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

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

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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)
    30.8%
  2. To $1100/oz and then back to $1200/oz before $1000/oz

    4 vote(s)
    30.8%
  3. To $1300/oz and then back to $1200/oz before $1400/oz

    0 vote(s)
    0.0%
  4. To $1300/oz and then to $1400/oz before back to $1300/oz

    5 vote(s)
    38.5%
  1. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Yes. & The "black gold" (oil) which tracked gold until late 2008, will catch up. I.e. expect to be paying twice what you do now for gasoline by end of 2012. Do you think your income, even in nominal dollars will double in two years?
    Food prices should do about the same. For many it ain't gonna be nice.
     
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  3. cosmictraveler Be kind to yourself always. Valued Senior Member

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    So what are people living on fixed incomes going to do?
     
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  5. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

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    6,677
    We as individuals will learn how to share and care for them as individuals and not rely on government to feed and house them.
     
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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    Eat at various soup kitchens, sleep in their useless car or tents. Their car won't have much other use as they can't afford gasoline and the banks will have taken their home and sold it to someone rich, who tries to rent it.

    Social security is indexed to the CPI, so for many their income will not be fixed. It is just that, after the dollar collapses, what they saved to supplement their SS will not buy much.

    My main concern is that there are a lot of guns in the US and when hungry, people will use them even in quasi-organized mobs looking for canned food, (and other valuables) stored in suburban homes etc.
     
  8. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    "... Securities and Exchange Commission filings this month by Soros Fund Management LLC, Paulson & Co. and Touradji Capital Management LP listed investments in gold as their biggest holdings. Exchange-traded products own 2,088 metric tons, equal to nine years of U.S. mine supply, data compiled by Bloomberg show. Precious metals will produce the best commodity returns in the next year, Goldman Sachs Group Inc. said in a Nov. 9 report. ..."

    From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=axNDoZM_5AzU&pos=7

    Billy T comment:
    GS may be correct (gold is best for 2011) but my money is on silver (more than gold anyway, but as I only buy stocks in miners, plus SLW, most produce some gold too, HL is the only "pure silver" miner of the seven or eight "silver miners" I own.). While I don't expect the Au/Ag ratio to return to the historic 16, It has been dropping from high of 70 to current ~50 and should, imho, go down to at least 30. It is also interesting (important?) to note that there is less silver than gold available (out of the ground) and industrial uses are again growing . They contracted some years ago when digital photograph replaced much of the film demand.) Currently, available stocks of sliver metal are declining as industrial use is about equal to production. (Hoarding for gain and consumption are about equal, although it is hard to draw a sharp line. For example which are silver bracelets?) Also the "coin melt" is essentially over as a supply.

    Except for a few, like HL, silver production is mainly a by-product of other metals, like copper, production. Thus, it is not easy to ramp up silver production, especially when China decides it has hoarded enough copper. China is also now encouraging its population to buy silver (from the government of course) - that takes Yuan out of circulation and helps with China's growing inflation problems. Also that gives China the opportunity to spend some of its dollar reserves for something real, which they can always confiscated back from the people (as the US did gold). China does not want to hold so much of the US Treasury's paper promises as they see US policy is to lower the purchasing power of the dollar (QE2, QE 3,,, etc.) Having their population buy silver is just another way to spend declining dollars for real assets, which typically are increasing in value. Thus I expect the hoarding of silver to grow rapidly in China (and India too.) especially among the "previously poor" who cannot afford gold and don't trust banks, etc. See end of post 115 as to where they will save it.
     
    Last edited by a moderator: Nov 22, 2010
  9. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

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    6,677
    Agreed, I recommend 50% gold and 50% silver by weight

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    . The storing and handling fees are higher dollar for dollar for silver but the reward is that both hedge against dollar collapse and inflation plus silver responds immediately to economic growth in any recovery.
     
