What is next for Gold & Silver? (obsolute prices now removed)

Discussion in 'Business & Economics' started by Billy T, Dec 5, 2009.


Where is Gold price going next? (give why in post)

Poll closed Nov 30, 2010.
  1. To $1100/oz and then to $1000/oz before back to $1200/oz

    4 vote(s)
  2. To $1100/oz and then back to $1200/oz before $1000/oz

    4 vote(s)
  3. To $1300/oz and then back to $1200/oz before $1400/oz

    0 vote(s)
  4. To $1300/oz and then to $1400/oz before back to $1300/oz

    5 vote(s)
  1. Pinwheel Banned Banned

    Not without consequences.

    If its so easy why doesn't the European Central bank simply print off all the money it needs to pay off Greece's debt?

    Because people who bought Government debt ie those who lent the government money, would see value of their bonds plummet. If there was high inflation the value of the bonds would become more and more worthless. People would be unwilling to lend money to the government in the future. And then you are FUBAR'ed..
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  3. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

    I found a chart that spells out exactly what you are saying. Tell me if you agree ...

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  5. Pinwheel Banned Banned

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  7. Captain Kremmen All aboard, me Hearties! Valued Senior Member


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    Yes, nice graph.
    Even a climate change denier couldn't disagree with that one.

    Here's another little graph. Gold price against Swiss Franc

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    From 1992 to 2006, it wasn't even keeping up with Swiss inflation.
  8. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

  9. Pinwheel Banned Banned

    Markets really tanking over this Euro crisis. Nowhere is safe.
  10. Captain Kremmen All aboard, me Hearties! Valued Senior Member

    Tonight, (Friday, 5th August 2011.)
    Should be interesting.

    People don't like going into the weekend with uncertainty
    Much lower, and I would say stocks were looking cheap.

    In the UK, we don't want the FTSE going below 5,000
  11. jmpet Valued Senior Member

    Gold spot- 1663.40 Silver spot-38.32

    It's a foregone conclusion that gold and silver will be going up from here on in.
  12. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    “… {The National Inflation Association} believes that a AAA rating should be reserved for countries that have budget surpluses, low levels of debt that could easily be paid off without printing money, and low levels of inflation. The U.S. had a cash budget deficit last year of $1.3 trillion, but once you include increases to unfunded liabilities, our real budget deficit was approximately $5 trillion. Even if Americans were taxed 100% of their income it wouldn't be enough to balance the budget.

    It is hard to imagine a fiscal situation worse than this, but the credit ratings agencies have justified giving the U.S. a AAA rating based on the dollar's status as the world's reserve currency and the Federal Reserve's ability to monetize our deficits and debts by printing money. If it wasn't for our printing press and the world's willingness to accept and hoard the dollars we print in return for the real products and commodities they produce, the U.S. credit rating would be junk. …”

    Billy T comment: It is an exaggeration to treat future obligations the same as current difference between expenditures and income, for two reasons: (1) These obligations are government created and can be government changed (and will be as in their present form they cannot be supported by the population paying taxes when they fall due). (2)It totally ignores the future income. Consider an individual instead of a government: If he earns $60,000/ year for 40 years and pays 15% taxes his future tax obligation is 2.4E6 x 0.15 = $360,000 or six times his total annual income, but ignoring his or the government’s income and focusing only on their future obligations, is silly bookkeeping.

    Also, it is at least premature to suggest that US Treasury paper should be “junk rated” even if the dollar ceased to be the unique reserve currency. – The English pound held that position until WWII, and England, with its serious austerity program, is AAA rated by S&P and likely to remain AAA for some years more; however if the Chinese Yuan were available as an alternative for international reserve held by central banks, then the Yuan would be the clear preference, especially if backed by gold, as I suggested it will be here:

    From: http://www.sciforums.com/showpost.php?p=2475063&postcount=55 Post 55 in this thread made on 2/9/10 but same idea posted a year earlier in another thread.

