Gold, Silver and Other PMs
- Normxxx
- azxcvbnm
- Normxxx
- Normxxx
- ACousins
- Normxxx
- codfish
- Bill_Duffy
- Normxxx
- Kirk
This archived discussion is "read only".
For the corresponding "live" discussions, post in the active topic forum here.
« Previous 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 Next »
» Normxxx - Re: Re: Bank Credit Analyst says . . .
In response to message posted by Austrian:I am targeting early February for the bottom-- but Gold tends to make rounded bottoms and spike tops (unlike the market). Still, I think it must break the 'magical' $400 level to be convincing.
Do you have an estimate for the ultimate bottom for the dollar? I have a feeling that the CBs are going to agree NOT to let it drop much further, contrary to the dollar speculators dreams.
That said, I think we will see at least one more selloff.
-- posted by Normxxx
» azxcvbnm - Re: Re: Re: Bank Credit Analyst says . . .
In response to message posted by Normxxx:Talk is cheap. So far, that's all the European CB's have done, talk. Japan spent $60 billion dollars in the past month just to SLOW the advance of the dollar. I think everyone wants the dollar to depreciate slowly, not all at once, and so the strategy is to talk the dollar up. The Euro CBs understand that they can't prevent the dollar from depreciating and the US has no interest in keeping the dollar strong. I think the Euros and the Fed might intervene once or twice just to make a show of it, but the dollar is headed lower as natural flows are just too big for any central bank to counter indefinately.
-- posted by azxcvbnm
» Normxxx - Re: Re: Re: Re: Bank Credit Analyst says . . .
In response to message posted by azxcvbnm:Well, we've been here before, and while I think this countertrend rally will top in February, and then down we go again, I doubt very much that the dollar will go below its natural(?) floor at 80.
-- posted by Normxxx
» Normxxx - Richard Russell Says . . .
BEST OF RICHARD RUSSELL
www.dowtheory.com | January 12, 2004
Going over past history, say going back a hundred years, total US debt averaged around 130% of GDP. But today US debt is around 300% of GDP -- its highest level in history. No country has ever carried debt amounting to 300% of its GDP before. But that's where the US is now.
Furthermore, the amazing fact is that our debt burden is actually growing faster than our GDP. In an effort to handle this debt burden, credit creation has been accelerating. Credit creation recently has been growing at an annualized rate of around $3.3 trillion.
Many years ago the great Hamilton Bolton (he was one of the founders of the Bank Credit Analyst) warned that it was taking more and more credit to produce less and less in the way of GDP in the US.
To take it to the present, it is now taking roughly eight units of credit to produce each one unit of GDP. The scary part of all this is that it is foreigners who are doing most of the financing of US debt.
Now the dollar is sinking, and I have to wonder how much longer foreigners will be willing to accept weakening US dollars. This is a particularly interesting question, since now, for the first time since the dollar was made the world's reserve currency, the dollar has a legitimate competitor -- the euro.
A few sophisticated economist believe that the current mess will end up with a balance-of-payments crisis and a crashing dollar that will force a break-up of the Bretton Woods monetary system. As the system crumbles, investors will rush towards what they believe is the best and most certain store of wealth. The safest, the time-honored store of wealth -- is gold.
A few fundamentals. The world is now beset with overproduction. A major reason for this is the dramatic rise of manufacturing capabilities by the nations of Asia, particularly China. China alone could probably produce all of the manufacturing needs, and more, of the entire world.
Overproduction is basically and fundamentally deflationary. To offset the deflationary forces, the US has turned to inflation of the money supply plus extremely low short interest rates.
Ironically, as US dollars have flooded the economies of the world, these dollars have allowed Asian nations to build their manufacturing facilities, adding even further deflationary forces to those that already exist.
As a further aid in its inflation efforts and as a huge incentive in keeping US consumers buying, the Fed has kept short-rates at 1 percent. The low rate has rendered the dollar unattractive to foreign investors. Additionally, the dollar has been weak because of the US's twin deficits, its half-trillion dollar budget deficit and its half-trillion dollar trade deficit.
At this early stage of the gold bull market, gold has been rising or falling opposite to the trend of the dollar. As time goes on, this will change, and gold will rise as it reflects doubts about all paper currencies and the whole central bank system of fiat paper.
The fact is that no one, no central bank, no power on earth can create wealth at will and out of thin air.. The very concept is an absurdity. But that's what the current system of "paper wealth" is based on.
The US money supply can increase $20 billion in a single week. Is this really wealth creation? Has anything of intrinsic value been created? The answer is self-evident. The system of irredeemable, paper money is a system based on fantasy and fraud.
