Ready for the next round? Gold over $700.

[Greyhound]

Just wow. This really doesn't bode well for the immediate future, politically speaking.
http://www.bullionvault.com/chart.html

Up $40 in the last 10 days, ~$200 for the year.

[HereSince1628]

1. That and mining equipment going to China are about the only

things I've done right in the market this year.

[BrklynLiberal]

2. Thanks. Will send this to my son.

[Greyhound]

10. Sell in May and go away. n/t

[OrangeCountyDemocrat]

3. It's Just Getting Started Folks!

By next year, you'll be looking back and wishing you had bought at $700.

Next stop, $800. By June I'd say.

[Greyhound]

5. I said $1000 by next year, I think I may have been too conservative.

And you're absolutely right about looking back and thinking this is cheap.

[dalaigh lllama]

6. We bought gold at $400

I told my husband we'll probably be able to take an ounce or two to buy a loaf of bread someday in the not too distant future...

[Greyhound]

14. LOL! Not to worry, the gold will still have the same purchasing power,

if not more, then it does now. It'll look bad cause the bread will cost $500 for a loaf, but he gold will be worth thousands...

[thecrow]

4. Who can afford it? Not me!

[NVMojo]

23. you don't need to buy gold, you can buy stock in gold mining companies

such as Newmont Gold or others. Nevada Pacific Gold. There are many. Look into it.

[Greyhound]

30. Or Silver? It's much more attainable and has appreciated even more. n/t

[JanusAscending]

7. This is ONE of the most important things I learned

from my dear departed Dad............beware.......when gold goes UP, the value of the dollar goes DOWN..........we are treading a very volatile precipice right now!! Could we be looking at another 1933 stock market folks???? This man knew his stocks and finances !!:scared:

[Sammy Pepys]

8. ...or we could be looking at...

new rules of correlation.

[Greyhound]

12. 'splain please... n/t

[Sammy Pepys]

15. As DC's dad said....

...when the dollar goes down, gold goes up...that is they're negatively correlated.

However, the current situation does not actually bear that out as clearly as you might think. The dollar has, in certain periods, actually moved with gold. Demand for physical gold (I believe you collect coins, do you not?) has added a new element to the whole mess. Gold traditionally is a used as a hedge against inflation in many portfolios that mostly consist of the traditional stuff like stocks and bonds, and not actually expected to provide significant returns. Gold used to be mocked as a loser. But the returns on it have been so unreal that people are treating it differently now....it actually has a return worth talking about. And I think the returns have encouraged people not to treat it as a hedge, but as a gain generator. Whether it can generate real long term returns is yet to be seen though.

Frankly, and this is just my personal theory, if gold gets to $1000/oz or so that will be the highest level it will reach and it will slide from there. I just don't think many people are going to be able to buy it in significant quantities at that price, nor consider the potential gains great enough to do so....most of gold gains will have already occurred by then. And one thing gold and other precious metals have not shed are their tendencies toward major volatility.....Buying something that high that has a good chance of suffering a significant slide does not an attraticve investment make. If I'm wrong, there's no skin off of my back...I carry gold/precious metals and related stocks in my portfolio too. I'm just keeping that exposure relatively low because I don't think the run will last.

[mslawstudent]

22. Precious Metal Markets Are Thin

The amount of silver and gold out there isn't that great. At current prices I believe I read superwealthy individual could buy all of it.

[Sammy Pepys]

26. ...and as the prices continue up....

...more and more buyers will be priced out of the markets. They're even getting too expensive for central banks.

[Greyhound]

9. Your father was a wise man.

That's the biggest reason for the rising prices, the BIG MONEY is dumping dollars because they are quickly becoming worthless. From billionaires to central banks and foreign governments, they are trading the dollars they've been holding and buying tangibles to retain value.

After raygun dismantled the safeguards that were put in place to prevent another debacle, they started the replay and this story only has one ending.

[NVMojo]

24. ...and he was right.

