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 Replies: 30 / Views: 3,127 |
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Pillar of the Community
 United States
1590 Posts |
More Bizarro News.
This from FUTURES magazine. Physical gold is down 11 percent year for year. Thirty percent in gold coins and bars. The higher price of physical gold is driving buyers away.
On the other hand the ETF market is up 56 percent because of QE3.
Which goes to show that the ETF market is totally disconnected from the real world.
I truly wonder what will happen when the ETF spot price hits $2500 and NO ONE IS BUYING PHYSICAL GOLD.
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Bedrock of the Community
13014 Posts |
As strange as that sounds with the gold market that actually makes sense to me. Some of it will be collectors being priced out of the physical or who decide to wait it out. While the number of collectors that can still afford gold is small, the number that would be willing/able to eat a loss if gold gets back to reasonable prices is even smaller. Theres also a lot more risk in physical gold. Gold has a long way to fall if prices normalize and selling during such a time would be very difficult with everyone trying to unload it. Its not likely itd happen tomorrow or next week ect but the fact it could happen carries a risk. But with paper even if it crashed in a day at any point you can just sell and salvage the money so theres a lot less risk involved.
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Pillar of the Community
United States
1126 Posts |
rgathright, From an actual metals traders point of view I was wondering if you could share your opinion of the 25,000 Gold contracts being dumped onto the market over the course of about 5 minutes Thursday at roughly the 9:40 a.m. mark.  (25,000 contracts is the paper equivalent of 2.5 million ounces of gold or, roughly, 77 metric tonnes 77 tonnes is the paper equivalent to the alleged physical holdings of Australia or Indonesia.) I am just looking for some honest opinions from those that operate in that world everyday. I feel it may be helpful to some of us that are trying to get our heads firmly wrapped around the workings of the metals market. Thank You Terry Edited by stewart
11/17/2012 06:31 am
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Pillar of the Community
United States
1590 Posts |
I understand Basebal. But I guess it irks me that all the....arguments that traders/shills use are reasons for the 'real world price of physical gold' to either go up or down.
Having said that is seems that they either don't actually look at what Gold is doing in the real world; or they just don't care. And all is smoke and mirrors by either bulls or bears to drive the price up or down in the 'imaginary market'.
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Bedrock of the Community
13014 Posts |
I honestly dont believe the hype that most of them have that gold is going to sky rocket to 5k an ounce ect. If they really thought that they wouldnt be selling at the moment. Plus at about 2k we see most people leave the market. It really does seem that all the experts advocating that have a person interest in it going up. I like to look more at sales figures for normal gold to get more of an idea what the everyday person is doing since they will have to be a part of it for gold to see such prices. Id buy it could touch that on a short term spike but not that it will stay there or even close to it for any significant amount of time
Personally I dont have a problem with the paper market, it can be a good way for people to pick up some extra cash if you time it right. Theres positives and negatives to everything and like we saw with the hunt brothers you dont need the paper market if you really want to try and influence the price so it kind of is what it is.
