Inflation Soars...And Gold DROPS???

RichR · August 13, 2008 9:54PM

What gives...this morning, inflation was reported at much more elevated levels than anticipated (both core and CPI), and gold fails to rise...and in fact drops slightly...what gives?

That violates Economics 101.

jmski52 · August 13, 2008 10:01PM

It must be the worldwide groundswell of confidence in the U.S. dollar.

Or the PPT, take your pick.

Can you post a link to the inflation data?

AbesNeighbor · August 13, 2008 10:05PM

Gold is a leading indicator.... The current inflation was reflected in its rise months ago... Hold on to it for the next round!!

RichR · August 13, 2008 10:39PM

Inflation link:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aL2cNvLZtzMg&refer=home

CaptHenway · August 13, 2008 10:40PM

There is some serious game playing in the gold markets these days. Notice how it goes up overnight, then gets hammered when NY opens.
Every day!
Something ain't right!
MOO
TD

DoubleEagle59 · August 13, 2008 10:44PM

trust me on this....

gold is the beach ball and inflation is the water and the USfed/central banks/PPT are the guys pushing the beach ball under water farther and farther down. Eventually, they're going to let this beach ball slip through their hands and that ball is going to soar high into the air!!

Jcarney · August 13, 2008 10:51PM

It's a conspiracy, I tell ya!

trozau · August 13, 2008 10:52PM

Everybody sells their gold when inflation is rising!

AbesNeighbor · August 13, 2008 11:05PM

We have always had inflation in this country, Granted, for a few years inflation was somewhat low and even some said we had deflation. That was probably true in some sectors of the economy. Gold is acting much like many commodities do in a trading market. Corn and Soybeans have also had an upward movement over the last several months and have since retreated.

Nothing goes straight up and it takes a lot of patience (Similiar to coin collecting) to dollar cost average through price fluctuations. I personally believe that we are still in the infancy of this movement upward and will continue to accumulate graded gold coins as I can afford them, over the long haul. And I'm an Old Guy!

stockwiz · August 13, 2008 11:59PM

I'm in the opposite camp.. I think that we had a commodity bubble which is bursting, along with the real estate bubble which is now bursting, and there will be a period of deflation.. deflation is merely the contraction of credit, which is what is happening. One can have deflation and still have the prices of some items go up, but ultimately I do think we have lower to go in gold yet.. for no other reason then gold is still above it's long term trading range. For what it's worth, gold has held up much better then other commodities though it did not rise as much as some others have..

In the long run I don't think you can go wrong holding gold and especially silver.. but in the short run there's no rush to go buy it.. just like there's no rush to buy real estate, which has a ways down to go yet.

mr1931S · August 14, 2008 12:00AM

Here's an interesting site to take a look at...

1928 resemblances

Google keywords:Wealth+Disparity+Depression

RegistryCoin · August 14, 2008 12:04AM

The best reasoning from "the experts" that I have seen is: "PMs have defied fundamentals". Hope that helps.

jmski52 · August 14, 2008 12:06AM

Oh, the inflation numbers aren't really all that bad, unless you need to eat or drive somewhere, or maybe heat your house this winter. Those phantom factors can just be ignored, if you ask the government.

ambro51 · August 14, 2008 12:35AM

Oh figuring all this out is rather easy.

this method works for the stock market as well

right is left, left is right. up isdown down is up. the sun rises in the west, sets in the east. what seems right...is wrong.

Its all one big crooked mess that fills the pockets of *somebody* while pulling money out of the pockets of people who think things are logical and they understand them.

HaHa.