  10. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    If you own the miner, and not the metal none of these costs exist.* Also if metal prices are rising, your percentage gain with the miners is much greater than for the person who owns the metal.

    See next to last paragraph of post 111 for a numerical example proof this is the case. Also the US has in the past confiscated the metal, but never the stock of miners.

    * You can of course avoid these costs by keeping the metal under you mattress etc. but then you run the risk of total loss or worse, being killed.
     
  11. quantum_wave Contemplating the "as yet" unknown Valued Senior Member

    Messages:
    6,677
    All true, but for the metal, BullionVault has a vault in Zürich, you can buy and sell gold or silver bullion in various currencies, and there is a daily independent audit of the physical gold and silver.

    The miners can be more profitable but are more volatile and you have the risk of corporate malfeasance unless you buy a fund of miners.
     
  12. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    Here is a “gold bug’s” four arguments for gold at $1900/oz by end of 2011:

    • Ongoing global stimulus initiatives figure to ignite inflation, which is highly bullish for gold. {QE2, QE3, & China’s “QEs” + rapid spending of dollars from reserves for real / physical assets in long term (20 to 30 years), up-front-paid-for, contracts for future delivers of energy, food, and minerals is dumping dollars on the markets to now circulate, like new QE2 funds will. - E.g. 10 billion dollars to PetroBras for 200,000Brl / day oil delivered every day on average for 20 years!}
    • The so-called concept of "peak gold" is real, and that even in the face of record gold prices, miners can't seem to crank out enough of the "yellow metal."
    • Global demand is burgeoning as wages rise in such newly emergent markets as China and India - a trend that's not going to quit.
    • Global investors remain dramatically under-invested in gold.

    Here is his “proof” of last point:

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    That is dramatic upside potential, but surely he is only including "financial assets" not homes, cars etc.

    To support 2nd point his argument includes (there is more at http://moneymorning.com/2010/12/02/...-yellow-metal-will-hit-1900-an-ounce-in-2011/ ):

    “…in just the past five years, the average recovered {ore} grade has declined a full 30% - dropping from 1.8 grams per ton down to 1.3 grams per ton. And the grades of replacement ore being found are now averaging about 0.60 grams per ton, meaning twice as much ore has to be found just to replace gold being produced at current grades. …”

    Billy T comment: He may be correct about average ore grade drop: Certainly as mines grow older the highest grades are gone, but they still produce from lower grades until that is no longer profitable: however, I strongly doubt that the average new ores being found are only 0.60 grams per ton. Either that is false, or I was very luck to buy 1000 sh of OSKLF one year ago.

    From my notes:
    “About Osisko Mining (21 Dec09) is currently developing the Canadian Malartic gold deposit adjacent to Highway 117 and adjacent mineralized zones into a large-scale open pit, bulk-tonnage mining operation. … The Canadian Malartic deposit currently represents one the biggest gold reserves in Canada for a single deposit, and is still growing by ongoing drilling on new mineralized zones. …”

    In fact their latest exploratory drilling results show ore grade improving and size of ore body increasing. (They are starting negotiations to relocate Highway 117 several miles to the east to greatly expand their operations, and the life of the open pit production, and the job-hungry population is very supportive.)

    “…24Nov10: Highlights from 27 drill holes include 72.5 metres {thick zone} averaging 2.02 g/t Au (CHL10-2247), 13.0 metres averaging 7.15 g/t Au (CHL10-2262), 92.0 metres averaging 0.77g/t Au (CHL10-2243) and 46.0 metres averaging 1.48 g/t Au (CHL10-2251) in Jeffrey Zone on the Malartic CHL Property …”

    By next day edit: Gold jumped $25 dollars today (3Dec10) to close at 1415.20/ Oz. And Silver at $29.40 makes the Au/Ag ratio = 48.14, so still falling (Silver the faster gainer).
     