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Pillar of the Community
Japan
666 Posts |
what is one should be concerned about is printing press which is on "ON" mode throughout all developped countries, and there are no signs of turning off the price. There is almost perfect correlation between money printed and price of gold. So, while investing in the metal I count only for this printing press. Yeah, and I don't base my assumptions of gold price appreciation on this article but I could've as well: http://www.bloomberg.com/news/2012-...eo-says.htmlSilver ... the same reasoning, but I'm not sure about correlation of money printed with silver price. Saying that I am buying PMs as it is more stable than holding fiat. Next, why one would offload gold? Just to suffer the loss and to hold cash? So what one would do with cash? Gold is the money! Most owners of it know this fact. So no matter if fiat goes down or up the gold will be sold in order to fund some expense of particular seller. I don't about other sellers but how many of those sold after buying at 1900 and then gold being $1550 sold their metal? Any numbers to back the view? I believe, and the market availability and the price confirmed it at the time, there were no glut in supply of gold. And there will not be any on the market as soon as fiat stays alive. One piece of advice - if the PMs are for a long term - stay away from reading news hourly or daily ... it is an information noise that distorts the big picture. It would be better spend some time first to do a homework, recheck the results and then believe in yourself then relying on some kitco-pitco whose are in business of selling-buying, not holding. Edited by bekiz
11/17/2012 06:52 am
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Bedrock of the Community
13014 Posts |
Quote:
Next, why one would offload gold? Just to suffer the loss and to hold cash? Either way youve suffered the loss the only difference is one is a loss on paper. Quote:
So what one would do with cash? Buy things, pay bills ect Quote:
Gold is the money! I have to disagree with that. It is valuable no doubt and does have value with private trades but you cant go down to the store and give them an ounce of gold for groceries or pay your bills in it in unless you take a huge loss using the coin for face value. It could be different in Japan but thats how it is here in the US anyway. Quote:
And there will not be any on the market as soon as fiat stays alive. Could you explain that more, not sure I understand what you mean here |
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Pillar of the Community
Japan
666 Posts |
<<<<Either way youve suffered the loss the only difference is one is a loss on paper.>>>>
Loss is suffered when buying power going down.
If one is speculating - then he will suffer a loss. For the one who holds PM for a term longer then 5 years - profit is 99.99% sure thing.
<<<<Buy things, pay bills ect >>>>
agree, that should be only reason to sell PM - to fund expenses
<<<I have to disagree with that. It is valuable no doubt and does have value with private trades but you cant go down to the store and give them an ounce of gold for groceries or pay your bills in it in unless you take a huge loss using the coin for face value. It could be different in Japan but thats how it is here in the US anyway. >>>
the same as one doesn't go to the store in US with japanese yen trying to buy something ... no one will give a darn about yen in US, but yen is still money, right?!
Exchange one universal money(gold) to local money and you have what you want - buying power. Do you have problem of exchanging gold eagle for fiat in US? I think NO.
<<<Could you explain that more, not sure I understand what you mean here>>
Wanted to say that there is no surplus of gold, but surplus of fiat.
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Bedrock of the Community
13014 Posts |
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For the one who holds PM for a term longer then 5 years - profit is 99.99% sure thing. Thats not really true. Look at the 100 year price charts. For gold is you bought anytime in the 30s you had to wait till the 70s to get your money back or break even, it basically went down in price for 40 years. If you bought in the 70s or 80s you had to wait till 08/09 to get your money back or possibly make money, and if you bought at the wrong time in the 80s I dont think weve seen the 1850 an ounce yet again and if we did it wasnt for long. Silver is the same story. If you bought during WWI those prices werent seen again till the late 60s, 80s prices came back briefly. Its basically sat at between 5-10 dollars for the last 100 years with spikes here and there. The only thing driving the prices today to where they are is economic trouble which happens every few decades if that gets resolved or people feel better about it the prices will start to sink fast. Its entirely possible gold bought at these prices will have to wait till 2030 2040 to see that again. Profit is anything but a sure thing in any investment Quote:
Exchange one universal money(gold) to local money and you have what you want - buying power. Do you have problem of exchanging gold eagle for fiat in US? I think NO.
No you dont but youre more than likely going to take a loss when you do that which begs the question of why do that in the first place if your just constantly converting back and forth. You always buy over melt and have to sell undermelt so you take a loss without a rise in price and sometimes a significant rise in price. You can avoid some of that with paper pms but youd most likely be better off with it in the bank if you have to convert it a lot. Quote:
Wanted to say that there is no surplus of gold, but surplus of fiat. Maybe maybe not it depends where you get your figures from. Theres a ton of gold jewelery being melted and theres more gold reserves we havent found yet. Demand is also down with the current prices but we could be using more than were mining right now. How long that will be the case no one knows |
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Pillar of the Community
Japan
666 Posts |
Quote:
Thats not really true. Look at the 100 year price charts. For gold is you bought anytime in the 30s you had to wait till the 70s to get your money back or break even, it basically went down in price for 40 years. If you bought in the 70s or 80s you had to wait till 08/09 to get your money back or possibly make money, and if you bought at the wrong time in the 80s I dont think weve seen the 1850 an ounce yet again and if we did it wasnt for long.
