The price of the gold will go $1,500/ounce this year

This thread is for views on prices of any precious metal, (or $ value vs. gold etc.) despite the name - Mod added this first line.

What can you learn from this whole page of advertisement in Mercury News on Aug. 24, 2009?

Gold price in August was around $950/ounce. The company which advertised in paper for sure is not a charitable institution. When it pays big money to rent hotels and put advertisement to collect gold from area to area, how much do you think they expect to make in future gold market?

Now media repeats on foreclosure and unemployment news, it pushes people to sell gold and jewellry to speculators. The next financial tsunami will be a gold bubble. At that time, the topic in media will change into "inflation". It will then advise you to buy back gold. This is how people being manipulated the financial group who controls this country by media and intelligence.

 

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where does the above quote come from?
Is that your personal opinion or was it stated in the AD you're quoting from?

 

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I sure hope so. I bought a ton when it was $300/oz.

 

Have that, too. My financial peeps are way ahead of me.

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Billy T replied to nirakar:

For same reason Brazil does. Namely when there is a flood of dollars in to the country the local currency will become more valuable (simple supply vs demand) That hurts the country's exporters, so to help keep exports up, the central bank buys dollars. For a while (pre-dollar run) the gain with saved exports is greater than the loss in central bank reserves with the droping value of the dollar.

Today Brazil added a 2% tax on money coming into or leaving Brazil. (called IOF which transaltes as tax on financial movements.)
Brazil hgas been badly hurt by the US pumping out liquidity as has one of the world's highest real interest rates. I.e. there is a large "dollar carry trade" (borrow at low cost in US and invest in Brazil) Now the two way 4% burden on that carry trade will nearly shut it down - same as if the FED bumped interest rates up 4%.

Brazil has had enough of this "damage Brazil's exporters to help the US recover" (from trouble it caused the entire world) so acted today in self defense. China may too, but is more dependant than Brazil on FDI to grow internally.

PS please bear with me (Billy T) - I think I have recovered all the information I accidently screwed up as inexperienced new mod, but it is not back into original form. Again I am very sorry.

 

Corrupt dealers are cashing in on Gold, headlined as being at a premium price.
They are buying scrap Gold, but not at its market price.
They spend a lot on advertising and arranging easy ways to sell gold, but some pay as little as 20% of scrap value.
Shop around, and you should find a reputable local antique or jewellery dealer offering 80% plus of the bulk scrap gold price.

It's a scam.

 

I appoligize to Nirakar, Kmguru et. al.

I have just become a mod here in B&E and did not realized that I edited most away when only trying to answer the Nirakar's final question question in his post 7's reply to Kmguru. I recovered what I edited away, but have lost part of the standard form. (I used "Billy T replied to Nirakar:" inserted near end of Nirakar's post 7 reply to Kmguru.)

I hope I have learned to be more careful now that I can edit other's posts.

Again I am very sorry, but too ignorate to know how to fix better. As Christ said on the cross: "Lord forgive them as they know not what they do."

 

I understand the need for China and Brazil and Japan and Korea and every other exporter of manufactured goods (does not apply to Saudi Arabia) to keep their currencies from appreciating by buying foreign assets. I understand that China and the other exporters have to do something with their dollars. But why do the have to buy US assets when they could buy better assets in any other nation to suppress their currencies? My guess at the is that the answer to my own question is that any nation other than the USA would take offense at China, Brazil and Japan buying their assets to suppress their currencies and any other nation would retaliate against having it's currency pushed upwards by foreigners purchasing their assets and debt.

But how long do China and the others plan to keep on buying US assets? Don't they know this can't go on forever?

I own shares of EWZ Ishares Brazil, PBR a Petroleo Brasileiro ADR, and a VALE the company formerly known as Companhia Vale do Rio Doce (an ADR).

I was not aware that this law was coming until you mentioned it; bad investor bad I am supposed to know about those things. One article written after NYSE closing yesterday said that EWZ my Brazil fund was down 4% after hours because of the law. I see no sign of an adverse reaction for EWZ in todays chart.

How long was this law debated? Was this law a surprise or something that people knew was coming for months?

How do you think this law will affect my Brazil fund and my Brazilian ADRs? I can see how this law would be very bad for an open ended mutual fund investing in Brazil as an open ended fund must constantly increase and decrease the size of their investment in Brazil as customers outside Brazil invest in the fund or withdraw investments from the fund and therefore an open ended fund would be continually paying that tax.

My guess is that the ADRs and my exchange traded fund won't really be affected.

