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Matterhorn Asset Management Sets Three Gold Price Targets: $6,000 – $7,000 – $10,000

Tyler Durden's picture




 

From Egon von Greyerz of Matterhorn Asset Management

GOLD ENTERING A VIRTUOUS CIRCLE

Fundamental and technical
factors for gold are now in total harmony and gold is entering a
virtuous circle that will drive the price up at its fastest pace since
this bull market started in 1999.

  • It is a fact that gold in US dollars (and many other currencies) has gone up 400% in eleven years or 16% per annum annualised.
  • It is a fact that the US dollar has declined 80% in value against gold since 1999.
  • It is a fact that the dollar and most other currencies have gone
    down 98-99% against gold since 1913 when the Federal Reserve Bank of New
    York was created.
  • It is also a fact that the Dow Jones (and many world stock markets) has declined over 80% against gold since 1999.
  • It is a fact that gold has made a new all time monthly closing high in dollars in August 2010.

 

Gold trend

We expect gold to start a substantial rise now which will continue
for 5-10 months before any major correction. Gold’s technical picture is
extremely strong with a continuous rising pattern of higher highs and
higher lows with the steepness of the curve increasing. From much higher
levels we are likely to see a correction that could last up to a year
before the next rise which will last several years before we see a
significant peak. Once gold has topped we do not expect the same kind of
decline as after the 1980 peak since gold is likely to become part of a
future reserve currency. At that point gold will be a solid but
unexciting investment with very little upside potential. But that is
likely to be a few years away.

In spite of a 5 times increase in the
value of gold or an 80% decline against many currencies and stockmarkets
in the last 11 years, most investors own no gold and still do not
understand the importance and value of gold. In a world of constant
money printing and credit creation leading to devaluing currencies and
devaluing assets, gold reflects stability and is virtually the only
store of value that cannot be destroyed by governments.

The average asset manager, fund manager,
pension fund or private individual owns no physical gold and at best
has a very small exposure to some precious metals stocks. And in spite
of this gold has gone up over 400% in 11 years. How is that possible?
For the simple reason with the relatively modest demand that we have
seen in the last few years, there is not enough physical gold even at
these levels. The increase in demand that we have seen has most probably
been satisfied by central banks leasing or lending their gold to the
bullion banks. Central banks supposedly own 30,000 tons of gold but
unofficial estimates of their real holdings are at 15,000 tons or less.

So what are the factors that are likely to lead to a major rise in the gold price?

We have for several years outlined in
our Newsletters the problems in the world that inevitably will lead to
massive money printing and a hyperinflationary depression (see for
example “Alea Iacta Est”  and  “There Will Be No Double Dip…” on the
Matterhorn Asset Management website).

There are three insurmountable problems:

  • Real unemployment at 22% in the US will continue to go up
  • The budget deficit will increase dramatically due to the problems in
    the economy and in a few years time the interest on the Federal Debt is
    likely to be higher than tax revenues.
  • None of the problems in the banking industry have been solved but
    merely swept under the carpet by phoney valuations of toxic debt with
    the blessing of governments. The circa $20 trillion that were pumped
    into the world economy to save the financial system in 2008-9 have had a
    very short term beneficial effect but solved none of the problems.

The effect of this massive $20 trillion
infusion has been ephemeral since we are entering the autumn of 2010
with virtually every single economic indicator and statistic in the US
deteriorating rapidly. With interest rates already at zero there is no
ammunition left but one. And it is this specific last bullet that will
be used to infinity in the next few years and starting very soon, namely
UNLIMITED MONEY PRINTING. Every single area of the US economy will need
support or printed money, whether it is the federal government, the
states, the municipalities, banks, pension funds, insurance companies,
the unemployed, corporations, health care, housing market, commercial
real estate,  individuals, etc, etc, etc. The list is endless and many
other countries will follow.

Before we talk about gold in hyperinflationary terms, let’s look at where gold is likely to reach in today’s money.

Three realistic Gold targets: $6,000 – $7,000 – $10,000:

  • In the 1971 to 1980 gold cycle, gold went from $35 per ounce
    to $850 or up over 24 times. If we were to see the same increase in
    this cycle, gold would rise to over $6,000.
  • The gold peak at $850 in 1980 corresponds to over $7,000
    today adjusted for real inflation based on the inflation rate as
    calculated by John William’s Government Shadow Statistics (
    shadowstats.com)
  • Gold and gold mining shares were an average of around 25% of world financial asset between 1921 and 1981. Today,
    gold and mining shares are only 0.9% of world financial assets. If gold
    and mining shares were to go to 25% of financial assets
    , gold would go to over $31,000. But even if we assume that world financial asset would go down by 2/3rds from here that would put gold at over $10,000.

The three historical comparisons above (and see chart below)
would put gold anywhere from $6,000 to $10,000 and this is without
inflation, or more likely hyperinflation.  In a hyperinflationary
environment, the price gold will go to is really irrelevant since it
depends on how much money is printed. In the Weimar Republic for example
gold went to DM 100 trillion. What is more important is that gold is
likely to go up at least 5 times from today without inflation and with
hyperinflation gold will protect investors against the total destruction
of paper money and many other assets.