A lot to be said for hiding money under your mattress.

lloydmincy · August 14, 2008 12:38AM

PM bubble here. Not a bad burst coming, but come on - you get a 100% return on a stock over a few years, don't you SELL??? If gas goes down in price, consumers feel SOOOO much better about any inflation fears. That's happening too. It is quite simply:

THE MARKETS

dac076 · August 14, 2008 1:12AM

It's that secret group of guys in a backroom all night smoking cigars and manipulating the price. They're also doing it to silver, platinum, palladium, corn, soybeans...

julie42 · August 14, 2008 1:26AM

<< <i>trust me on this....

gold is the beach ball and inflation is the water and the USfed/central banks/PPT are the guys pushing the beach ball under water farther and farther down. Eventually, they're going to let this beach ball slip through their hands and that ball is going to soar high into the air!! >>

konsole · August 14, 2008 1:40AM

Its hard to believe the people that say precious metals will go way way up in price, when the prices seem to always go with oil. When oil goes up so will precious metals, and vice versa and with oil maxing out around $150 and gold at $1000 at about the same time, its hard to believe that precious metals will ever get past their recent highs when oil seemingly will not get up to that $150 mark atleast anytime soon. Maybe oil and metals are related to something else but until they start behaving indifferent of each other I have a tough time seeing how the metals could rocket up to even new highs anytime soon.

57loaded · August 14, 2008 1:43AM

COMEX gold is inverse with the USD index, which is 57% in EURO

not oil, not inflation (yet)

jmski52 · August 14, 2008 1:44AM

Let me go on the record to state that all of the money I've put into precious metals has been a big mistake! I have been such a fool!!

All of the logical and rational arguments that I've put forward in defense of gold, silver and platinum have all been discredited! All of the talk about market manipulation by the government and the banking cartel - all lies!!

So, to summarize where things stand right now I quote from a famous novel which pretty much sums it up:

"O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother."

The End.

dac076 · August 14, 2008 1:57AM

<< <i>Let me go on the record to state that all of the money I've put into precious metals has been a big mistake! I have been such a fool!!

All of the logical and rational arguments that I've put forward in defense of gold, silver and platinum have all been discredited! All of the talk about market manipulation by the government and the banking cartel - all lies!!

So, to summarize where things stand right now I quote from a famous novel which pretty much sums it up:

"O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother."

The End. >>

I disagree with your position, but love the reference. Great book!

jmski52 · August 14, 2008 2:05AM

I disagree with your position, but love the reference. Great book!

I disagree with my position, too.

roadrunner · August 14, 2008 2:12AM

I disagree as well. There is no way to positively state that collusion and manipulation is not a major force in precious metals. There is more proof to say that it does happen. In any case the weak hands and funds are being purged from the market. I compare this period to 1974-1976 where gold fell back 50% on it's way to record highs 3-4 years later. No one said it would be easy. We haven't even seen true volatility yet when gold moves up or down by $100+ in one day.

you get a 100% return on a stock over a few years, don't you SELL???

I'd say no. Most people are conditioned to hold for more money and not to sell what has been a good thing. Did people sell their homes when they doubled and tripled in price only to go into a rental? Nope. How many here sold their coins after finding themselvers in a 100% profit position over the past few years? Probably very few. For every stock player who takes the 100% profit off the table, there are probably 5 to 9 others who hold waiting for bigger gains. I wonder how well the original shareholders of Microsoft would have done had they settled for 100% profits back in the 1980's? Most people sell when they can't bear to lose any more money. They hold on to winners until they eventually become losers. This applies to just about all types of "investments." People "love" their stocks just like they love their toys and hobbies. They get so attached that they frequently make the wrong moves.

roadrunner

jmski52 · August 14, 2008 2:19AM

you get a 100% return on a stock over a few years, don't you SELL???

I try to sell when I think that the reasons that I originally bought have changed in a fundamental way.

If anything, I see that the reasons I originally bought precious metals are magnified, if anything.

coinkid855 · August 14, 2008 3:12AM

-Paul

RichR · August 14, 2008 6:27AM

Well...for what it's worth...I bought practically all of my silver, gold and platinum as collectible coins...to enjoy...which I do.

However, as an added benefit, they've also tripled (quadrupled?) in value over the past few years...which have only recently made me think about selling them for a significant gain...which, remember, was never my original intent.

Truth be told...have I thought "what if" in the past few days...regarding selling plat at $2200 and gold at $1000...sure I have...but I still enjoy looking at those same coins just like I did when I originally bought them.