 

Both China and Brazil are already using some of the dollar assets to buy real (not paper) assets, expecially China but this just spreads the loses with the dollar decreasing in value to other contries. China even did it to Brazil last year - lent 10 billion dollars to PetroBras which will be repaid by 200,000 barrels of oil for 20 years, as I recall. I think Brazil then bought some French and Italian bonds. It is becoming a game of "Old maid" or hot potatoe - don't get stuck holding the old maid or hot potatoe when the run on the dollar hits. Total central banks reserves were 67% in dollars less than a year ago, now they are only 63% of the total - all are trying to decrease their dollar holdings now, but it is not easy.

Some small but significant holder, like Kuwait will get out of dollars and start the run of all to get out. Probably not by direct sales (dumping dollars) but by set of relatively secrete future dollar delivery contracts. One day we will learn they were made. A few months later, US and EU will be in deep depression (low economic activity) with near "run-away inflation" i.e. "extreme stagflation."

Local stock market fell nearly 3% and dollar rose nearly 2% against the Real yesterday with the news. It was not expected. They kept it quiet as they should with little leaking. Slightly more than 1/3 of Brazilian stocks are foreign owned.

I expect it will make existing Brazilian ADRs slightly more valuable than if there were no new IOF tax and probably make most of the larger Brazilian IPOs put their new paper up for sale in the US - add to the ADRs choices. For Brazil investing funds it may not do much as you can buy and sell without the tax in the US - sort of like an ADR, but when fund has negative investment they need to sell in Brazil and bring the money back to pay the sellers of the fund. Probably they will keep some of the "new incoming money" in the US to lessen the amount of selling they need to do when there are net redemption periods. So the "over head"of the fund will increase at least while US interest rates are so low.

I have owned both Vale and Petrobras ADRs, but neither just now.

 

Central banks holding of dollar reserves are still growing in absolute terms. The decline is only in relative terms.

And in those terms, let's note that 63% is still a higher percentage than was held back in 1990. In the mid-90's - the height of American preeminence - the dollar's share was a bit below 60%.

If people actually expected the dollar to collapse, it would have already. That's how an efficient market functions. The moment a sustained decline in the dollar appears likely, investors the world over will borrow a ton of dollars and use them to buy other currencies, thereby making a killing and tanking the dollar in short order. There would be no time for orderly de-leveraging or "hot potato" games.

 

I agree with all your post, especially the part about how fast the dollar can collapse when (if ?) the common view switches to: "Dollar's value errosion rate is accelerating and will not recover."

Currently still most regard the dollar as a safe harbor in a storm and attitudes only slowly change. However, there can be a great awakening. For example, last year China signed contract with Brazil for 200,000 barrels of oil each day for 20 years and will supply 10 billion dollars at scheduled future times, I think.

Who knows how many other contracts exist for future supply of real goods at fixed dollar prices in the future. If there are lot of them, not generally known and they should become public, it is conceivable that someone will put 2 & 2 together and realized the there are many more contractual sellers of dollars than buyers.

The FED can not cancell the law of supply and demand. It is possible for someone who can get access to all these future sales or dollars contracts for real goods and who can put 2 & 2 together to say: "The king has no clothes." and flip most peoples POV about the dollar as a safe haven almost over night.

I expect that is several years away still (but before Halloween 2014, as I predicted several years ago.)

PS
I should have said: "The percent of central bank dollar holding has declined from 67 to 63%"
And you should have said:
"The NOMINAL amount of dollar holding of central banks is still growing." But at least in Brazil's case (and I suspect in many cases) the value (purchasing power) of central bank dollar holdings is shrinking. - that is why the dollar percentage is shrinking.

It is a sad day when Brazil's central bank buys Italian bonds* (payable in Euros) instead of US Treasury bonds to reduce their risk of losses (in purchasing power).

---------------
*That happened 4 or 5 months ago and thus far has been a very smart move as dollar vs Euro has dropped greatly (~20%, I think).

 

There is no assurance gold is going to reach $1 500 .
The oil reached nearly $150 last year and then it came tumbling .
The world economy is fragile and many aspects control it and not just one element .
With winter coming and the need for fuel increasing the market is a game .
Also this Swine Flu can have a serious impact if it became world wide spread in frightening numbers .

 

You're (again) confusing exchange rate with purchasing power. The dollar is not undergoing inflation right now: just the opposite. Diversification of froex reserves is related to diversification (to avoid risk) and speculation on exchange rates.

Again: exchange rate is not the same thing as purchasing power.

 

No I am not confusing them. Of course purchasing power and exchange rates are different.

I simply said that although the number of dollars Brazil's Central bank holds has increased, they will not buy as much, except in the US.

In the US they will buy slightly more now than when Brazil's central bank bought those dollars as the US now has slight deflation. However, the US is no longer Brazil's main trading partner. China is. I do not know the fraction of Brazil's total trade that is with the US, but guess the US share is less than 20%. If that is correct, the fact that on 20% of Brazil’s trade there may be about a 1 or 2% increase in the buying power of the dollars is not important compared to ~20% loss of buying power on 80% of Brazil's non-US trading.