[screembloodymurder]

11. Gold will triple from here.

The dollar will lose 65% of it's value in the next 5 years.

[Greyhound]

40. Just an FYI. Did you know that the dollar has already lost over

95% of its value since the Fed was enacted?

[Greyhound]

13. and in further developments...

" CNBC hosted a debate with Phillip Gottheff (the bull) and Davide Dietze (the bear) this morning. Phillip easily won the debate stating ... "The gold market knows inflation is already here ... which helps explain the hysterical surge in prices this year... ETFs have expanded the metals market to now include institutional investors...With Goldman Saks forecasting $100+ oil I think we could see $1,000-1,500 gold easily... Why hoard? Because investors are afraid of paper. If we were to try to monetize our paper with gold the price would be in the $10,000/oz. - $20,000/oz. range." - 5/9/06

Emphasis is mine.

[ken solo]

16. What's up DU and What's all this gold hoopla about?

Hi all this is my first DU post.
I’ve been surfing here for a few months now. It’s very heartening to see a large net community with likeminded ideals and values. I have an econ undergrad so I take a little extra interest in this topic forum. Anyhow, on to gold…

This whole gold thing really looks like a speculative bubble to me. If you get into gold, watch it very closely because you may have little time to sell when the crash comes.

My point:
I understand that gold has value in industrial and technological applications. I don’t understand how gold as a currency has anymore intrinsic value than a fiat money system. i.e. Our money has value because we have faith that it is worth something. There is no doubt that gold is appreciating greatly vis a vis the US dollar, but again this strikes me as very speculative.

I fail to understand how gold would protect anyone during a period of hyperinflation. If hyperinflation is real and rampant, a barter system is much more likely to occur than simply exchanging fiat money for commodity money. I would be much more likely to exchange some tomatoes and beans from my garden for some fish from your stream as opposed to some gold shavings.

There certainly was and possibly still is an opportunity to make some speculative cash on gold right now, but I don’t think that gold holdings are any protection against actual hyperinflation.

This is all my opinion of course. As a progressive I’m open to receiving new information and learning from it. Anyone have a comment/correction?

Cheers,
ken solo

[Greyhound]

17. Welcome to DU

I'm sure we'll be talking, soon.

[Quequeg]

18. What happened in Weimar Germany in 1923?

Did gold serve as any protection for savings in Weimar Germany?

How about in more recent times, such as in some Latin American countries that have suffered hyper-inflation?

How about right now in Zimbabwe, which has 914% inflation?
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/05/02/MNG6VIJ1PL1.DTL

It would be interesting to look through history to see how useful gold has been during times of hyper-inflation.

Peter Bernstein wrote a book called "The Power of Gold." In an interview, he said he was surprised to learn how long gold has been used as a store of value.

http://www.wiley.com/WileyCDA/Section/id-7898.html
Question: What revelations about gold most surprised you?
Bernstein: I was struck by how important gold had been for so long—since the beginning of civilization. As I learned from the Croesus story—one of my favorite parts of the whole book—gold not only implied power and prestige, but became an internationally acceptable currency early in the world’s history. It’s amazing that the human response to gold is a universal phenomenon, common to people of every continent. Another aspect of gold I hadn’t really thought about is the aesthetic. Because gold is so malleable, as well as beautiful—a glimpse inside the Federal Reserve can really take your breath away—people can make wonderful works of art with it.

Gold has been used as a currency for more than 6000 years. We've only been off the gold standard since 1971.

[distantearlywarning]

19. Gold also protected some people during the Great Depression

People who converted their dollars to gold and stored it prior to the Depression did much better than others, and in fact some of them became quite wealthy.