Wealth Protection

Gold must only be held in its physical
form and the holder of gold must have direct access to the gold. We
consider ETFs, gold in a bank (whether allocated or unallocated),
fractal ownership of physical gold, futures or any other form of paper
gold as very risky and a totally unsatisfactory method for owning gold. 
Physical gold should preferably be stored outside your country of
residence and outside the banking system. The holder must have direct
access to the vaults where the gold is stored.

Silver

Silver has been lagging gold since its
peak at over $21 in 2008. For the last few months the gold/silver ratio
has been consolidating between 58 and 71. The ratio is currently around
64 and is likely to start a move down to new lows below the 2006 low at
just 44.  So this is very good news for silver which is likely to
outpace gold substantially in the next few years.  Silver is probably
the most undervalued precious metal today and has great potential.

But there are many caveats for silver:

  • It is an extremely volatile metal and is definitively not for the fainthearted.
  • We only recommend physical silver owned directly by the investor.
  • Physical silver currently weighs 64 times more than gold for
    the same amount invested and is circa 120 times bulkier (due to its
    lower density).
  • Therefore silver is not as practical as gold as a means of payment.
  • Also, silver is subject to Vat (value added tax) in all European countries. Thus silver cannot be moved freely across borders.
  • Physical silver for investment purposes can be bought/sold
    and stored tax-free in Switzerland but if the investor takes possession,
    Vat must be paid.
  • Due to the above factors investors should carefully consider the split between physical gold and silver.

Stockmarkets

At the beginning of July this year we
sent out a message to investors that, based on our proprietary
indicators, we expected stockmarkets to finish the correction up at the
end of July and resume the major downtrend in August. We also said that
gold would start its major rise in August.  And this is exactly what has
happened so far.

We now expect major falls in all
stockmarkets worldwide over a sustained period. We would not be
surprised to see the Dow down to the 1,000 area (in today’s terms)
before this bear market in over. But it will not be a straight line and
there will be extreme volatility. When hyperinflation sets in,
stockmarkets will have a major but temporary surge.

The only stocks that investors should
hold are precious metals stocks and possibly some resource and food
stocks. But it must be remembered that stocks do not represent the same
degree of wealth preservation as physical precious metals held directly
by the investor.

Currencies

Currencies should in the next few years
be looked upon as a necessary evil and not as a store of value.  All
currencies will continue to decline against gold, just as they have in
the last 11 years and in the last 100 years. Due to money printing by
most governments, we will have a fierce game of competitive devaluations
by virtually all central banks. We have seen the Euro and the pound
weaken substantially and the next currency the speculators will jump on
is the US dollar.  The dollar is grossly overvalued, partly due to the
weak Euro, and is likely to weaken significantly due to the problems in
the US economy.

Currencies only reflect relative value
and not absolute value since they can be and are printed until they
reach their intrinsic value of zero. It is a fallacy to measure the
value of a currency relative to another currency since they are all
losing value. Currencies should only be measured against real money
which is gold. This is the only method that reveals governments’
deceitful actions in destroying the value of paper money. Therefore it
is a mug’s game to speculate or invest in currencies since they will all
decline in an extremely volatile and unpredictable market.

So are there currencies which are likely
to perform better on a relative basis for funds that have to be held in
paper money? We believe that Norwegian kroner, Swiss Franc, Canadian
Dollar, Singapore Dollar, Australian Dollar and Renminbi will perform
relatively better than many other currencies.

Government Bond Markets

The bond market is the biggest bubble in
financial markets worldwide, in our opinion. Investors around the world
are worried about the state of financial markets and therefore believe
that government bonds represent a safe haven. These investors will
receive the most enormous shock on two accounts. Firstly, no government
will be able to repay the debts outstanding. So there will either be
government defaults, moratoria, or money printing that totally destroys
the value of the bonds. Secondly, interest rates are likely to go up
significantly to at least 10-15%, totally destroying the value of the
bonds.

Conclusion

We are now entering a period when most
major asset classes and in particular stocks, bonds and currencies are
starting a major decline. Since most financial assets in the world are
invested in these three categories plus real estate which will also
decline, we are likely to experience major shocks and crises in the
financial system and the world economy.  Wealth protection is now more
important than probably at any other time in history. Physical gold and
possibly other precious metals directly controlled by the investor will
be a vital part of a wealth preservation portfolio.

 

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Tue, 09/07/2010 - 08:30 | 566936 JJ McApe
JJ McApe's picture

Is this the Golden Bullet?

Tue, 09/07/2010 - 13:50 | 567564 Hard1
Hard1's picture

Isn't bonds/stocks/currencies are overvalued and gold is cheap a little biased comment coming from an Asset Management firm that only offers gold.

Tue, 09/07/2010 - 18:12 | 568170 akak
akak's picture

The presence of a bias does not necessarily imply the absence of truth.  Are not those with the best or most accurate knowledge going to be biased towards their own conclusions?

Tue, 09/07/2010 - 17:56 | 568138 dnarby
dnarby's picture

Ha ha ha, this report is funny!

For starters, the average historical percentage of global assets held in gold and gold mining stocks during times of finanical crisis is 26%, not 25%...  Get your facts straight!

And currently, the percentage held in gold and gold mining stocks is 0.8%.

That means we need a 32.5x increase in gold in gold stocks to meet historical averages.

