is NOT going to default so they will pay it....The difference between the government and our debt is they have the legal right to PRINT money whereas if I do it....well....you know what happens...
More $$$ printed requires greater compensation to those seeking a return of a declining currency....Gold will store that value.....It has for thousands of years....
TDN, great set you have!
$20 Saint Gaudens Registry Set
5 years that gold unofficially backs all currencies. And this trend is now more evident because CB's have lost a lot of their manipulative
grip on the gold market. Even our own Fed is in gold day to day via major brokerages to help control the price. CB sales and 25 years of equity inflation has convinced Joe SixPack that gold is a relic that has no meaning in today's world. Well for something that has no meaning to our currency, it sure has been an perfect inverse image of the currency chart from 2000-2005. Only in the past 6 months has gold started to move independently at times compared to most of the world's major currencies.
Look at my sig. line. I put that down there 2 years or more ago. "Gold is currency once again." Unfortunately about 98% of Americans
still don't buy it.
roadrunner
This game of selling paper bluffs has been slowly dying over the past 2 years. There are eager buyers for bullion in Asia for every ounce
the CB's or Commercials want to sell at lower prices. This was not the case 2 years ago. The COT and bankers had their way. Someone
has been slowly buying up that 15,000 tons of CB sales in the 1990-2003 period. Someone who appreciates physical value.
Traders are slowly demanding more and more delivery on Comex gold trades. And this is not good for the Banker brokers. Ultimately,
most or all gold will probably be demanded on delivery, no more paper bluffs. This is why I say there is much more than supply and demand
at play. It's a game of poker. The gold market was small enough to be moved on bluffs because the buyers for all that physical gold were not as many. Today there are more than enough to take whatever the CB's want to sell. Interesting that they have stopped selling...and some are now reaccumulating. Their own actions indicate which way they think the trend is going (lol).
roadrunner
I'm glad I didn't buy any 6-7% CD's back in 2000.
Yikes what a trouncing those people took!
6024 N. 9th Ave #5
Pensacola, FL 32504
HTTP://WWW.AACoinCo.Com
<< <i>Would somebody please talk to me like I'm a six year old and explain to me why gold is so valuable? Tell me what diseases it cures, how much interest it pays, what product does it make that helps society.
I just don't see the hype about gold in today's world. It makes nice jewelry but thats about all. You can't eat it if our economy tanks (as gold bugs always promote). I'm sure some of you remember all the gloom and doom that was forcasted in the late 70s when interest rates on CDs was near 17%. Buy gold was the mantra then because the world as we know it is coming to ... >>
This always seems to be a popular agument why it is not worthwhile to physically own gold. "what diseases it cures", "you can't eat it...." etc. But... this is so immaterial to me!
Neither can you 'eat' your greenbacks when/if the dollar devalues into less and less.... neither can you 'eat' your house when the housing bubble breaks, and you lose your job, etc... etc.... etc...
Of course you cannot eat gold! It is just another tool to keep in your toolchest to help insure in times of trouble. Will it pay off? Will you need it? I don't know. But I do know that I spend thousands of dollars on various insurance every year.... and have nothing of the amount that I get back at the end of the year. Does that make it a bad product... of course not. It also is a tool... and essential.
Point I am really trying to make is that it is wise to diversify.... gold is another way to do that.
it again becomes common wisdom that some of investors' wealth should be in gold, the price will
be at much higher levels.
<< <i>Gold is no protection against catastrophe but it would provide protection against inflation. When
it again becomes common wisdom that some of investors' wealth should be in gold, the price will
be at much higher levels. >>
Hmmm--- Or, "When Gold is at higher levels, it will again become common wisdom that some of investor's wealth should be in gold". At that point I'm selling my few common Saints-- Meanwhile it has strong support at $475-$485
Roadrunner, we have neither of them. Look at my "Dow vs. Gold" thread. Where's your wager????
I try to stay neutral short term. I can never predict these things short term.
NO one can argue with me except having to wash my hands often!
And gold as well as silver (coins too) did a fine job of protecing one's assets during this tumultuous period (1971-1979).
Gold is a great investment during troubled times and high inflation..... Roadrunner, we have neither of them. Look at my "Dow vs. Gold" thread. Where's your wager????
Lloyd, we differ greatly on how we see the economy. There is both deflation and rabid inflation at work. Money supply has been pumped at 7-9% average for the past 10 years. That's inflation!
And it's not at 1-3% as commonly published by the BLS over those same years. Its effects are slowly being brought to the surface. The only delay has been the cheap cost of labor from overseas (and that's changing also). If you don't see it that way there's nothing I can do to change your view. The fact that commodities and coins as well have been moving up for years should imply that there is something to do with inflationary effects going on.
I already answered your bet in that thread. Please re-read it. Come up with something for 2006 only if you'd like to bet. I'll bet you that gold exceeds its recent 2005 high sometime in 2006 (let's put an MS65 Saint on the line). I made several such bets as well in 2004 and 2005 that you didn't respond to. It's a free world, and you don't have to respond (nor should I expect you to if you do not). Nor should I want to inquire each time why you didn't take the bet.