    Almost everyone believes China has no choice but to buy US bonds and that ugly as it is, the dollar is the least ugly currency available as a “safe haven” and for international reserves. Both facts are true for a few years more, but that can and will change, almost overnight, when China wants it to. China’s process of converting to a domestic market and exporting mainly to its Asian suppliers of subcomponents it installs in its higher value added products is still incomplete. China needs to spend down more of the dollars in its reserves, with even more “paid up front” contracts for up to 30 years future delivery of raw material it needs. Thus, China is not yet ready to destroy the dollar as the international reserve currency. It needs to about double its gold reserves, cut its dollar reserves and trade with US and EU in half first.

    I will be one of the few, not shocked and terrified when Bloomberg TV interrupts regular broadcasting to tell that China is backing the Yuan with gold, for any and all central banks who want to hold Yuan instead of dollars. (“Not terrified” as Brazil will still be economically OK as one of China’s main suppliers of meat and soy and other food stocks, lumber, minerals, and oil.)

    To make it clear this is "on thread." Note I still predict that gold will be between 5000 and 10,000 Yuan per ounce in about 5 years more. No one will quote gold, oil or grains etc. in dollars then, just as they are no longer are quoted in pounds sterling, the earlier world reserve currency.

    PS if you think China will not take great delight in destroying Western economies, read this post: http://www.sciforums.com/showpost.php?p=2668027&postcount=358

    But in addition to getting their long waited for vengeance, there is a huge economic incentive:
    With US and European economics in the trash can of history, there will be adequate supplies of oil and minerals for China’s needs, without the great prices increases competitive buying by US and EU would make.
    Last edited by a moderator: Aug 6, 2011
  13. Pinwheel Banned Banned

    Gold breaches $1,700 an ounce.
  14. jmpet Valued Senior Member

    Gold Spot- 1719.70 Silver Spot- 39.01

    I still think gold and silver- especially silver- is a good buy even at these prices.
  15. joepistole Deacon Blues Valued Senior Member

    I have to agree, there is just too much chaos and uncertianty out there.
  16. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

    In my opinion, and I'm sure sharing this view will not change anyone's investing, gold will trend up with dips and spurts until maybe October 2012. Unless you like to play the swings, add to positions on any dips and stay in until 10/31/2012. Don't tell anyone

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  17. nirakar ( i ^ i ) Registered Senior Member

    I look correct in post 10 but I did not have the balls to pick a number or the balls to plunk down money on this crazy overvalued asset called gold. It is overvalued but if there are no safe alternatives Gold can keep on rising.
  18. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Plus, if the Yuan becomes the international reserve currency China, instead of the US, will get to annually import nearly half a trillion dollars worth of goods and services and pay for them with printed paper.

    I note that contrary to historical norms, Gold is gaining in value more rapidly than Silver. This implies to me one or more central banks has accelerated it buying of gold. If China, the world's largest producer and already largest buyer too is doing that (as I suspect) then gold could easily hit $2000/ oz this year if China has decided it may need to make the Yuan the international reserve currency sooner than it had earlier planned (by means I described in post 55).
    Last edited by a moderator: Aug 10, 2011
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member


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    “China is the world's largest producer of gold. It beat its previous record. Chinese gold production rose from 285 to 300 tons of gold from 2008 to 2009. Gold production in China increased by 62% since 2001 while world output fell by 9.6% during the same period.. …”

    Who holds the gold? And percent of their foreign currency foreign reserves.
    (July 2011prices ~ $1600/oz used for percent of reserves calculations)

    1. United States 8,965.6 tons (No % as creates dollars as needed)
    2. Germany 3,747.9 tons 71.7%
    3. IMF 3,101.3 tons (like US, creates money as needed)
    4. Italy 2,701.9 tons 71.4%
    5. France 2,683.8 tons 66.1%
    6. China 1,161.6 tons 1.6% (probably higher % as a major buyer and for four years has been world’s largest producer but tells little)
    7. Switzerland 1,146.2 tons 17.6%
    8. Russia 915.2 tons 7.8% (gold production up 21% in 2009.)
    9. Japan 843.3 tons 3.3%
    10. Netherlands 674.9 tons 59.4%
    11. India 614.6 tons 8.7% (200tons bought from IMF in Nov 2009)
    12. European Central Bank, 553.3 tons 31.3%
    13. Taiwan 466.8 tons 4.6%
    14. Portugal 421.5 tons 84.8%
    15. Venezuela 403.1 tons 64.8%
    Total (others central banks included) 30,160 tons or 16.5% of all gold is “government gold”
    Only Germany, Italy, Netherlands, Portugal & Venezuela hold more than half of their reserves in gold.