That puts the price of gold at ~$40,625.00/oz.

$10,000.00/oz, ha ha ha ha ha!

Tue, 09/07/2010 - 08:33 | 566939 snowball777
snowball777's picture

We will all be ruled by gangster rappers by virtue of the value of their chains.

Tue, 09/07/2010 - 08:46 | 566960 idea_hamster
idea_hamster's picture

There would be a wonderful poetic justice to that.

Tue, 09/07/2010 - 08:55 | 566977 snowball777
snowball777's picture

Let's go full circle and have all the descendants of the former plantation masters build hybrid Escalades and bazooka subwoofers as reparations.

Would also be ironic if the mortgage problem was resolved via 1-800-GOT-GOLD scheisters sublimating gold into relieved debt.

I too, have a dream.

Tue, 09/07/2010 - 09:59 | 567104 contrabandista13
contrabandista13's picture

"... I'm just out there donald trumping gettin paid for buildin somethin...."

Tue, 09/07/2010 - 20:48 | 568505 dnarby
dnarby's picture

Tru dat.

Tue, 09/07/2010 - 08:35 | 566941 MrTrader
MrTrader's picture

Thank you for the strong sell signal.

Tue, 09/07/2010 - 08:36 | 566945 Tyler Durden
Tyler Durden's picture

Further confirmed by the $10 spike

Tue, 09/07/2010 - 08:55 | 566979 snowball777
snowball777's picture

Booya!

Tue, 09/07/2010 - 08:43 | 566954 JJ McApe
JJ McApe's picture

looool

Tue, 09/07/2010 - 08:45 | 566958 LoneStarHog
LoneStarHog's picture

Sooooo...now that you have sold...at what price do you think you will buy...$1300...$1400...???

Tue, 09/07/2010 - 20:49 | 568507 dnarby
dnarby's picture

I like $1150.00

Tue, 09/07/2010 - 08:37 | 566947 LoneStarHog
LoneStarHog's picture

Was Karl Denninger a consultant for this paper?

Tue, 09/07/2010 - 13:39 | 567544 Imminent Crucible
Imminent Crucible's picture

Karl Denninger is not bullish on gold and has stated flatly that gold will not protect you in the unfolding debt collapse.

I think he's wrong about that, but let's not misrepresent his position.

Tue, 09/07/2010 - 08:39 | 566949 chrisina
chrisina's picture

I don't buy Gold because of a price target. I buy physical Gold because it doesn't have any liabilities from the credit system attached to it. It's the only way to store wealth if the credit system collapses. Likelihood of which is increasing day by day.

Tue, 09/07/2010 - 08:54 | 566972 Sudden Debt
Sudden Debt's picture

and because gold feels as soft as a babyskin :)

It's just fucking cool to have. I just like to look at it when I'm borred :)

GOLDFEVER BABY!!! AND I'VE GOT IT!!!

Tue, 09/07/2010 - 09:09 | 567010 billhilly
billhilly's picture

Yah Man!  and the fondle factor of a 100 0z bar of Silver sure gives a warm cozy feel!

Tue, 09/07/2010 - 09:50 | 567092 Brutlstrudl
Brutlstrudl's picture

Around my  way, people have stuff growing in their closet that they look at when  bored/

Tue, 09/07/2010 - 08:43 | 566952 papaswamp
papaswamp's picture

Gold and Silver just went verticle!

Tue, 09/07/2010 - 08:48 | 566963 Sudden Debt
Sudden Debt's picture

you should apply for a job at CNBC :)

Tue, 09/07/2010 - 09:11 | 566984 papaswamp
papaswamp's picture

Hey I was reporting the facts..CNBC would probably either ignore the price spike that just happened or say"...gold and silver are reacting positively to Prez Obama's new stimulus plans..."

Tue, 09/07/2010 - 10:11 | 567124 e1618978
e1618978's picture

I think he was referring to the fact that you misspelled vertical.

Tue, 09/07/2010 - 08:43 | 566953 antidisestablis...
antidisestablishmentarianismishness's picture

Apple Computer has outperformed gold by about 6 to 1 over the past 10 years.  Does that mean Apple is going to $3000 or gold is going to $200 or what?

Tue, 09/07/2010 - 08:51 | 566970 Quintus
Quintus's picture

Interestingly, despite the huge ramp in price that you identify, I do not recall reading hundreds of 'Analysts' raving on about how AAPL was in a bubble, and nobody should invest in it 'cos it's gone up so far already new buyers have missed the boat etc. etc. etc.

Funny that.

Tue, 09/07/2010 - 13:42 | 567551 Imminent Crucible
Imminent Crucible's picture

Probably it's AAPL's 0.19% dividend yield.  You can't pass that up.

Tue, 09/07/2010 - 16:00 | 567818 hidingfromhelis
hidingfromhelis's picture

But, but...you can eat apples.  Oh wait, you meant Apple Inc, the computer company.  My bad.

Tue, 09/07/2010 - 08:43 | 566955 Sean7k
Sean7k's picture

The elites and central banks will never allow the common man to prosper through the purchase of gold. Gold purchasing will be restricted to the few with insight to buy while allowed to and those that have always owned it. 

