Gold

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[quote author="acpme" date=1227237341]question: for those of you who fear the repercussions of current events translating into massive inflation, why not buy TIPS? the rest of the mkt has dumped them and they're trading at a huge discount right now. real 3% yield right now.</blockquote>


I am under the impression that TIPS are dependent upon the government calculated CPI, which I do not trust as far as ...
 
[quote author="awgee" date=1227241780][quote author="acpme" date=1227237341]question: for those of you who fear the repercussions of current events translating into massive inflation, why not buy TIPS? the rest of the mkt has dumped them and they're trading at a huge discount right now. real 3% yield right now.</blockquote>


I am under the impression that TIPS are dependent upon the government calculated CPI, which I do not trust as far as ...</blockquote>


Y not? And I'm sure you think the fox is a bad candidate for gaurding the hen house as well.
 
[quote author="IrvineRenter" date=1227318275]Gold is kicking butt today: 11/21/2008</blockquote>


I think a close above $900 will have me convinced. I still think there will be some forced selling into December.
 
<a href="http://www.tulving.com/goldbull.html">no</a>





<a href="http://finance.yahoo.com/echarts?s=SWC#chart1:symbol=swc;range=5d;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined">the miner equivalent (also check PAL)</a>
 
[quote author="Astute Observer" date=1227365966]awgee, does the same discrepancy applies to the Pt and Pd market? Or they are only for Au and Ag?</blockquote>


I dunno. Sorry.
 
Awgee, why do you put Paper Minth so low in your list. This article from Europacific seems pretty convincing. It's always good to hear contrarian opinions...helps you form your judgment!



<a href="http://www.europac.net/investment_perth_best.asp">Perth</a>
 
"I believe that ultimately we will come to view the commodity rise that included gold and oil as just the last of the speculative bubbles and will wonder why it took so long for gold to roll over and die. I will slightly alter my prior conclusion and say that if you are considering gold as an inflation hedge, you should take a look around you. Gold remains a sucker's bet..."



<a href="http://seekingalpha.com/article/109582-own-gold-time-to-fold?ref=patrick.net">Own Gold? Time to Fold</a>
 
[quote author="morekaos" date=1229134156]"I believe that ultimately we will come to view the commodity rise that included gold and oil as just the last of the speculative bubbles and will wonder why it took so long for gold to roll over and die. I will slightly alter my prior conclusion and say that if you are considering gold as an inflation hedge, you should take a look around you. Gold remains a sucker's bet..."



<a href="http://seekingalpha.com/article/109582-own-gold-time-to-fold?ref=patrick.net">Own Gold? Time to Fold</a></blockquote>


<em>Consider the Japanese example, as it seems very analagous to ours. Short-term rates have been low there for quite some time, but there hasn't been any sign of inflation.</em>



Same crisis, different set of ideas and culture. Very flawed argument.
 
[quote author="morekaos" date=1229134156]"I believe that ultimately we will come to view the commodity rise that included gold and oil as just the last of the speculative bubbles and will wonder why it took so long for gold to roll over and die. I will slightly alter my prior conclusion and say that if you are considering gold as an inflation hedge, you should take a look around you. Gold remains a sucker's bet..."



<a href="http://seekingalpha.com/article/109582-own-gold-time-to-fold?ref=patrick.net">Own Gold? Time to Fold</a></blockquote>


<img src="http://static.seekingalpha.com/uploads/2008/4/1/alanbrochsteinnew.jpg" alt="" />



I would not believe a word this guy says... look at him... he's gotta be trying to sell something
 
Care to put this into context? My knowledge of the commodities market ends at "if you don't sell before delivery date you end up with "x" bushels of corn on your doorstep". While I wouldn't think a gold delivery would be a bad thing, I'm not certain what this means for the rest of the gold market.
 