Silver is the same story. If you bought during WWI those prices werent seen again till the late 60s, 80s prices came back briefly. Its basically sat at between 5-10 dollars for the last 100 years with spikes here and there. The only thing driving the prices today to where they are is economic trouble which happens every few decades if that gets resolved or people feel better about it the prices will start to sink fast. Its entirely possible gold bought at these prices will have to wait till 2030 2040 to see that again.
Profit is anything but a sure thing in any investment It is not wise to compare price when it is fixed with price determined by the laws of supply and demand That's why it would be better to compare buying power of the gold throughout several hundred years in comparison with fiat. Quote:
<<<<<No you dont but youre more than likely going to take a loss when you do that which begs the question of why do that in the first place if your just constantly converting back and forth. You always buy over melt and have to sell undermelt so you take a loss without a rise in price and sometimes a significant rise in price. You can avoid some of that with paper pms but youd most likely be better off with it in the bank if you have to convert it a lot. >>>> Ok, if you do it at the same second - buying and selling you suffer a loss ... no brainer. Now, let's consider buying and holding for 5 years ... do I need to tell that if you had fiat for years and gold - gold would be a sure winner, even if one payed 20% premium when buying it? Again, if you are judging from the point of speculator - the spread in PM might burn, but if one is an investor who is in my understanding a person who buys for a longterm basing on fundamentals then for the future it's much better to stay with money called gold then with money called USD, JPY, CHY, etc ... If you chose the later - good luck to you, but I wouldn't do it. Gold I've got year ago will bring me more today then if I had fiat ... even if I sell it under melt value ... why? Because developed world is printing and will print fiat - the world has to either default or print ... in either case PM is a winner ... as well as other hard assets. Quote:
Maybe maybe not it depends where you get your figures from. Theres a ton of gold jewelery being melted and theres more gold reserves we havent found yet. Demand is also down with the current prices but we could be using more than were mining right now. How long that will be the case no one knows>>>>>> read this please http://www.bloomberg.com/news/2012-...eo-says.htmlTon of gold jewelry ... 1 ton? Demand just from China is almost 1000 tons per year. Demand is down, right, but: <Global gold demand in Q3 2012 was 1,084.6 tonnes, down 11 per cent from the record Q3 2011 figure of 1,223.5 tonnes. However, the World Gold Council said that demand ‘remains resilient' ��" Q3 2012 was above the five year quarterly average of 984.7 tonnes.> http://www.cpifinancial.net/news/po...r-cent-in-q3As you see demand is lower but above the average ... and big boys a.k.a. Central Banks are buying it and I don't want to play the games against entities that are printing fiat and buying gold ... One wants to do it - good luck. Edited by bekiz
11/17/2012 10:09 pm
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Bedrock of the Community
13014 Posts |
Quote:
It is not wise to compare price when it is fixed with price determined by the laws of supply and demand
That's why it would be better to compare buying power of the gold throughout several hundred years in comparison with fiat. You have to convert it back to fiat for buying power, but if you look at it that way then its even more down from the 80s. 1600 then was worth more than 1600 now and it saw its highest price in the 80s. Its price has to go up to keep up with inflation for the buying power and its hasnt steadily climbed over time so really it would be deminishing without the spikes during times of uncertainty. Quote:
Now, let's consider buying and holding for 5 years ... do I need to tell that if you had fiat for years and gold - gold would be a sure winner, even if one payed 20% premium when buying it? You can tell me that but I wont believe you. The price chart of gold doesn't support that either. Quote:
Gold I've got year ago will bring me more today then if I had fiat ... even if I sell it under melt value ... why? Again though thats not true, you have to convert it to fiat to actually buy things with it. If your selling it for less than you paid youve lost value. Even if you sell it for exactly what you paid you lost value from inflation and lost out on interest. It HAS to be higher for it to bring you more than what you paid for it would have Quote:
As you see demand is lower but above the average ... and big boys a.k.a. Central Banks are buying it and I don't want to play the games against entities that are printing fiat and buying gold Were in a downturn in the economy and will be for a few more years demand is exactly where its expected to be. It also goes up during recessions/depressions. Banks are buying, but they always have been and always will be. They have financial incentives tax wise and asset wise for what they can do having large gold reserves. I get the diversifying and having a PM in case SHTF (silver would be better for that though) but theres nothing to support that buying gold and holding it long term guarantees a greater return in the future than the present time. Until a PM can be used as actual money for its metal content its value is how much fiat you can get for it. Even with printing if fiat gets inflated the price of gold goes up because the dollar is weaker. But that doesn't mean that you can now get more things for the gold, it just means things cost more. If you buy for 1500 and sell for 2500k inflation could cover that spread from the printing which isn't a gain in value its just holding ground. But like the people in the 80s who bought at 1600 or 1800+ they saw no gain. They saw a massive loss both in inflation and the actual money number they could get for their gold. Theres numerous examples of that in history, a gain is anything but a sure thing |
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Pillar of the Community
Japan
666 Posts |
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You have to convert it back to fiat for buying power, but if you look at it that way then its even more down from the 80s. 1600 then was worth more than 1600 now and it saw its highest price in the 80s. Its price has to go up to keep up with inflation for the buying power and its hasnt steadily climbed over time so really it would be deminishing without the spikes during times of uncertainty.
right ... but if you have kept $800 (that's what was the price of gold back then right?) until now you would lose much more ... right? So, gold is a better protection against inflation then fiat. Quote:
You can tell me that but I wont believe you. The price chart of gold doesn't support that either.
I'm not writing it to make you believe in anything. 5 years ago gold was 600-700 USD ... believe it or not it is higher today. Quote:
Again though thats not true, you have to convert it to fiat to actually buy things with it. If your selling it for less than you paid youve lost value. Even if you sell it for exactly what you paid you lost value from inflation and lost out on interest. It HAS to be higher for it to bring you more than what you paid for it would have other than exchanging gold for fiat the rest is wrong Quote:
Were in a downturn in the economy and will be for a few more years demand is exactly where its expected to be. It also goes up during recessions/depressions. Banks are buying, but they always have been and always will be. They have financial incentives tax wise and asset wise for what they can do having large gold reserves.
you are too optimistic ... downturn for 5 years at least ... Quote:
I get the diversifying and having a PM in case SHTF (silver would be better for that though) but theres nothing to support that buying gold and holding it long term guarantees a greater return in the future than the present time. agree, but if to compare holding paper to hard asset - I prefer hard asset because it is antifragile (the term introduced by Taleb in his last book) and it proved throughout centuries that fiat goes away, PM survives ... Finding short periods in history where things were different makes all the decisions based on those short periods' studies flawed. Quote:
Until a PM can be used as actual money for its metal content its value is how much fiat you can get for it. Even with printing if fiat gets inflated the price of gold goes up because the dollar is weaker. But that doesn't mean that you can now get more things for the gold, it just means things cost more. If you buy for 1500 and sell for 2500k inflation could cover that spread from the printing which isn't a gain in value its just holding ground. But like the people in the 80s who bought at 1600 or 1800+ they saw no gain. They saw a massive loss both in inflation and the actual money number they could get for their gold. Theres numerous examples of that in history, a gain is anything but a sure thing here it is too long to explain and will require to read some books regarding the policy undertaken that time and now ... as well as study why now is different than it was back then Again, I don't want to turn anyones opinion towards buying any idea ... you don't like gold - so be it. You think it's overvalued?! Why not. Ok! So be it. I don't have crystal ball but just common sense and ability to crunch data and see what's going on and where all the nations are heading. So that's just my view against yours, nothing more. Only time will tell who wins: fiat or gold. |
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Bedrock of the Community
13014 Posts |
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right ... but if you have kept $800 (that's what was the price of gold back then right?) until now you would lose much more ... right?