    Last edited by a moderator: Dec 3, 2010
  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    Currently Bloomberg's commodities is showing gold down a little ($6.40) to $1409.7 /oz and silver up to $29.81 so the Au/Ag ratio has fallen to 47.29.
    At 8:30 next AM, Bloomberg has Au at 1390.9 and Ag at 28.955 for a ratio of 48.04 I.e. Silver fell greater percent than gold but both took hits. In general if X has greater percent gains than Y, then X will drop faster too.

    I will make a quite risky prediction: The gold/silver cost ratio will NEVER go above 50 again !!!!
    ("Risky" as it was above 70 less than a year ago and 48.04 is less than two points below 50.)
    Sunday 12Dec10, Au/Ag is at 48.42
     
    Last edited by a moderator: Dec 12, 2010
  14. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    23,198
    My prediction "Gold / Silver ratio NEVER to be over 50 again." (and was over 70 less than a year ago.) made on 7Dec10 with very little safety margin is looking quite safe now:

    According to Bloomberg 5 minutes ago, Silver is 30.04 and Gold is 1420.4 for a ratio of 45.760
    Also note that silver prices climbed 75% in 2010 but gold only by 36%. I.e. silver going up more than twice as fast as gold last year.

    By edit:
    7Jan11, gold at 1,358 & silver at 28.545 /oz (both down significantly from recent peaks) but ratio is 47.57 so my less than 4% safety margin prediction still true.
     
    Last edited by a moderator: Jan 7, 2011
  15. Pinwheel Banned Banned

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    2,424
    I've poured 20% of my savings in silver recently, following the new year drop. I guess I'll find out in the comming months how crazy that was.
     
    Last edited: Jan 12, 2011
  16. Carcano Valued Senior Member

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    6,865
    It also went down faster than gold during the crash of 2008-2009.

    Industrial metals are more volatile.
     
  17. nietzschefan Thread Killer Valued Senior Member

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    7,721
    Gold did not go down in 2008.

    Buying "resources" now myself. Oil/potash/etc.
     
  18. Carcano Valued Senior Member

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    It did go down about 20%...not as much as silver or palladium.

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  19. Michael 歌舞伎 Valued Senior Member

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    I think Gold dropped today by $20-40.... some people suggest it will continue to do so for months before heading right back up up and awaaaaayy......

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    No, I don't own gold, but, I may buy some just to see what it looks like

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  20. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    Gold at 1341.1 & 27.33 for silver on Bloomberg's commodity tab - a future index - easiest source to get both I know, but not the spot price.

    Thus ratio is 49.071 and getting dangerously close to making my post 130 prediction that the ratio would never go above 50 again become wrong, but is confirming what I also have said. I.e. that in slump, silver loses greater percentage than gold (and in rising market goes up faster). Gold being down about $100/oz I think qualifies as a "slump." Also gold is in a slump relative to other commodities:

    "... Interestingly, despite gold's latest run, it was still a laggard compared to many other commodities. In the commodity world, gold didn't even place in the top half in 2010. Against a basket of 14 commodities that includes everything from aluminum to wheat, gold's 29.52% return places it eighth. Palladium took the top spot with a 96.6% return, followed by silver with an 83.21% return. Natural gas continued its cellar-dwelling ways, dropping 21.28% to become the worst-performing commodity of the basket. ..."

    From:http://moneymorning.com/2011/01/24/outlook-2011-fear-and-love-in-gold-trading/
     
    Last edited by a moderator: Jan 24, 2011
  21. Pinwheel Banned Banned

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    Silver is continuing to plummet, down 10% since the New Year already.
     
  22. Pinwheel Banned Banned

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    Off a cliff..

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  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    I like your markets around the world graph, so I put source into this post. Currently from Bloomberg commodities (a future quote) we have gold at 1322.70 and silver at 27.11 so the ratio is 48.79 close to busting my "NEVER AGAIN" above 50 prediction, but it is not yet broken.

    Do you have any idea what made the "cliff" at about 11AM NY city time?
     

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