Gold isn't tulips. It's finite and mostly in the hands of the wealthy. The same ones that make the rules. If we buy too much, they will confiscate it. If we use it, they will jail us. 

When they have drained our wealth through purchases, they will impound it. 

Consequently, buy gold, but be prepared to defend it with all your wiles. Be prepared to save it and ride out the inevitable storm, so you can use it on the other side. The wealthy do not suffer competition and they don't let just anyone into their club. 

Tue, 09/07/2010 - 08:51 | 566968 LoneStarHog
LoneStarHog's picture

This is a true strategic and logistical nightmare for the corrupt powers, unlike Waco, Ruby Ridge, et al.

Without the benefit of actual statistics, I will infer from what information is available that most gold owners are also well-armed.

Waco, Ruby Ridge, et al. all involved a select individual or small group in a confined area. Easy pickings for government thugs.

What do they think would be the logistics to confront literally millions in individual locations?

I truly believe that part of the master plan by these corrupt sociopaths is to perpetuate the paper scam of U.S. economics/finance until it just crashes. It will then be too late for the general population to secure a lifeboat of gold/silver. THEY will already be secured, which I wrote about in 2004, which simply stated that the paper game at the bullion banks was to allow the Jamie Dimons of the world to put their personal assets into depressed metals, while using bank funds to do the manipulating.

The actual number of gold/silver owners will be so minuscule - most will own small amounts by comparison - that it will not be worth harassing them. Allowing these few to become the new Middle Class will be the best solution.

However, I am not naive enough to believe that these corrupt sociopaths work on mental logic, so preparations must be made.

Tue, 09/07/2010 - 08:57 | 566982 Sean7k
Sean7k's picture

Which is why they won't attempt it. They can control the use of it in hard times. When people become desperate enough to use it. 

While I agree with you, I just think the elite are so greedy, they will not stop at being reasonable. Their thirst for control is absolute. 

Hope for the best, plan for the worst...

Tue, 09/07/2010 - 09:05 | 566999 LoneStarHog
LoneStarHog's picture

"They can control the use of it in hard times." -- You mean like Prohibition controlled alcohol?

How in all that is holy does anyone think that THEY can control the use of it, especially in desperate times?

Tue, 09/07/2010 - 09:44 | 567078 Almost Solvent
Almost Solvent's picture

"They" can't.

Confiscation would not be logistically possible, "they" know it.

Most likely it will start with heavy taxation on the sale/purchase of gold.

Maybe migrate to a "fixed" price.

Ending in the exposed naked emperor.

OR, "they" want gold to skyrocket as "they" have secretly amassed huge physical reserves and stand to profit immensely when the fiat falls and it turns out "they" had the physical gold all along.

Tue, 09/07/2010 - 10:17 | 567140 tmosley
tmosley's picture

Heavy taxation will create or expand the black market.  Creating a fixed price will create a gold standard/expand or create a black market.

There aren't a lot of valid options for those in charge of our economy.  This is always the case when a small group is in charge of any economy.

Stop saying "they".  You know exactly who we are talking about.  The Treasury, the administration, and the Fed.  Stop pretending like this is all some shadowy conspiracy, rather than a simple failure of a large planned economy.

Tue, 09/07/2010 - 10:41 | 567204 LoneStarHog
LoneStarHog's picture

Uh...What pronoun would you use for that group?

Tue, 09/07/2010 - 11:47 | 567327 thesapein
thesapein's picture

Same pronoun, just without the "scare quotes", was meant, maybe?

Tue, 09/07/2010 - 12:16 | 567373 LoneStarHog
LoneStarHog's picture

That dumpy New York Gumba, Snookie, scares me more than a couple of quote marks.

But...hey...that's just me.

Tue, 09/07/2010 - 15:25 | 567770 thesapein
thesapein's picture

"I" ain't afraid of no quotes!

Wed, 09/08/2010 - 03:01 | 568955 faustian bargain
faustian bargain's picture

who ya gonna call? Quotesbusters!

Tue, 09/07/2010 - 11:20 | 567286 tamboo
tamboo's picture

those guys are middlemen, the really big money pulls their strings.

Tue, 09/07/2010 - 13:56 | 567580 apberusdisvet
apberusdisvet's picture

The fact that PM prices have been suppressed by the CBs for at least 40 years is no conspiracy theory; it's fact and for obvious reasons.  "There shalt be no safer haven than USTs".  Unfortunately for the banksters, the Asians refuse to play in their game.  The Chinese, in particular will seek at least a partial gold standard in the coming years.  Take that to the bank.

Tue, 09/07/2010 - 11:45 | 567323 Snidley Whipsnae
Snidley Whipsnae's picture

Most likely a heavy tax on mined ore...similar to what Australia proposed recently. What is already above ground and held by individuals would be very difficult to confiscate and would likely cost more than it produced.

Heavy taxation on owned bullion = creation and expansion of black markets = funding for a new era of mobsters similar to prohibition. No good could come of it.

Tue, 09/07/2010 - 09:12 | 567014 SWRichmond
SWRichmond's picture

I see parallels between allowing real wealth to circulate and be privately held, and the individual right to bear arms.  Both leave power diffused in the hands of the many where it is much more difficult to manipulate / abuse.  Both are protection against standard means of abuse by governments: inflation of the currency, and abuse of the monopoly on the use of force.  Both were enshrined in the U.S. Constitution, for now-obvious reasons.

