interesting read on gold prices

[goldenIrishman]

Found this and though some others here might be interested in it:

Falling gold price is cause for optimism - Business Insider

Considering that Gold prices are way down at this time, those of us that mine for a living want to see prices stay high.

 

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[goldenIrishman]

Very interesting articles Dave. I had suspected that it was some kind of s**t being pulled by someone. Whomever was responsible was well informed and they had to have set this up well in advance and were ready to pounce when the time was right. That they timed it to coincide with a holiday where the Japanese market was closed shows how well thought out their plan was.

Very few groups have the ability to pull something like this off but even with that short list I doubt that anyone other than those involved will ever know who did this.

 

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[goldenIrishman]

I can't speak for others but I'm strictly gold. Of course if I was to come across some nice gems or other metals.....

 

[Adventure_Time]

Throwing a prediction out there, gold will be 1500-1600oz in the month preceding the 2016 primary. Who gets elected obviously dictates where it goes from there, but unless Mary F***in Poppins shows up to run as a candidate... people should lose their minds this go around.

 

[Medina Joe]

Link for diamonds. I agree its all cycles

The price of diamonds is collapsing - Business Insider

 

[Medina Joe]

This is from Martin Armstrong about gold


With your recent comments on gold; you seem to be implicitly suggesting people to sell their gold, since there is a good chance for it to bottom-out at a sub-$1000 level. Wouldn’t it make far more sense to hold onto it at least till November?

1) We don’t know for sure whether some of the central banks actually have all the gold they claim to hold:

2) Not all of the large scale gold transactions are performed overtly:

3) The gold accounts without physical holding/delivery go unaccounted in the total global demand for gold.

Kind regards,

REPLY: It is irrelevant whether or not there is gold in Fort Knox. The chance of anyone in government admitting to such a fact is at ZERO. Most of these scenarios are meaningless. It all depends simply upon the overall belief in government by the masses, not those predisposed to buy gold, for they will believe anything that supports a predisposed bullish bias.

The question as to what to do if you hold physical gold is a separate issue from “investing” in gold. Sure, I own $20 gold pieces and give them as gifts to the children in the family on their birthdays. That is really for Plan B. My concern is not with such physical basic holdings that you should have a hedge; my concern is when the gold promoters tell people that ONLY gold will rise and everything else will crash and burn. That is the snake oil fraud, which has no support in history whatsoever.

ctrl_alt_del

If we as a civilization self-destruct because of the greed of politicians and go all the way to a Mad Max event, then even gold will have no value. A complete control-alt-delete reboot would reset the stage and the only thing of value would be food. Not even gold would have value for historically it only came to have value as a luxury, not for a practical utilitarian purpose.

It is sheer madness to have gold as your total portfolio investment. If you have some gold and it is a VERY SMALL proportion of your net worth, fine, but ask yourself the question: Can you survive a drop to the Yearly Bearish Reversal lying at $681? That is your max risk so that is what you must consider. Otherwise, you will panic at the low and will have no other choice but to sell everything. Then when a rally begins, you will not be there.

An experienced trader who survives NEVER enters a trade without knowing where he is right and where he is wrong. If you keep making excuses for losses and hold your position all the time, you will lose your confidence and conviction and never see the light of day. That is a fool’s game and anyone who advises that is by no means an analyst. The BUY & HOLD advice applied to stocks, gold, silver, etc. has NEVER been correct. You may have bought gold when it broke $1,000 on the upside before 2011. Nice, but did you sell when it came close to $2,000? If you did not sell, then you are in danger of enduring losses you perhaps may not be able to withstand.

The gold bugs believe only in gold and cannot see reality. There is nothing wrong with selling at $2,000 and buying twice as much at the low. Anyone who argues against such a strategy is a promoter whose advice you should not take. Such a message is that no one can forecast anything, so just buy and you will eventually be right like some broken clock twice a day for a second. That sales pitch ruined stock investors during the Great Depression. Is your family’s survival worth such a fool’s game?