    From: http://www.cnbc.com/id/33242464/The_World_s_Biggest_Gold_Reserves?slide=1
  20. nirakar ( i ^ i ) Registered Senior Member

    A lot of Gold Production is a by product of copper production which explains why gold production would rise and fall with the demand for copper which in turn rises and falls with the global economy in general.
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "... South Korea spent more than $1 billion over the past two months on its first gold purchases in more than a decade, doubling its national holdings. The Bank of Korea said even though prices have already hit historic highs, it was the right time to diversify its foreign reserves.

    "South Korea's central bank seems a little late to the party, but gold investors should continue to expect price support as central bankers around the world are underinvested in the yellow stuff," Sean McGillivray, head of asset allocation at Great Pacific Wealth Management, told Reuters. ..."
    From: http://moneymorning.com/2011/08/11/...mpania-de-minas-buenaventura-sa-nyse-adr-bvn/

    by edit later from another source: "The Bank of Korea recently said that it bought 25 tons of gold worth USD1.24 billon between June and July, while Thailand added about 17 tons of gold to its reserves in June. Asian central banks will be major players in the gold market. ..."

    Billy T comment: I bet China is buying more even faster as they lose much more as dollar sinks in value.

    "... Central banks have been buying gold like mad. In fact, according to the World Gold Council, buying in the first quarter of 2011 totaled 129 tonnes... That's more than the combined net total of gold purchases during the first three quarters of 2010! ..."
    From: taipan@taipanpublishinggroup.com ("SmartInvesting's" Daily Email to me today.)

    They also advise to hold your gold outside of the US as what happened 78 years ago can happen again. (For only 1%, I'll hold it for you in Brazil.

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    Last edited by a moderator: Aug 11, 2011
  22. charles brough Registered Senior Member

    We should not overlook consumer demand also. In Singapore and China, all jewelry is 16 to 21 carot gold. A jewelry shop there has so much gold in it that when the sun hits the store window just right, the gold sheen fills the sidewalk in front. It is impressive. Also, in India, they go for silver.

    As the price of gold rises, silver tags along partially because the common man cannot so easily afford gold. However, the growing Western budget restraints are killing demand and lowering other metal prices such as copper. That means that silver production declines as less is produced by the drop in copper production.

    Gold production increases, however, because the decline in the price of oil means gold excavation and mining is cheaper.
  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    There is some truth to your points but both gold and silver are the primary reason many mines were opened. For example, Hecula's US mine mainly yields silver. I own stock in it and also in BVN which just released 2Q11 results today. Here is small part of the release from my records:

    "... BVN, headquartered in Lima, Peru since it started operating in 1953, currently enjoys amazing fundamental growth. It owns a 43.65% stake in Yanacocha, Latin America 's largest gold mine and most profitable in the world, and is also involved in the production of silver, copper, zinc and lead.

    The metals-price surge and increased sales in gold and copper helped push Buenaventura's second-quarter net income to $204.2 million, up 83% from the same quarter in 2010. Total second-quarter revenue was $343.3 million - up 52% from the same period a year before - with 70% generated from precious metals. The company generated $1.4 billion in revenue in the last twelve months. ..."

    Cost of oil is not much influence on production. Labor problems, even roads blocked by locals is more important as is interference by local governments. The main driver is however the ore grade. If it is falling production will fall as the plants can only process X tons of ore per day. Also accidents are very big modulators of production. Last year a cave in in Hecula's main mine, killed a man and closed the operation for about half a year, as I recall.
    Last edited by a moderator: Aug 12, 2011

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