[markam]

21. my thoughts

"I don’t understand how gold as a currency has anymore intrinsic value than a fiat money system."

just like fiat money, you can't eat, live in, or drive gold. In that sense, it has no more value. However, unlike fiat money, the government cannot print more gold to pay their debts. Right now, the government could double the money supply to pay it's debts. This, of course will simply cut the value of money in half, making you poorer. However, the price of commodities, including gold and silver, should double. If you have your wealth in commodities, you end up just as rich as before. As high value commodities, gold and silver are the easiest to store.

"I would be much more likely to exchange some tomatoes and beans from my garden for some fish from your stream as opposed to some gold shavings."

But suppose the guy with the fish doesn't need tomatoes and beans, he needs a new anvil. There is a guy in the next county that has an anvil available, but he needs shotgun shells. You then have to find somebody who has shotgun shells and needs tomatoes and beans. you then have to shlep over to the next county to exchange the shells for the anvil and then get it to the guy who has the fish.

Wouldn't it be a lot easier to just buy the fish with some gold, and let him worry about buying the anvil, and selling your beans and tomatoes to the guy that has shells and get some gold from him? The difficulty in efficient bartering was the reason that money was invented in the first place. Gold and silver have simply been the most efficient type of money since the beginning of civilization.

[ken solo]

28. RE #21 my thoughts....

"But suppose the guy with the fish doesn't need tomatoes and beans, he needs a new anvil. There is a guy in the next county that has an anvil available, but he needs shotgun shells. You then have to find somebody who has shotgun shells and needs tomatoes and beans. you then have to shlep over to the next county to exchange the shells for the anvil and then get it to the guy who has the fish."

I understand that a currency system is far more efficient than a barter system, its just that gold as a currency is not very efficient for the other reason you mention in your post: it is a slow and difficult process to add more gold currency to the money supply (gov can't make more). As a result, the gold currency that exists becomes more and more valuable leading to a scenario where I'm getting but a few shavings for my tomatoes and beans. We'd all carry around a little satchel of gold dust, trading a tiny pinch for goods and services. This is why cheap money always drives dear money out of exchange. any commodity as currency will eventually go by the wayside whether its a bushel of corn or gold coins.


"Wouldn't it be a lot easier to just buy the fish with some gold, and let him worry about buying the anvil, and selling your beans and tomatoes to the guy that has shells and get some gold from him? The difficulty in efficient bartering was the reason that money was invented in the first place. Gold and silver have simply been the most efficient type of money since the beginning of civilization."

again, I agree that any currency system is more efficient than a barter system. However, in a period of hyperinflation paper money is worthless, and gold would become too valuable to use as a currency. So where would that leave us??

BTW, your points are good ones. I'm just trying to carrying on what i consider to be a semi-intellectual discussion. FWIW i hope we put some adults back in charge soon and hyperinflation in modern US is relegated strictly to "what if" scenarios.

Cheers,

ken solo

[Bouvet_Island]

29. You ignore

that even though a US depression would affect the world economy, gold would translate to foreign valuta at a reasonable rate while dollars probably woulndn't. During the initial crisis, the increased trade and panic buying (maybe by mom and pop as well as the financial markets) would probably inflate gold a lot, and you could change to swiss francs or Norwegian kroners with high profit. This is economy 101, it aint demi glacé intellectualism. Lots of people would want to not live in the states, a Norwegian plumbers wage would carry your extended family.

I also think you don't realize completely the unique properties of gold, which is a) it doesn't corrode b) supply is limited and there is no new "big finds" likely. And even if someone found like half the worlds supplies on a shallow seabed somewhere, it likely wouldn't deflate prices that much. Platinum and titan as well have industrial uses and supply demand that makes it very interesting without a nucular Dollar, Titan prices quadrupled over not such a long time and we are not looking at any technology that could replace it in quite some years.

Its also interesting how the Chinese have positioned themselves, buying lots of the asian ore extraction on long term deals. I aint sure if the drop in demand for metals if the US sinks would affect prices much against the increased demand from the expansion of the pan asian economies.