And, lastly, do I see gold retreating back to $300/ounce and plat to $600...nope...so I guess I still did better than putting the money in a bank and buying a few CDs at 5-6% back in the day!

P.S.: and what bank offers a posting board like this to discuss your rocking CDs and IRAs? How dull would that be!

Bear · August 14, 2008 6:56AM

Meddling by the various National Reserve Banks have

caused a distortion in the normal financial developments.

All debt is suspect and subject to more serious

markdowns then then we have seen to date. Credit will

slowly choke off and folks better be prepared to make do with

what they currently have. With the potential of the collapse of the

financial foundations and potential new cold war ,as well as potential

hot wars, we are in for a long and difficult time for the world as we know it.

fishcooker · August 14, 2008 7:17AM

...what gives?

Simple: In a bull market, price rises on good news and rises on bad news. In a bear market, price falls on bad news and falls on good news.

bluelobster · August 14, 2008 7:29AM

at the top there are a million reasons for buying overbought assets...at the bottom there are very few. Nothing has changed, it's just that most never believe it.

CertifiedGoldCoins · August 14, 2008 8:19AM

Human nature (lemming effect) at work. When sharply rising PM prices make the news, those outside the market want to get in, and profit. Many get in near the top. Eventually gravity takes over, and as prices fall, latecomers panic at the thought of a loss, and scramble to get back out, accelerating the drop.

jdimmick · August 14, 2008 9:03AM

I think the PM price rise earlier already figured in the current inflationary time preriod , and is now looking ahead to potential less inflation on the horizon, coupled with a recent commodity sell off and lower oil prices, not to mention were getting closer to the start of an possible intrest rate hike! while other countries may be starting to expereince what we have been, al starting to strenghthen up the dollar. Lots of the hedge funds have sold off to find better returns/safehavens elswhere, I believe we are done for the most part. I was lucky to only get stuck with 3 oz of gold and 1 10oz silver bar at (break even) and made some good money over the past 12 months, while many are still awaiting that 1500 gold / 25 silver that hasnt came yet.

7over8 · August 14, 2008 10:48AM

when the big bank run dry of liquid funds

they sell thier PM's first

there is ABSOLUTELY no reason for the drop in PM's this week other than central banks manipulating the market through thier trusted member banks.......who else makes GOLD LOANS at MINUS 3%?

just think about it, borrow us dollars at 97% of face and sell them into the spot market at 100% of face....pooof!!!! instant 3% profit.....on the trade....

and when you sell large amounts of "loaned" gold into the spot market....what happens......severe downswing in price......while you are at it, take out some more shorts before you sell into the spot market, then cover them after the spot market is trashed.......WOW more profits!!!!

all while helping the central bank put the lid on a pure indicator of INFLATION and USD valuation............

bidask · August 14, 2008 11:10AM

<< <i>when the big bank run dry of liquid funds

they sell thier PM's first

there is ABSOLUTELY no reason for the drop in PM's this week other than central banks manipulating the market through thier trusted member banks.......who else makes GOLD LOANS at MINUS 3%?

just think about it, borrow us dollars at 97% of face and sell them into the spot market at 100% of face....pooof!!!! instant 3% profit.....on the trade....

and when you sell large amounts of "loaned" gold into the spot market....what happens......severe downswing in price......while you are at it, take out some more shorts before you sell into the spot market, then cover them after the spot market is trashed.......WOW more profits!!!!

all while helping the central bank put the lid on a pure indicator of INFLATION and USD valuation............ >>

Are you aware the dollar has been rallying the last month or so and Goldman Sachs called a bottom in the dollar.......that is headwind for gold.

mrearlygold · August 14, 2008 11:13AM

Obviously a lot of people here haven't experienced the end of the 89, or 79 bull markets. Remember when generic ms-65 morgan dollars were a g-note?

And you couldn't get them?