 

[kayakpat]

Gold has very little practical real world uses, Gold market are a snake oil scam, sold on fear. but makes beautiful jewelry

 

[KevinInColorado]

Gold has very little practical real world uses, Gold market are a snake oil scam, sold on fear. but makes beautiful jewelry

Actually that is no longer true. We use a lot of gold for computing circuitry as the data loss/corruption is eliminated. Every piece of electronics and every data/TV cable has gold these days. About $1 of gold per iPhone for example. It adds up fast though.

Of course you are right about the major use being jewelry. As the Chinese and Indians get more affluent they are buying a lot more gold. The rising middle class in India is buying so much gold (almost all imported) that it is affecting their currency value vs other currencies...this led the government to impose a 6% tax on imported gold. They use the tax collections to prop up their currency...balancing out the affect of the gold importation. (Eg the Indian women I work with are wearing about a pound of gold on their wedding day, all 20-22 karat! They own ALL of it, nothing loaned to them!!)

My point, there are a LOT of factors pushing and pulling on gold supplies and prices. As others have said, I think the long term trend will be up due to:
- rising middle classes in Indian and China
- increased use (and lack of recycling) in electronics and wiring
- fiat currency inflation (even target inflation rates of 2% add up to a lot over a lifetime!)
- increased average saving rate in the U.S. We have gone from a savings rate of almost 0% of household income a decade ago to 5.5% now...some of that savings goes into gold

Market manipulation is certainly a factor in the shorter term. My comments are around the loooonger term macro trend supporting factors.

 

[Adventure_Time]

Gold has very little practical real world uses, Gold market are a snake oil scam, sold on fear. but makes beautiful jewelry

Gold is a very essential component in advanced and even basic electronics utilizing circuit boards, as technology advances so does our need for gold. Even if everything went to hell once the smoke cleared we'd have to reestablish a currency system and survey says gold comes back into play time and time again. During a collapse scenario govts would still have a vested interest in electronics manufacturing for obvious reasons. Gold is not going anywhere regardless of what happens in any of our lifetimes.

 

[Mad Machinist]

Thanks for your perspective MadMachinist. I have an entirely different view of the markets.

If you could name just one Major that isn't underwater on their gold hedges I'd give some thought to your theory. China is the worlds biggest gold miner and they don't sell any of their production. China has been producing about 450 tons a year and buying another 1,400 tons from foreign sources. That leaves about 600 tons of annual production for the rest of the world. There are plenty of willing buyers at these prices.

It certainly isn't a supply/demand market price. You would know that if you ever made a call for delivery. Paper gold and metallic gold are two different markets now. Just try to get delivery on a COMEX contract of certified good delivery bars at paper prices and listen to the laughter from the repository. It ain't gonna happen.

You are right though that the Juniors with low proven reserves are dying like flies, it happens with every market drop, as always. As long as investors are greedy and looking for 10 baggers that will remain a problem. Investors have the attention span of fleas these days. I don't know how that would help the majors though, they aren't buying juniors and they aren't doing exploration work anymore.

I work with several Juniors that are well funded but new funding is a long way off. We also work with a few Capital groups that are eager to provide bridge funding in the 5 mil range to Juniors with established projects. No proven reserves = no funding. They could buy paper gold if they wanted to gamble. More than 5 mil bridge funding is rarer than hen's teeth these days. Nobody is going to pony up for a new mine with this rigged paper market.

I have no doubt that the commodity and equity markets are manipulated. If you look beyond the mining business it seems obvious that it's a much bigger game than current supply from mining. I'm betting when the market breaks to the upside you won't be able to buy physical gold. I'll also bet you won't be able to get cash funding for less than 26%. That's a different game from mining altogether.

Heavy Pans

You may be right. I maybe right. Hell we may both be wrong.

I am simply basing my thoughts on what happened and is happening with my little venture right now. When I came in they were property rich and equipment poor with no avenues to gain new funding. They burned up everything in buying property and mineral rights without thought of where the development money was coming from.