Tue, 09/07/2010 - 09:26 | 567047 LoneStarHog
LoneStarHog's picture

What they can attempt to control is ammo, either at the manufacture or taxation.  That is why ammo sales have been so high and shortages had developed.

Tue, 09/07/2010 - 09:23 | 567043 snowball777
snowball777's picture

http://www.youtube.com/watch?v=I_1pUfDfgY0

Just substitute Baghdad with say Pittsburgh.

Tue, 09/07/2010 - 09:17 | 567033 chrisina
chrisina's picture

You can also store your physical gold, 100% allocated, in a tax free vault in Switzerland, in a perfectly legal and secure manner.

 

Tue, 09/07/2010 - 09:47 | 567084 Almost Solvent
Almost Solvent's picture

And when SHTF, how can one access that gold unless one is in Switzerland or any bank deposit box when the bank holiday is instituted?

Keep physical nearby so that it can be acessed when needed.

Tue, 09/07/2010 - 12:04 | 567358 DosZap
DosZap's picture

chrisina,

And where do you think they will go first to get your wealth/gold.Any, and all Banks, Vaults.

They love it if you store it........you control it directly, YOU control it.They may issue confiscation, but folks want ice water in hell also.

Guess what neither WILL get it.After the abomonation and disaster these buffoons have caused globally,locally, folks are not going to turn over the only things they have left of value voluntarily.......

This is not 1933, and we not only distrust the Gv't we despise it, we hate it.

Unless, and until they ever get back to Governing as intended by the Constitution, they are no part of me.

My allegiance is to regular Americans, and family,and survival.

I take serious offense at what they have done, and are doing.

Tue, 09/07/2010 - 10:08 | 567117 breezer1
breezer1's picture

not sure why you were junked. makes sense to me. gold is political and poison to paper money. when it goes up there is no comment but when it goes down $10 the msn uses words like plummet and crash . 

if you want to poke a central banker or government in the eye, buy physical gold and silver. simple.

Tue, 09/07/2010 - 08:46 | 566961 Zero Debt
Zero Debt's picture

"The total destruction of paper money and many other assets"

Nice....popcorn - check, phone off - check, 3D glasses - check...

 

Tue, 09/07/2010 - 08:49 | 566965 Jason T
Jason T's picture

Have owned CEF since 12.60ish.. may need to buy more.

Tue, 09/07/2010 - 08:50 | 566967 AUD
AUD's picture

"gold is likely to become part of a future reserve currency."

It still is & always will be. All central banks loan their gold to 'gold market participants', AAA credits of course. They even earn interest in gold or it's cash equivalent.

Tue, 09/07/2010 - 09:01 | 566991 BeerGoggles
BeerGoggles's picture

"Gold must only be held in its physical form and the holder of gold must have direct access to the gold. We consider ETFs, gold in a bank (whether allocated or unallocated), fractal ownership of physical gold, futures or any other form of paper gold as very risky and a totally unsatisfactory method for owning gold.  Physical gold should preferably be stored outside your country of residence and outside the banking system. The holder must have direct access to the vaults where the gold is stored."

How do you hold it outside of your country but not in a bank?!?!?!

Tue, 09/07/2010 - 09:21 | 567039 chrisina
chrisina's picture

Just an example amongst many :

http://www.globalgold.ch/

Tue, 09/07/2010 - 09:23 | 567042 Quintus
Quintus's picture

Use a specialist vaulting company, e.g. Viamat.

Tue, 09/07/2010 - 12:25 | 567383 DosZap
DosZap's picture

Beer,

Seeming contradiction there huh?.

I guess you go to Swissie land, and bury it.........you must be able to access it at will.

Er', excuse me.........Swissieland long way from the back 20.

The first line is it.

"Gold must only be held in its physical form and the holder of gold must have direct access to the gold"

Period.

I trust the Swiss Banks as far as I can throw them.............they are part of the BEAST.

They sold out, and gave in to the Globalist monster. Allowed their customers to get outed, and screwed.

Tue, 09/07/2010 - 09:04 | 566997 morph
morph's picture

Cherry picked graph. Why 1999?

Tue, 09/07/2010 - 09:08 | 567008 LoneStarHog
LoneStarHog's picture

Look, there are bull and bear markets in EVERYTHING.  Have you ever heard of TIMING?

That is the canard of that idiot Douchenger, et al.  They REFUSE to accept the fact that there are phases to a new bull market, which began in 1999 for gold. THEY keep going back to 1980.

TIMING got the first smart investors in 1999...

Tue, 09/07/2010 - 09:53 | 567093 morph
morph's picture

Anyone can pick a time period on any graph and declare a "xyx market"

Bull and bear markets are hindsight. Your reasoning seems to say that the bull market will never end.

Tue, 09/07/2010 - 10:03 | 567109 LoneStarHog
LoneStarHog's picture

"Your reasoning seems to say that the bull market will never end." -- WHAT don't you understand about, "...bull & bear markets in everything..."..."timing"?

If there are BULL & BEAR markets in EVERYTHING, if means that EVERYTHING will have a BULL & BEAR market and TIMING through RESEARCH is critical.