A 3 year bet? The logisitics on that is a bit too much imo considering all the changes that can occur in our lives, this forum, the world, etc. in that time. One year's about my limit. I'll be happy to bet to your heart's content on each move in gold, considering that there is "no inflation" driving it....even if the money stock increasing at nearly double digits is the very definition of inflation. Price inflation will follow in earnest, it always does.
roadrunner
<< <i>"...is both deflation and rabid inflation at work. >>
Yes, this is how I tend to see it too. For a number of years I've been warning friends and family that the cost of everything we use daily, things like: food, gasoline, housing, and medical care have been rising in cost at a blistering rate. This is not only inflationary but probably hyperinflationary. In the meantime, wages have not budged at all and in fact have probably declined in real terms. The minimum wage is still a pittance and many jobs have gone overseas or have been trumped by technology.
In addition, the world is awash in cheap goods and services created by former third world and communist entities which itself tends to create a deflationary taint to this whole mix of bad economic brew. As I see it, there is no crisis of supply. Yet, the current economic horizon might be suggesting a real possibility for a crisis in demand.
So, it might be that gold has rallied for reasons different than just inflation (if that were not enough). It is quite possible that the U.S. dollar is simply not presently viewed as the "defacto" world currency; a distinction that it has enjoyed ever since Bretton Woods and probably before that. Too much debt at home (many Americans are drowning in it) and too much printing of greenbacks from the nation's printing press has devalued dollars. Furthermore, since October, there are now in place new bankruptcy laws that virtually assure debtors economic bondage here in America. Taken together, and with the declining status of the USD in recent time, I can only hope and pray that we are not looking at a "stagflation" scenario - which could have the potential to be horrendous for the economy. matteproof
Actually, I have no real opinion on the matter. I'm just amazed when Laura is right!
The rise in the money supply is precisely one of the major reasons why gold has risen. And it is inflationary, very much so.
Price inflation is another matter entirely. Prices can behave on their own for periods of time regardless of monetary inflation.
roadrunner
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i><<Gold is a great investment during troubled times and high inflation>>
Roadrunner, we have neither of them. Look at my "Dow vs. Gold" thread. Where's your wager???? >>
I can't find that thread anywhere. I thought it was pulled and finally gave up.
I'm certainly in for a piece of that action. By the time I had a chance to get back to my PC(sometimes I actually have to work)I couldn't locate it anymore.
Please point it out. I'd be very happy to put my money where my head is at. I've done it before, I'll do it again and I think your bet is easy money.
I think you will be paying off by June of '06 if not before.
Lloyd, link me up to it, please. No meager $50-$100 bet from me, either. I honestly thought the thread was pulled, I really did look for it.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>The only factors in gold's price are supply and demand. >>
So which one will influence the price first. The current production that is the lowest in 10+ years or 1 billion Asians with a history of failed paper money rising in prosperity??
<< <i>Is this the one? >>
Indee it is. Thank you.
I'll follow up on it a bit later this evening.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>
<< <i>The only factors in gold's price are supply and demand. >>
So which one will influence the price first. The current production that is the lowest in 10+ years or 1 billion Asians with a history of failed paper money rising in prosperity?? >>
Supply and Demand is easy for all of us to say and comprehend. I don't see any mention of this stuff though.
Jerry
There were no takers at the gold closing over $400 and then $500 in previous years. The $600 level is next, just may not happen by the close of 2006, but I think it will. By 2007 it is a sure thing imo.
But rather than hold on to bullion gold I will continue to side with generic $20's.....especially MS65 saints.
roadrunner
I am one of those in your corner RR. I do believe we will see $600 an ounce in '06. Although I can not pinpoint the drive of the PM market, my indicators point north. I have also started buying bullion because I am becoming attached to my St. G's. However, every man has his price and I am waiting for mine then the St. G's are gone.
Tom
Some gold gurus really don't see the gold fireworks reaching crisis levels until 2012-2017. That would be a long bull market in gold, and something unfamiliar to all of us.
roadrunner
I am in no hurry. I purchased the St. G's over a period of 6 years now. I have every intention of hanging on until my price comes around, and it will. Being gold is on its way up, I began to purchase bullion to turn it over in a year or two or three for some potential serious coin. At this point time is on my side, gold price is doing exactly what I had predicted (call it luck) however, I will continue to look for good prices on St. G's and during low points buy bullion.
Tom
I say the price of gold will be above $550 before the end of the year. And stay that way through the entire year of 2006. Gold will hit peaks of $820, then it will get pushed to $880. It will end the year 06 between $780 and $810. But definitely gold above $550 this year and very few days to do it!!!