I did a fire sale on some of the property to generate capitol and all the propertied ended up in the hands of the majors. It my have been a fluke, it may not have been. I don't know. I do know the properties didn't last long and I had no problem getting rid of them at fair prices.

Actual mining for me is still a few years out. Need to complete drilling to find proven and probable resources and get equipment in place.

What is going on right now doesn't effect me much, I'm just sitting back and watching.

But some food for thought, other than Pebble Beach, when was the last world class mineral deposit discovered? Only a few in the last 5-10 years that I can think of. So lock up the smaller deposits for when the major deposits run out and the commodities prices skyrocket.

 

[benny]

I don't know if there's any truth in this, but it occured to me that the value of everything used to be defined by the value of gold. Might be something else that even gold value is defined by now. It takes energy to process, harvest, or manufacture anything. The price for that could be defined by the amount of oil (energy) required. So, if the price of oil drops $30/barrel, and it takes 10 barrels of oil to produce enough diesel, etc to process enough ore to get an ounce of gold, then the price of that oil defines that price that the gold can be sold for. Price of oil drops; price of gold drops.

Course, I could just be full of it.

 

[Duckshot]

The US Dollar is based on the Spanish milled dollar and in fact is a unit of silver. When the US adopted the dollar, gold was used by the USA only to add market liquidity and to aid international trade with countries that had a gold standard.

Or, so I have been told.

 

[Medina Joe]

You may be right. I maybe right. Hell we may both be wrong.

I am simply basing my thoughts on what happened and is happening with my little venture right now. When I came in they were property rich and equipment poor with no avenues to gain new funding. They burned up everything in buying property and mineral rights without thought of where the development money was coming from.

I did a fire sale on some of the property to generate capitol and all the propertied ended up in the hands of the majors. It my have been a fluke, it may not have been. I don't know. I do know the properties didn't last long and I had no problem getting rid of them at fair prices.

Actual mining for me is still a few years out. Need to complete drilling to find proven and probable resources and get equipment in place.

What is going on right now doesn't effect me much, I'm just sitting back and watching.

But some food for thought, other than Pebble Beach, when was the last world class mineral deposit discovered? Only a few in the last 5-10 years that I can think of. So lock up the smaller deposits for when the major deposits run out and the commodities prices skyrocket.

A new discovery of gold has been made and the quantity expected is up to 46,000 tons of gold, whose market value is estimated to 298 billion US dollars if the market stays the same. The entire USA gold reserve is 8,000 tons. So we are talking about a sizable discovery in the Sudan.


There are still the Gold Promoters who claim they can prove that paper gold suppresses the gold price. If that were true, it would apply to all futures, and besides that fact, they have no problem when gold rallies in the futures market. If their theory were correct, then why buy gold. Give up and buy stocks.

“Paper Gold” is the ONLY reason gold is a viable market. Without a central clearing house, any commodity becomes illiquid. How do you price it? It become like art. Its value become a matter of opinion. You only hear how “Paper Gold” suppresses the gold price in a bear market. During bull markets, they love the futures markets. Could just be that these people are just hopelessly biased and desperate to try to explain why they are in a losing trade?

Still others cry that demand has risen and the US mint had to stop production to keep up with the demand and that means gold is suppressed by paper gold elaborately resorting to supply-demand theories. What they totally ignore is that at the peak in markets, it is the demand for futures because the bulk of people “trade” and do not want to physically take possession of gold. They trade on leverage. These promoters totally ignore the fact that is is the concentration of capital into a single sector that creates the Phase Transition or the flight of capital that creates the Waterfall. They come up with elaborate theories to explain why they are wrong when in fact they do not understand that EVERYTHING rises and falls in value. It is not even that people fall out of love with gold, it is the simple fact that they can make more money elsewhere.

this is martin armstrong writing not mine.

 

[Duckshot]

"Martin Armstrong" sounds unaware of supply and demand,, a basic market principle. When you increase the supply of a good or service the price falls to meet demand. Gold whose existence is dependent on a fraudulent piece of paper will most certainly increase the supply of gold so long as people believe that paper is identical to gold.