Tue, 09/07/2010 - 10:19 | 567150 tmosley
tmosley's picture

The chart since 1900 looks much the same.  So what?

Tue, 09/07/2010 - 09:04 | 566998 Sophist Economicus
Sophist Economicus's picture

BANG! ZOOM!

Tue, 09/07/2010 - 09:07 | 567004 SWRichmond
SWRichmond's picture

When silver hits $25.00 I'm sending Blythe Masters a thank-you note.

Tue, 09/07/2010 - 09:08 | 567006 yabs
yabs's picture

I think these people are missing the point why are we pricing gold in units of worthless paper

If the dollar collapses then it will have to be replaced and therefore nothing will be priced in dollars.

There will come a time when an ounce of gold will not be worth

any dollars or euros or any other currency

An ounce of gold will be worth .....an ounze of gold.

then maybe all currencies will be priced in gold

People looking to buy gold to see its value go up in dollars are missing the purpose of gold

the purpose is wealth preservation in a tangible asset that has been used as currency for thousands of years.

When all paper collapses gold will still be there

Tue, 09/07/2010 - 09:33 | 567062 snowball777
snowball777's picture

All 4.8B troy ounces...too bad there's 6+B of us and several trillions in dollar denominated stuff to fit into that teeny bag.

Will we all carry microscopic quantities, perhaps individual atoms, for payment?

Tue, 09/07/2010 - 10:00 | 567106 ColonelCooper
ColonelCooper's picture

Isn't that what Morgans are for?

Tue, 09/07/2010 - 15:11 | 567736 RockyRacoon
RockyRacoon's picture

Right, Coop.  And junk silver of all types.   I especially like all half dollars, even Franklins.  They have a heft that is convenient for the pocket.  I carry a 1 oz silver eagle all the time.  It's getting a nice patina and some wear -- looks better every day.  I show it to people and they just marvel at it.  

Tue, 09/07/2010 - 09:16 | 567030 yabs
yabs's picture

I buy my gold with Bullion Vault does anyone know how reliable

they are?

I mean for all I know it too could be a naked short scam?

Tyler how about a piece on the best way to hold gold and how

reliable they are?

physical gold is the way but whats the best way

not in your house thats for sure

it could be confiscated

Tue, 09/07/2010 - 09:28 | 567051 Quintus
Quintus's picture

I use BV.  Before I invested I talked to them, and to their auditors.  I also checked the auditor's bona fides with their professional association, to ensure they were not a Madoff-style one-man-band.  I also pulled BV's accounts filings and companies house records.

As far as I can tell from all of the above, they are legitimate.  If not, those auditors are going to get a big chunk taken out of their professional indemnity insurance.

Tue, 09/07/2010 - 09:39 | 567071 snowball777
snowball777's picture

It's all good; they've got a derivative of their policy to cover that with Cassano Jr.

Tue, 09/07/2010 - 09:56 | 567088 chrisina
chrisina's picture

Problem I see with BV is that transactions are done through Lloyds TSB, and I don't trust a UK bank.

 

Questions : what happens if Lloyds TSB goes bust ? What happens if the British Govt confiscates all Gold in BV or forbids any british bank to operate any Gold redemption transactions?

I prefer a 100% Swiss solution because history has shown that the Swiss Govt will never intervene to confiscate Gold. Anything partly UK or partly US based is not to be trusted.

Tue, 09/07/2010 - 10:02 | 567108 VFR
VFR's picture

My BV gold is in Switzerland.

Tue, 09/07/2010 - 10:12 | 567123 chrisina
chrisina's picture

Yes, but BV is incorporated in the UK, and all transactions go via Lloyds TSB, a UK bank.

What happens if the UK Govt forces by law BV and Lloyds TSB to freeze and confiscate all accounts? How will you take delivery of your Gold from that vault in Switzerland? Also, it's only a time share of a 400 ozt bullion bar, so the only thing you'll get back if the UK Govt intervenes is a big crap load of UKFiatcos at whatever rate will have been deemed "appropriate" by TPTB.

 

Tue, 09/07/2010 - 10:14 | 567131 Quintus
Quintus's picture

Lloyds is merely the bank that your money transits through on the way to and from Geneva or wherever your gold is.  If you ensure that you hold no cash balance with BV, and use the US or Swiss vault, then neither Lloyds nor the UK government can do a damn thing to touch you.

Tue, 09/07/2010 - 10:30 | 567164 chrisina
chrisina's picture

So via whom and how do you get hold of your Gold that's in a vault in Switzerland or a redumption in specie if BV and Lloyds TSB are forbidden to operate such business?

Who do you contact?

Tue, 09/07/2010 - 10:37 | 567192 Quintus
Quintus's picture

If I want my gold, I can go to Viamat in Geneva and collect in units of 400oz bars for an administration fee.  The procedure for doing so is available from the bullionvault website.

If Lloyds looks like going under or comes under government pressure, BV has accounts at other banks in place.  If I want to sell my gold for fiat, they will simply wire the money to me via those other accounts.  You are surely not suggesting that a private company is only allowed to deal with one bank are you?  In any case, Bullionvault has servers in multiple jurisdictions, so defining where exactly the transactions are taking place would be difficult.  If the UK outlaws the business, it could be legitimately argued that they are not doing any business in the UK anyway.