One of my colleagues at Heritage had a customer who wanted if I remember correctly 1,000 MS-65 Morgans when they were at the top, saying "they're going to 2 grand they're going to 2 grand!" The order couldn't be filled so they "settled" for a couple thousand MS-64's and 63's.

The market collapsed .

I was into early 10's and Patterns when all that was happening. Whew!

I also remember a doctor coming into my shop back in 1980 looking to "stock up" when gold was way high and wondered why I wanted money up front on any gold orders. He kept saying "it's just getting started"! If I remember correctly he took a 2nd mortgage to finance his purchases. Never heard from him after the drop.

I had purchased 10,000 oz's of silver, between $5.50 and $7.50 from a company in Ft Lauderdale Fla ( I was in NJ and had never even seen Ft Lauderdale at that point). I called the broker to sell when silver was 32 bucks. He told me I was an a-hole, and that it was going to 100. I said, yup so you should be happy to own it at 32. He hung up. His sales manager hung up too. I flew down with my financial partner from Brooklyn . We were both very angry. Got there and everybody was in a "meeting". It got very ugly and finally Kenny had the sales manager in a chokehold and told me "Tommy go and cash this thing while the sales manager whimpered and he put his finger in the guys face and told him "you better hope that check is good or you go out the window".

I went to the back and of course they didn't have that much cash on hand. Cleaned out what they had and they wired the rest. I called up to the company and reported that I had the money.

We went to lunch. I bought a Sea Ray Weekender at a place called Captains Cove. Flew back to Jersey and bought a demo Corvette at Malcolm Konner Chevy . Went back to Fla ( REALLY liked Ft Lauderdale and was only 25 years old.....at such an age who wouldn't like Lauderdale back then? Heheh ) Had a ball.

Bought silver futures again a couple years later, when Anwar Sadat was murdered. Thought, great, middle east turmoil has to turn this 12 dollar+ an oz silver into significantly more. Got a margin call a couple days later. Lost it all.

Never speculated in that game again.

mhammerman · August 14, 2008 11:27AM

"silver futures again a couple years later, when Anwar Sadat was murdered. Thought, great, middle east turmoil has to turn this 12 dollar+ an oz silver into significantly more. Got a margin call a couple days later. Lost it all."

Summer time, and the livin' is easy; fish are jumpin' and the cotton's high...

Thanks for the story mrearly

Bear · August 14, 2008 1:06PM

When too many folks try to climb up on the

mule, it might be a good time to get off.

mrearlygold · August 14, 2008 1:10PM

<< <i>"silver futures again a couple years later, when Anwar Sadat was murdered. Thought, great, middle east turmoil has to turn this 12 dollar+ an oz silver into significantly more. Got a margin call a couple days later. Lost it all."

Summer time, and the livin' is easy; fish are jumpin' and the cotton's high...

Thanks for the story mrearly >>

Anytime Mr mhammerman, ahhh to be younger again with a pocket full of __________( fill in the blank )

jmski52 · August 14, 2008 1:23PM

Summer time, and the livin' is easy; fish are jumpin' and the cotton's high...

You better spread your wings, child......and reach, reach for the sky......

Man! I've never seen the PMs kicked this hard, ever. Not that it really means anything, but it is fairly impressive.

Bullish · August 14, 2008 1:43PM

I think it's getting really close, to that time, to pull the trigger! & start buying again! All PM's are really getting killed. Most people who own these, won't sell for a while, depending on what they have in it. Somethings really fishy here! Gotta strike while the fire is HOT!!! I LOVE IT!!

ARCO · August 14, 2008 1:54PM

Tulving.com is completely sold out of silver in every single category they have. They don't have ANY silver whatsoever. Folks are loading up on this dip.

Tyler

Whoops, I thought I was on the silver is "dropping like a flasher's overcoat" thread.

COINB0Y · August 14, 2008 2:13PM

I flew down with my financial partner from Brooklyn . We were both very angry.

LOL! I'da love to seen that one.

My Uncles had friends from the East of Cleveland for collection problems he didn't have time to handle, personally.

Inflation Soars...And Gold DROPS???

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