Not only that, but the supply of dollars increases constantly due to inflation and fractional reserve banking. If the dollar was based on gold the price of gold should rise in proportion to inflation, like stocks have been doing lately.

This ain't rocket surgery.

 

[Medina Joe]

Go read his blog duckshot. i did not post the whole thing.

 

[Goldwasher]

if you don't think gold will matter when " the smoke clears"...you can send it to me I'll at it to my worthless pile

 

[Clay Diggins]

“Paper Gold” is the ONLY reason gold is a viable market. Without a central clearing house, any commodity becomes illiquid. How do you price it? It become like art. Its value become a matter of opinion.

This is untrue.

Gold is a commodity just like corn, coal or oil. Gold is physically traded daily just like corn, coal or oil. Martin Armstrong knows this so either you have misunderstood his writings or he has become senile from his years in prison.

There are several major clearing houses besides the New York COMEX (Commodity Exchange Inc.) clearinghouse. Some like COMEX allow cash settlement of futures but the largest gold markets in the world don't trade in paper gold at all - the actual metallic gold is transferred in a trade. The biggest buyers and seller of physical gold are central banks.

Paper gold is a bet on a future price of the commodity gold. It's like betting on a ballgame - it's not the same as playing in the ballgame. There is no ball.

If there was no real market for physical gold I'm pretty sure it would not be mined. You might argue that value is based on the trading volume or profit potential with intangible things like bitcoin but when it comes to gold, iron, corn or fertilizer the value is based on the need for those commodities. No gold colored paper and no B.S. could ever substitute for real gold or real fertilizer in the real world. Just ask Apple if they will be settling for paper.

Heavy Pans

 

[Mad Machinist]

A new discovery of gold has been made and the quantity expected is up to 46,000 tons of gold, whose market value is estimated to 298 billion US dollars if the market stays the same. The entire USA gold reserve is 8,000 tons. So we are talking about a sizable discovery in the Sudan.

That deposit might as well be on the moon. When you consider the political instability along with the sheer lack of infrastructure, like roads and power, in Africa, it does not make sense to try and mine there. In fact, First Quantum just shuttered one of it's copper/gold mines there for the lack of power.

First Quantum says Zambia power cuts hit mining operations | Mining News

When the warlords over there finally pull there craniums from their colorectal canals and work together, mining in Africa is going to become a losing proposition.

 

[Duckshot]

Go read his blog duckshot. i did not post the whole thing.

Please do not take offense M-Joe, but Armstrong is preaching religion here.

These promoters totally ignore the fact that is is the concentration of capital into a single sector that creates the Phase Transition or the flight of capital that creates the Waterfall. They come up with elaborate theories to explain why they are wrong when in fact they do not understand that EVERYTHING rises and falls in value. It is not even that people fall out of love with gold, it is the simple fact that they can make more money elsewhere.

I have no faith in Martin Armstrong. He is leading his flock into elaborate theory, which the same thing he spouts off about being against.

 

[Mad Machinist]

I know little about paper gold and futures....From a very small scale, I can see where it would cause a problem if it works like this on bigger scales. If I committed to a certain amount every month and I couldn't meet that amount I would lose my price. I would get less, and may even lose the contract with the refiner.(never ran into that problem ) You could also call up at anytime and get your percentage on spot at that moment, with the promise that an amount of physical gold was sent in before such and such time. Usually 24 to 48 hours. They would even transfer the money into your account before receiving the gold. And it's sold before they even get it from you!(from what I understand)

I haven't been around it in a few years so maybe things have changed.

If it works like this on huge scales I can see where problems come up with paper or buying and selling before it's actually in their hand! Get one big guy that can't meet or messes up a transaction and it would have a Domino effect.

Too many things need to happen too quickly with a real serious chance of something messing up along the line. I'll take physical gold any day.

 

[TheRingFinder]

I can tell you exactly what Gold prices will do:

They will either stay the same, go up or go down. I have insider information and know this for a fact!