Ultimately, BV does not own the gold, and they do not hold the gold.  The UK government cannot force them to hand over what isn't theirs and what they do not have possession of.  Can't be done.  

If the Swiss government agreed to force viamat (A Swiss company) to send the gold held on behalf of BV customers to the UK, what message does that send to everybody with assets in Switzerland?  The Swiss would never, ever, compromise on this.  It would be the end of their private banking and asset custodian industry.

Tue, 09/07/2010 - 11:02 | 567248 chrisina
chrisina's picture

Fine, as long as you are certain that if the UK Govt were to stop BV from operating, you have a procedure and can contact Viamat to redeem your Gold whenever you want it.

 

I just think that solutions that are 100% Swiss, where you have direct contact with the vault in Switzerland, and where you have bars or coins that are entirely yours stored in their vault are safer. They are more expensive though.

Tue, 09/07/2010 - 12:32 | 567403 DosZap
DosZap's picture

Quintus,

Wanna bet?

These vaults will be one of the first places taken down, IF they go onto that mode.

The old saying is still valid.

 

If you do not have it where your can PHYSICALLY get to it,anytime you want,but no one else can, then you do NOT own PM's.

Tue, 09/07/2010 - 15:15 | 567738 RockyRacoon
RockyRacoon's picture

Correct.  Trust no government.  JFC.  That's the point in the first place.

If you absolutely cannot hold physical gold then you need to look at why not!

It is likely that the reason is more psychological than strategic.

Tue, 09/07/2010 - 10:14 | 567133 Chemba
Chemba's picture

I buy my Gold through Goldman Sachs.  They get me the best prices, and they store it for me in a vault 500' below 200 West Street, protected by a squad of 100 tough SOB' who are former special ops commandos from the IDF.

Tue, 09/07/2010 - 14:12 | 567609 zaknick
zaknick's picture

F@ck GS "gold".

Tue, 09/07/2010 - 15:16 | 567747 RockyRacoon
RockyRacoon's picture

Cute.  Not funny, but cute.

Tue, 09/07/2010 - 09:34 | 567065 yabs
yabs's picture

quintus i agree thats why I am with them

the only tyhing that bothers me is the Rothchilds have reportedly bought inot  a large share of them

when ever they are involved its bad news

they are TPTB

Tue, 09/07/2010 - 09:44 | 567077 Quintus
Quintus's picture

Indeed.  There are two ways of looking at the Rothchild investment. 

(a) They are seeking control of the gold held at BV and will, at some point, wind up the business and offer cash settlement.  Legally, investors could still request their gold back (it is held as a 'Bailment' and is not the property of BV) - it would be the equivalent to a dry-cleaners closing down, they cannot sell the clothes you left with them since ownership resides with you.

(b) They are smart people with long involvement in the gold markets, and have invested in a business which they KNOW is going to be massively profitable as gold explodes over the coming years.

I prefer to consider option (b) but am watching closely to see if the Rothschilds' minority stake increases.

Tue, 09/07/2010 - 09:48 | 567085 yabs
yabs's picture

well hope its B but why it disgusts me

I was buying gold as a hedge against the rothchilds Zionist financial terrorism now they have followed me

Tue, 09/07/2010 - 10:22 | 567159 tmosley
tmosley's picture

Hey, arsonists buy fire insurance too.  If they do it right, they can make quite a bit of money in the process.

Tue, 09/07/2010 - 09:59 | 567095 VFR
VFR's picture

I have both gold and silver with bullionvault.

Via Mat is subcontracted to keep the gold safe by bullionvault who are only custodians of the gold

the bullion is also insured as part of the monthly storage fee. All bullionvault gold is assayed and drilled, testing for purity. There is also a daily audit.

Bullionvault company assets are also held in gold and therefore available at 24 hours noitice. The Rothchilds recently invested in bullionvault.

 

Tue, 09/07/2010 - 10:46 | 567213 boiow
boiow's picture

bullionvault is the future.  imho

Tue, 09/07/2010 - 12:39 | 567411 DosZap
DosZap's picture

Guy's,

IF it's outlawed, YOU will lose it, if you do not control it physically......

The Swiss fkrs sold out their Banking system, after how long?.

These vaults WILL have no choice, if the authorities show up, and load up.

Your SCREWED.

Think they will shoot it out to keep your PM's?.

We have lost Legal Contracts, we have lost Eminent domain, and the BEAST that controls the wealth of the world, will take what's yours, and never blink an eye.

(This applies esp if your Americans).

 

Tue, 09/07/2010 - 13:10 | 567479 Quintus
Quintus's picture

Yes, I do think they would shoot it out to defend their most profitable industry, should the need arise.  I have spent a number of years in Switzerland and I know how they view their sovereignty, and how well armed and prepared they are to defend it.

That said, it would never come to that.  If the Swiss can survive WWII intact when surrounded by Nazi states, they can survive what's coming.  Anyone with the power to order a strike on Switzerland probably has a personal vested interest in keeping Switzerland independent, and those numbered accounts and deposit boxes intact, if you see what I mean.

Tue, 09/07/2010 - 10:09 | 567122 jkruffin
jkruffin's picture

The only issue I see with owning Gold is that when the time comes, the government will just confiscate as they have in the past.  If you are going to buy it, make sure you buy in amounts not reportable and you have it in your physical possession and hidden.