Basically only the US wants dollars now more strongly than it did ~6 months ago. The Rest of the world will give you only about 80% of what it did ~6 months ago for dollars. The dollar is losing purchasing power except in the US itself.

As I do not live in the US, perhaps I see and experiences this more clearly than US residents do (unless they are planning a trip abroad).

 

2015 Gold and Silver Rush?

I have been doing a lot of research on precious metals and am starting to believe that the price of gold and silver will go up faster than inflation for the next decade or so simply because the dollar is so weak (so it will take a lot of dollars to buy gold and silver).

I am coming to the conclusion that it's better to put your money in precious metals than in a bank or on the stock markets or in real estate, based on my research.

I'd like to hear everyone's opinion on this- the good and the bad and your thoughts-

 

The next decade is beyond my vision. I'm not sure how things will play out. As for shorter term

Wait for Bernanke to announce some interest rate hikes later this year and the USD will make very large gains in a short period.

It will probably continue to rise as the economy grows stronger and lagging indicators like unemployment start going down. Remember the USD is extremely integral in the global economy for at least another decade.

Also remember that a currency like AUD is around 80% correlated with prices of gold. So buying AUD and selling USD is another option (and a sometimes better one) you have in times of panic.

But don't take my word for it I'm quite new to the game

 

A question to think about before choosing precious metals as the correct way to bet on a falling dollar:

Are the Dollar, the Euro ,the Yen, the British Pound, Gold, Silver, platinum, and oil futures like a balloon where if you squeeze one area some of the the other areas must expand?

Can Dollar, the Euro ,the Yen, the British Pound, Gold, Silver, platinum, and oil futures all be overpriced at the same time? They may all be overpriced now if people were willing to consider alternative denominations for their non-stock/non-local currency investments.

Is their a reason why a Korean or a Turk or a Nigerian person wishing to store some of his wealth outside of the stock market and outside of his native currency but in a safe relatively liquid investment should chose to put their money into a Dollar, or Euro, or Yen, or British Pound, or Gold, or Silver, or platinum, or oil futures denominated investment?

Based upon basic and relatively proven parts of macro economic theory I have been expecting the dollar to fall for the last 25 years but the fall I expect never comes to the same degree that I would expect it to. Why does the dollar not fall as I would expect? 1 because the Dollar is the reserve currency, 2 because there is manipulation by governments to preserve the current order, 3 most importantly because the old men in charge of most of the worlds wealth have yet to figure out that this is no longer 1959 so they continue to view the dollar as the ultimate store of wealth.

It bugs me that gold is priced well above it's industrial value. Why should Gold rather than Cabbage patch dolls or Tulip bulbs or rare comic books be the store of wealth?

I don't like buying irrationally priced investments but what choice do you have considering the financial markets are driven primarily by irrational cycles of emotional mass psychology and rationality only plays a secondary role if you are looking at time frames of less than about 40 years.

Inflation adjusted gold and silver charts: http://www.sharelynx.com/chartstemp/FreeGoldSilverCPI.php

Silver/Gold ratio and shorter term non constant dollar gold and silver charts.
http://www.chartsrus.com/chart.php?image=http://www.sharelynx.com/charts/AuAG.gif

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Silver has not risen in price the way gold has. Silver gets used and distributed as products more rather than gold does. Gold gets stored in bulk more than silver does. Gold gets mined for Gold. Silver is produced as a by product of mining for other metals.

Silver and Gold and foreign currencies are not my choices for falling dollar inflation hedges because I am uncomfortable with my ability to predict their future values. I am exploring stock options as a falling dollar inflation hedge. I would be looking at commodity options but I don't have an account for trading commodity options.

I wish options were longer dated. If their were better ETFs for commodities choices available I would not be messing with direct ownership of options at all.

 

"The price of gold will go $1,500/ounce" is my prediction, or opinion. It based on the quote which was in "San Jose Mercury News".

I also think the Feds is preparing another financial tsunami in the rest days of this year. US dollars will rapidly devalued to a historical low. The price of the gold will soar to $1,500/ounce. The Japanese yen will go 80/dollar or higher and the Euro will go 1.6 dollar/Euro or higher.

So there is a regime change in Japan. The former ruling party - Liberal party was too close to its enterprises and big business. It resists to increase the value of yen to the desire of the Feds. That's why it has to step down. The new regime - Democrat party is willingly to sacrifice the Japanese financial interest now gets the power. They will keep Japanese yen in high value that certainly hurts Japan's economy.

China and India are collaborating with the Feds. They have bought the gold quietly for sometime and will make a good fortune in coming gold rush.

All these will happen in coming days of this year. What a tsunami it is if it all takes place in three months, especially in December. I predict it before the media bang the drum on inflation. Remember what I said today and how the Feds control your mind with propaganda.