[quote author="Oscar" date=1229316080]

Care to put this into context? My knowledge of the commodities market ends at "if you don't sell before delivery date you end up with "x" bushels of corn on your doorstep". While I wouldn't think a gold delivery would be a bad thing, I'm not certain what this means for the rest of the gold market.</blockquote>


Adding to awgee's insights, seeing as how there is already a shortage of physical gold and premiums are running high on ebay, a shortage of gold on the comex should send prices higher. How high is anyone's guess, but there are a lot of short positions in gold. And with the recent volatility and lack of credit, supply is short. A lot of projects have been canceled or put in maintenance status because the gold miners need a steady $850 gold price to be profitable. The junior miners are already being consolidating or receiving buy-out bids (check Orezone, Mag Silver).
 
Awgee, after reading your reply, I found this <a href="http://meltdown2011.wordpress.com/category/silver-gold/vaporize-comex-countdown/">website</a> while searching for the number of registered ounces at Comex.



From the site:

<blockquote>COMEX trades hundreds of times more gold & silver than they actually possess. If enough investors demand delivery of PHYSICAL gold & silver COMEX stockpiles will be depleted. If COMEX runs out, the ensuing rush to grab physical metal to settle contract obligations *could* be the spark that ignites the long-awaited precious metals wildfire.</blockquote>


Now consider this passage from <a href="http://seekingalpha.com/article/94111-gold-futures-dirty-secret-part-ii">this September article</a>:

<blockquote>So the supply in the cash market has really been a short covering of the futures market for lack of a better word. Just look at what these markets are telling us. The cash market is telling me I can?t even buy gold because there is next to none for sale. The futures market is telling me that I can buy gold at just over $800/oz. Considering the current and expected monetary inflation, $800/oz is dirt cheap.

What do I expect? Well, I expect the futures market to freeze up just like the cash market already is. It is the ONLY possibility at this point. There are many of you who have read this far and are probably screaming at the computer that a freeze in the gold futures market is impossible.

...

Personally, while the gold carry traders are rolling over their now diminished shorts, I will be rolling over my long positions. I have and will continually use both the options and futures markets to grow capital. I promise you this: when the futures market does freeze, I will have a sizeable long position on that which will have grown exponentially leading up to the fireworks, <strong>because when the market freezes, you will no longer be able to get long these markets</strong>. I wonder how regulators will handle that. Maybe they?ll take the speculators out and hang them.

</blockquote>


Individually, those disparate websites don't mean much. But if, and I really have to stress *if*, those who wish to take physical delivery are actually capable of driving up the price of gold (or drive up the price on the futures market without crashing the price on the physical market), I could see a panic ensue that feeds on itself. But I really don't have much faith that it would fool the big boys into mistaking a temporary panic for a fundamental shift in inflation-driven price rises. That temporary price spike will be good for some quick profits, but I don't see how those taking delivery prevent more physical metal from being registered with the Comex by Central Banks and producers, effectively undoing everything the long traders are trying to accomplish.
 
While there is not a shortage per say in obtaining gold through some dealers, I will say that I see gold flying off the shelves, as I mentioned earlier in this thread. I was watching a particular product, waiting for the price to go down, and a few days later, sold out. And this was while the gold price was slowly making its way up from $700 after the start of deleveraging.



You do make a good point about the buillion banks. I believe they hold a good amount of the existing supply, so if they wanted to (though I doubt they would) they could put up for sale their supply. If anything Goldman Sachs turning net long is a sign that they have a good idea of what's coming.



I have yet to hear (I go through a few presentations and listen to interviews of the gold miners) of major cost savings due to the commodities drop. I think the bigger issue is the cost to build the mine and the facilities. For example, Oceanagold was slated to build a $180m mine, but due to the commodities runup, their costs ballooned up to $320m, and they have it mothballed. Cash is still king at the moment until the credit market frees up.
 
Maybe I should slowly start bulking up on gold and silver... 80:20 or something like that. My question is what about Platinum... i still have a few pieces laying about that I'm wondering what to do with....

any ideas?

-bix
 
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