They could easily do the same with Silver I imagine.

Government control is what it is all about. As long as we let them have it, they own us.

Tue, 09/07/2010 - 10:14 | 567135 grunion
grunion's picture

It would be a mistake to ignore the impact of ammunition sales as a factor in the shortage. People are buying ammo like they have never bought it before.

Tue, 09/07/2010 - 10:23 | 567162 grunion
grunion's picture

Which brings us back to land. You need enough to survive on and have plenty of hidey-holes for all those things good citizens should not own. That of course being determined by TPTB.

Tue, 09/07/2010 - 15:20 | 567759 RockyRacoon
RockyRacoon's picture

Own it all in moderation.  It would be foolish to concentrate one's wealth in any one element of a good survival strategy.  Unless, one's object was to be the go-to guy in some area -- I like pharmaceuticals and think that would be successful.   I don't follow my own advice here but I may "diversify".

Tue, 09/07/2010 - 10:54 | 567234 FranSix
FranSix's picture

Long term averages in bullion prices make more sense than peak values.  All we have to go by are inflation-adjusted prices with past peaks, but the real story will be the yearly average price. (people are talking investment, but really what they're considering are gainsaying short term trades.)

The inflation-adjusted averages for the 1980 peak are:

CPI-adjusted = ~$2500U.S./oz.

shadowstats = ~$7500U.S./oz.

Tom's Inflation Calculator

http://www.halfhill.com/inflation.html

Gold was up 4.09 times from the low of ~$250U.S./oz., so dollars to doughnuts the interim target will probably be 4.09 times $681U.S./oz.

What will carry the gold price to the levels and blow out eventually is the downside mania(worthless fiat paper neurosis) in the dollar, or some sort of currency event. (unless the gold price becomes a fixed value in the G20)

Tue, 09/07/2010 - 11:09 | 567260 topshelfstuff
topshelfstuff's picture

have you all read these two FinancialTimes articles? essential reading...understand the IMF's SDR's won't be a remedy and the current agreement runs out as 2010 runs out

Beijing looks to broaden renminbi use

By Robert Cookson in Hong Kong
http://www.ft.com/cms/s/0/182a2b70-b130-11df-b899-00144feabdc0.html

http://www.ft.com/cms/s/0/81500cea-a9fc-11df-8eb1-00144feabdc0.html

Beijing looks to broaden renminbi use
By Jamil Anderlini in Beijing

...........Beijing is trying to encourage use of the renminbi for trade as part of
a long-term plan to promote it as a reserve currency and reduce
China's exposure to the US dollar

Tue, 09/07/2010 - 11:11 | 567263 yabs
yabs's picture

yes the only things I see as being valuable in the future are precious metals, ammo and guns, food and cigarettes

I was in Angola in the 90's when Inflation ran  at 1000 percent much like Zimbabwe today and cigarettes were used as money sometimes

Tue, 09/07/2010 - 15:23 | 567766 RockyRacoon
RockyRacoon's picture

Prisons have all sorts of "money", cigarettes being one of them.  Whatever works is what works.  Funny how this has progressed to using prison commissary chits or receipts.  That is the exact parallel to paper money.  No wonder printing presses aren't made available to the inmates!

Tue, 09/07/2010 - 11:40 | 567317 tamboo
tamboo's picture

long on water, booze, and babywipes.

Tue, 09/07/2010 - 11:56 | 567344 VFR
VFR's picture

it's good play devil's advocate Chrisana, It reminded me to look at the policy again. mmmm. I am happy with my gold exit. Should maybe rethink silver. Ulimately though I can see an exit currently in sterling, dollars or euros. of course with a fiat currency collapse and new currencies I may be happy to accept "new world gold coins" or a "tally stick". either way the gold will not go away. By hook or by crook the governments will find a way of controlling the masses through fiat. There may be fireworks along the way and if there are afterwards I hope to sell my gold or trade it dependent on what someone will accept at the time.

Tue, 09/07/2010 - 12:29 | 567397 tony bonn
tony bonn's picture

excellent article confirming 3 trusims

he who owns the gold makes the rules

gold is in permanent and severe backwardation....

there is no gold in ft knox save for a few gold plated tungsten bars

we are witnessing the crumbling of the ancien regime fucktarde...

the ruling plutocratic class marches on with its evil plans....

Tue, 09/07/2010 - 13:42 | 567550 XitSam
XitSam's picture

What is the reason for "Physical gold should preferably be stored outside your country of residence and outside the banking system."

Tue, 09/07/2010 - 14:36 | 567656 quasimodo
quasimodo's picture

$10K per ounce? Better than so much I guess

Tue, 09/07/2010 - 17:37 | 568093 Grand Supercycle
Grand Supercycle's picture

DOW/S&P500/FTSE/EURO short signal continues:

http://stockmarket618.wordpress.com

Tue, 09/07/2010 - 21:19 | 568563 Mr.Prussian
Mr.Prussian's picture

Trust the Swiss? are you kidding, try reading up on how they decided to keep as much of the Nazi plundered gold they were laundering after WWII. The only way you have PMs is to have them in your personal possession, geez buy a nice safe and your done.

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