Jerry
<< <i>Dec. 22 (Bloomberg) -- Placer Dome Inc. agreed to an increased takeover offer from Barrick Gold Corp. valued at $10.4 billion, uniting the two Canadian companies to create the world's largest gold producer. >>
<< <i>The acquisition would make Barrick the world's largest gold producer, ahead of Newmont Mining Corp., with output of as much as 8.4 million ounces. As part of the transaction, Goldcorp Inc. agreed to buy some Placer assets for $1.485 billion in cash. Mining companies have been buying rivals as gold prices have climbed to a 24-year high and output in some areas has dwindled. >>
What effect will all of the mergers/production increases have on the supply/demand/price of gold?
Where was Barrick when Placer Dome was $8 a share in 2000 and 2002?
Knowledge is the enemy of fear
Barrick may have been looking for a way to reduce their hedge.
Nice to see gold rebound in the $505 range so far today.
roadrunner
when the price moves against it. Watch for increasing volatility.
The forces holding silver in check are probably less strong so an erratic upward
movement is likely.
roadrunner
They're taking it all awaaaaaayyyyyyy..........
<< <i>If we get to the point where we can make gold from lead, then we certainly will be making old coins from scratch as well. 1933 Saints and 1804 dollars will be showing up out of the woodwork.
roadrunner >>
They already are being made from scratch. Check all the eBay offerings from China.
Worry is the interest you pay on a debt you may not owe.
<< <i>I still predict that with all the technology today that soon there will be an announcement that Gold, Silver, Platinum, etc. can all now be manufactured instead of mined. This will be first accomplished through radiation technology in small amounts sort of like Diamonds are now being produced. When that happens all metal prices will drop dramatically. >>
It's already being done. This takes place on a daily basis in nuclear power plants. Silver isotope 110 is one of the by-products; if I am not mistaken, I believe that there are gold isotopes produced as well. The problem is that these are such minute quantities that are not realistically able to be captured and concentrated. Also, you would not want this silver, etc. It is quite radioactive, and contributes to the nuclear plant workers radiation exposure. (so they are 'bad boys' products!)
Another problem... once they radioactively decay.... they become another element! So if you were able to capture the silver and gold..... they would 'decay' on you and become another base element like..... lead (this probably is not the final product, but since I do not have my chart of the isotopes in front of me and cannot quote from memory, I cannot tell you the actual ones)
But.... alchemy is in action.... gold and silver can be produced!!
Fake 1804's have been made since the 1800's. What I'm talking about are re-creations fully indistinguishable in fabric from the real McCoys. Coins that the US Mint, Secret Service, and the TPG's could not prove to be other than authentic. While that may not be a problem with 1804 $ and 1913 5c it would be a mess for 1933 Saints where an exact number is not known. If a reproduction or die process were created that fully duplicated the quality of the US Mint, that would be news.
Unstable radioactive silver or gold is not quite my idea of a monetary substitute for the current metals. When they produce something that can be safely carried around in our pockets, and not deteriorate to a different form, then we should be concerned.
roadrunner
Perhaps in future years provenance will be much more valuable than it already is. Perhaps slabbed coins prior to a certain date will be much more valuable... as one method to help ensure a genuine coin. Although faking slabs will then become the new methods for the counterfeitors!!
Tom
Those are some great points Tincup. Most here already realize the value to important pedigrees and older holders. But if at some point those holders can be faked too.....as was done in 1988 for a brief period (with little market effect), then we are in trouble. But I also think the TPG's can keep ahead of the counterfeiters just like the Treasury does with currency.
Coins are a fairly tight community. Wouldn't it be relatively easy to recognize a new player (whether on line or at shows) who all of a sudden has "stuff' that doesn't quite fit? Maybe there are better things for the counterfeiters to play with other than coins? Gem stones, jewelry, currency, paintings, collectibles in general, antiques, can keep them busy as well too. In our hobby you not only will have to fake the coin perfectly, but the holder as well. Guess that was one good side to the slabbing game. The fakes can show up in 3rd tier holders but they would have marginal effects on the PCGS/NGC side. If anything to bolster the prices of those coins as 3rd tiers get a bigger black eye. I'm surprised that since 1988 I haven't heard of any attempt to fake PCGS or NGC holders. Rather the counterfeiters can just open up their own "legitmate" slab company and sell to their heart's content. After all the coins are now "certified." But rather than sell fakes that can get them jailed quickly, just sell overgraded stuff which is easier and much less litigious.
No easy answer here. If Eliasberg or Pittman were still alive, they wouldn't have to worry one bit as to where their coins came from.
Nor would any of us worry when we bought from such collections.
I've always liked higher grade mint state seated coins because I've never heard of any decent fakes ever being made, let alone a gem UNC. But once you wander into 20th gold and silver the added mint marks start to show up all over the place. They just never bothered with the 19th century stuff. First you had to find the real coin (hard enough) then try to mess with the mint mark (hard too)....then you had to find someone who would want it (harder since the # of collectors in this area is very small).
roadrunner