[Greyhound]

38. The bottom line is that gold is unique, in that it is universally

recognized as inherently valuable. This makes it the universal base-line that all currencies are measured against, and this, in turn, makes it the best place to counteract the inevitable inflation caused by all fiat currencies.

[Greyhound]

20. A potential fly in the ointment, ironically brought to us by FDR in an

attempt to preserve the ruling class' power base:

The Gold Confiscation Of April 5, 1933
From: President of the United States Franklin Delano Roosevelt
To: The United States Congress
Dated: 5 April, 1933
Presidential Executive Order 6102

Forbidding the Hoarding of Gold Coin, Gold Bullion and Gold Certificates By virtue of the authority vested in me by Section 5(b) of the Act of October 6, 1917, as amended by Section 2 of the Act of March 9, 1933...

http://www.the-privateer.com/1933-gold-confiscation.html

[NVMojo]

25. ...and the Great Depression was when????

[Greyhound]

27. Began in 1929, went on, and on, until America entered WWII (1941).

I have a feeling you were trying to make a point, but it escaped me.

[Greyhound]

31. The correction may be through, although we could conceivably dip

to $550 and still be in a bull market. Summer is traditionally slower so we may not see +$700 for a while, but the trend is still very strong.

[Sammy Pepys]

32. I think it's beginning to top off....

I think we're looking at basically flat prices for a bit.

[Greyhound]

33. Up $ 13.40 in last three days? Does it seem a Little too volatile to you?n

:shrug:

[Sammy Pepys]

34. I think...

..we're going to get back up to $700ish and bang around there for a while, but not push too much higher in the near future. I don't think we'll see $800 for a while. Just my guess.

I think as gold gets back to it's safety roots it may stay pretty volatile.

[Greyhound]

39. The technical "experts" at my company are saying it might drop as low

as $500 - $525 before it begins the next round. I still think $800 - $850 this year. Still a secular bull with a minimum (historically) of 8 years to go.

[Sammy Pepys]

41. I don't even know what to think now....

...but I think $700ish will be the ceiling for the year, barring something major. I think $800 might be ambitious.

[Greyhound]

42. Well I'm basing my guess on the fact that this "rally" of the USD is

a phantom based on the hint that Bernanke dropped for just this reason. Nothing has really changed, the debt is still beyond the ability of a human mind to grasp, the deficit is still growing unhindered by any sane trade policy, the corporate architects of this fiasco are still in control of everything, and the "Big Money" is still running for the Euro and tangibles.

Never forget that the world markets are strictly controlled by those that benefit the most from it, watch what they do and get in fast and wait for them to signal the next move so you can get out.

[Sammy Pepys]

43. Good points...

Though if the Fed does hike interest rates again, which looks likely, that's not going to be good news for gold no matter how you slice it.

And gold is volatile anyway. What has it lost in the last month? 20 percent? In the short term, I'm not sure how much ground gold is going to be able to make up, especially if the dollar does keep strengthening. I think a ceiling for the rest of the year is starting to form.

[upi402]

35. Forums in other countries talk about dropping dollars

And silver, gold, and titanium are lauded as a safe home for dollars until the forex looks settled.
I don't claim to know, but gold sure seems like a safe-home as the US house of cards gets buffetted by our corporatocracy.

<snip>
Calling the dollar "terminally ill," Peter Grandich, editor of the Grandich Letter, said the currency is headed for a long-term retreat. "This in turn should be most beneficial to gold's long-term path -- up," he said.
<end>
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BEF20370C-219C-40E9-967A-64C6E91773F3%7D&siteid=google

[Monk06]

36. I interviewed Peter Grandich last year. He's neither a gold bug nor

a negative nelly on the dollar.

He's a very conservative analyst. When he gets
nervous and starts talking long term dollar
weakness, it would be wise to take him seriously.

Check out this gem by Paul van Eeden

http://www.321gold.com/editorials/vaneeden/vaneeden053006.html

[Sammy Pepys]

37. I think it's fair...

..to call Peter Grandich a gold bug.