So, gold is a better protection against inflation then fiat. In that instance thats true, but thats a 3 year time span. There MANY more instances were the reverse is true. It can be better protection in short term periods but over the super long haul history would disagree. Quote:
5 years ago gold was 600-700 USD ... believe it or not it is higher today. And 12 years ago gold was going down. You cant use 1 5 year span and say its true forever. Look at the 100 year price chart history if you dont believe me. http://www.macrotrends.org/1333/gol...orical-chartQuote:
other than exchanging gold for fiat the rest is wrong
No its not if you buy something for 1700 and sell it for 1500 youve lost value. If you buy something for 1500 and sell it 5 years later for 1500 youve lost value since you could have bought more with 1500 5 years prior. Quote:
you are too optimistic ... downturn for 5 years at least ...
Probably but golds already at about the max level it can be supported at. The more expensive it gets the less people buy and it gets knocked back down. Quote:
agree, but if to compare holding paper to hard asset - I prefer hard asset because it is antifragile (the term introduced by Taleb in his last book) and it proved throughout centuries that fiat goes away, PM survives ... Finding short periods in history where things were different makes all the decisions based on those short periods' studies flawed. 100 modern years is really whats relevant for us with how society has changed. Things that happened in the old Roman times dont really apply, we cant survive on our own like they did anymore. But like I said if you want it in case SHTF thats one thing I'm just saying its not an assured winner for investments. Quote:
as well as study why now is different than it was back then It is different in some ways as Obama won where Carter lost and we have healthcare coming up. But in a lot of ways its the same, if they have to just flat out lie the world wont let all money collapse which would happen if the US economy crumbled. Theres far to much to lose if that happens But you seemed to have changed from investment reasons to SHTF reasons where the reasoning is completely different and I cant really tell which one youre advocating for |
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Pillar of the Community
United States
1590 Posts |
Gold demand is up as far as the Central Banks are concerned. However; the common person is buying much less gold.
I have been quite frank that as a dealer my sales are down by 90 percent from this time last year. The same is true of most of the dealers I am involved with.
That is not to say that if YOU, the potential buyer, were to ask them if their sales are down; that they would tell you the truth. After all how much can we sell if we tell you that demand is down? And if there was no problem selling most still wouldn't tell you that demand is down so that YOU the buyer don't have the ammunition to "talk us down" on the price.
Take a look at Morgans for a moment. In 2007 common date Morgans (i.e. 1883P, 1896P, 1881S, ect) were selling for $17 to $25. In 2009 those same Morgans were selling for $28 to $32. Now most B and M's sell those Morgans for $40 to $50. Why? Because the bullion price caused the intrinsic value to rise more than the numismatic value. Many dealers bought high and are now stuck with merchandise they paid $30 to $35 for. These same dealers refuse to sell at a loss.
The current intrinsic value of that same Morgan is about $23. To make a sale the dealer is going to tell you about the "great investment track record" of Morgans. They are NOT going to tell you that they have lost money and NEED to sell the inventory they bought high, at a price point that makes them money.
Dealers usually don't cost average. They are very comfortable buying a coin at spot, for say $10, and then when spot goes waaaaaay up, selling at $20. They are not comfortable at buying at $20 and selling $10.
By the way, this is the reason a great many bullion buyers have gone out of business. I know one dealer that bought and stacked when the spot prices were high. Most of us did. It was almost impossible to keep up with all the customers that wanted to sell when Silver went above $35/oz. He now has a huge stack of Silver; and no business. He has no way to pay his business expenses but to sell at a loss. Which he is unwilling to do. Now he sits and waits for Silver to spike so he can sell.
Funny thing that. The last time it spiked, there were very, very few buyers. And the smelters were NOT taking orders. It seems too many people got burned buying high.
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Pillar of the Community
United States
4008 Posts |
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Replies: 30 / Views: 3,127 |
First Page
Posted 11/16/2012 8:18 pm