In the end, the system based on fantasy must collapse, and a system based on real wealth, permanent wealth, intrinsic wealth, must take over. The base of such a system has always been precious metals. It's as fundamental as 2 + 2 equals 4.
This is the rationale for every investor to hold gold. Holders of gold have one major problem -- timing or the patience to sit tight with their gold holdings until the fundamentals begin to work.
www.dowtheoryletters.com
-- posted by Normxxx
» Normxxx - Japan for Gold?
Bill Fleckenstein:
A bullish development for gold could also lie in a potentially tectonic statement made last week by Japanese Finance Minister Sadakazu Tanigaki -- though it was overshadowed by turmoil over the Fed's interest-rate announcement. (I'll have more to say about the impact of this announcement on gold prices below.)
Tanigaki's comments have longer-term implications for currencies, metals, and perhaps even fixed income, so I would like to share them with readers, via the following from Bloomberg:
Japan needs to "carefully" consider diversifying its official reserves to include more holdings of gold. "That would be necessary for the purposes of diversifying assets," Tanigaki said at the fiscal and finance committee of the lower house of parliament in Tokyo. He was responding to a question by Jin Matsubara of the opposition Democratic Party of Japan, regarding why most of Japan's official reserves are in foreign currencies and U.S. Treasuries, rather than other assets, including gold. . . . "There is debate among international monetary authorities about gold's role in foreign reserves," Tanigaki said. "Boosting holdings of gold would affect the gold market and so should be carefully considered."
If Japan buys, it could spark a flood of buying
This story made the rounds, as one might imagine. Some folks were quick to say that Tanigaki was misinterpreted, while others were quick to do calculations about Japan's tiny sliver of reserves held in gold. I tend to believe that where there is smoke, there is fire, but this is, of course, just conjecture. According to my sources in the metals market, the Japanese have not been doing anything yet. But if they do, a trickle will soon become the functional equivalent of the biblical flood that required Noah to build an ark, including not just the Bank of Japan but also Japanese citizens, the Bank of China and Chinese citizens.
Those of us who've long held Alan Greenspan's actions in disdain have continually scratched our heads about why the Bank of Japan, the Bank of China and others persist in lapping up dollars and mispriced Treasurys, rather than exchanging their surplus dollars for gold, which would not put pressure on the foreign exchange rate. Apparently, some brighter lights in Asia have begun to figure this out.
The gold correction has arrived
Meanwhile, in the wake of the Fed's communiqué, violent downside moves roiled the currencies, precious metals and precious-metals stocks last Thursday. During the rout, I took the opportunity to purchase some gold for myself when it fell below $400. This large correction in the metals is one that I have been worried about and sort of anticipating, though I did not know what would precipitate it.
I have a hunch that in the next short space of time, a tremendous buying opportunity will have presented itself. Certainly, should Japan raise its gold holdings, the implications for precious metals would be wildly bullish. Folks would want to scoop up as much gold as they thought they could stomach, then close their eyes and not check on the price except maybe once a month for a couple of years, because that would be one powerful trend in place.
-- posted by Normxxx
» Bill_Duffy - Re: Gold proxy
The easiest proxy is to buy Gold Stocks such as NEM, BVN, or GG. There is also a closed-end fund, CEF (Central Fund of Canada) that investsexclusively in gold and silver bullion.
-- posted by Bill_Duffy
» Normxxx - Re: Gold proxy
In response to message posted by codfish:Yes. Within several months, Gold will be traded on the U.S. Exchanges like an ETF. It is already so traded in London. There seems to be some kind of technical or regulatory holdup, but that should clear away by summer.
Until then, stay away from most Gold mine shares; they are mostly way overpriced, based on their known reserves of Gold.
There may be one exception, AngloAmerican (AAUK) is a huge, worldwide company, which is actually a good play on all commodities. It mines a lot of gold, but that is only the fourth or fifth largest source of its income. It's main source of income is paper and paper products, although it owns about 45% of the DeBeers Diamond Mines. Do investigate it thoroughly to make sure it fits your investment and risk needs.
CEF generally trades at a premium which recently was huge, but has since come down because of the activity in London. There is no justification for a premium in excess of costs; the London premium is about 1-2% per annum, but is a lot cheaper than if you had to store and insure actual bullion yourself.
The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only.
-- posted by Normxxx
» Kirk - Gold a Buy here for a trade?
.<img src=http://stockcharts.com/def/servlet/Sharp...>
Full size image http://stockcharts.com/def/servlet/Sharp...
-- posted by Kirk
« Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 Next »
Please follow the guidelines set forth in the Suite101 Posting Etiquette when adding to the discussion.