PHYSICAL Gold is a Reasonable Investment Right Now

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Fri, 04/30/2010 - 12:12 | 325631 mchandler@ameri...
mchandler@ameritech.net's picture

Figure there is also a certain amount of skimming at the mine level by operators/owners.  What better way to save than directly with no tax and no records.

Fri, 04/30/2010 - 12:03 | 325600 Frank Owen
Frank Owen's picture

Semi-related. Take a look at that casket! Murdered Carl Williams buried in gold casket:

http://www.abc.net.au/news/stories/2010/04/30/2886516.htm

Fri, 04/30/2010 - 16:37 | 326090 RockyRacoon
RockyRacoon's picture

Somebody will be digging that sucker up.   Probably a "business" partner.  It's probably gold foil over particle board.

Fri, 04/30/2010 - 17:17 | 326172 Bear
Bear's picture

Maybe gold paint ... dig away

Fri, 04/30/2010 - 11:53 | 325567 sheeple
sheeple's picture

Very nice breakdown George Washington, thank you.

Fri, 04/30/2010 - 11:50 | 325561 dumpster
dumpster's picture

what old stale news .

bandwagon.. ANY one with a scintilla of understanding , had this gold move square on at many many up ticks ago.

gold has been a resonable investment to preserve buying power for ten years ,

of coure the smart money has shown that with a long term chart of gold

 

Fri, 04/30/2010 - 11:47 | 325557 Internet Tough Guy
Internet Tough Guy's picture

At the risk of enraging silver bugs, I have been trading silver for gold. Gold has been acting like money since the crisis started, but silver has been acting like an industrial commodity. Remember the crash into the 9s? Sure, it doubled again but I don't like the ride.

 

Gold will be at the heart of the next monetary system. That's why central banks hoard it. Silver? Not so much.

Rebuttal, bitches?

 

Fri, 04/30/2010 - 14:03 | 325837 tmosley
tmosley's picture

Rebuttal?  Not so much, but I am happy to take the other side of that trade.  I think that either way, we will both be sitting in the shade sipping gin and tonics while the paper bugs are mowing our respective lawns.

I would argue that the central banks don't hold silver any more because industrial uses were found for it, so they could accumulate more purchasing power by selling the silver.  Of course, now there isn't any left, and the people who knew why they held silver are long dead.  

Fri, 04/30/2010 - 12:46 | 325678 Gunther
Gunther's picture

ITG,

supply and demand:

There are way less known hoards of gold then Silver.

A while ago was an analysis published at the oildrum.com how long known mining can continue in terms of current production versus known ore. Silver in the ground will be mined in about ten years, way before gold.

On the demand side silver gets used up in various industrial processes where it is hard to recover and price-insensitive. Moreover, it is known as the poor man's gold and the second monetary metal.

If the goldbugs disagree with silver being money, look at what the shorts are doing when they try to bring the price down. Silver and gold are sold at the same time.

If you look at a long-term-gold/silver-ratio-chart the ratio is high when the prices are low (in bear markets) and low when prices are high (at the end of bull markets).

 

Fri, 04/30/2010 - 12:22 | 325655 THE DORK OF CORK
THE DORK OF CORK's picture

So you reckon silver will become the new copper - maybe.

I keep a 10% ratio for the worst case scenario but was pleasantly surprised by talk of massive silver manipulation due to the fact that few large buyers take physical delivery.

I personally cannot see it being taken out of the monetary equation in a age of deglobalisation.

Fri, 04/30/2010 - 11:41 | 325544 Trace Mayer J.D.
Trace Mayer J.D.'s picture

Here is an updated and pretty version of the Liquidity Pyramid.

Fri, 04/30/2010 - 11:28 | 325527 Common_Cents22
Common_Cents22's picture

in this rigged market, I am concerned about the insiders vs. fundamentals.

It seems the right way to play this poker game is not your own cards(fundies) but how your opponents are betting.

If the big banks/hedge funds run the game and they are shelling out gold, can't the gold market be depressed tremendously by TPTB?  

Especially when seeing the above report that outsider banks might be taking more physical delivery, supplied by JP Morgan.

 

So when the likes of JP Morgan is divested of most of its gold at high prices, won't they then be incentivized (in concert w/ others) to take down the gold market?  Isn't the gold market small enough for tremendous manipulation?

 

Or is there so much demand on the other side by the rest of us that it would backfire on the insiders?

Fri, 04/30/2010 - 11:16 | 325503 Calmly Waiting ...
Calmly Waiting for the Collapse's picture

A better time to buy it was when it was $650 and a bit more an oz.

 

Haaaaaaaaaaaaaaaaaaaaaaa

 

 

Fri, 04/30/2010 - 11:52 | 325565 dumpster
dumpster's picture

haaaaaaaaaaaaaa

 

even better time was 300

Fri, 04/30/2010 - 11:44 | 325549 Internet Tough Guy
Internet Tough Guy's picture

You ain't seen nothing yet.

Fri, 04/30/2010 - 11:16 | 325502 Jesse
Jesse's picture

 

Looks like Bank of Nova Scotia just picked up about 1.7 tonnes.

http://jessescrossroadscafe.blogspot.com/2010/04/guess-who-took-delivery-of-17-tons-of.html

And of course, the seller was JPM

Fri, 04/30/2010 - 11:10 | 325492 trav7777
trav7777's picture

Look at the production curve...either in aggregate or nation-by-nation.

THERE is your Peak theory, right there.

Despite a freaking 300 or 400% runup in the price, NO NEW SUPPLY.  Right here we have actual production figures BITCH SLAPPING a fundamental "axiom" of all economics theory right in the face before issuing an institutional beatdown to it with dimension lumber.

The economists were WRONG.  Higher prices do not cause more supply; they only do when they CAN.  Economists DID NOT accept and DO NOT RECOGNIZE that supply rates can peak!  This shit to them is TOTALLY unforseen.  The reason for this is because their stupid theories and schools were hashed out 100 years ago when supplies could grow YoY seemingly forever.  Hubbert didn't release his Peak Theory in oil until the 1950s and he was laughed at for forecasting something coming to the USA 20 years hence.

The economists assume ever-increasing supply and they are in charge; they have the ears of the "leadership" and they assume rosy scenarios.

At least with gold, all the supply ever mined is still here; with oil, every last barrel has been burnt.  This should serve as a warning to peak deniers like Douchinger because gold's supply data is better-developed than oil's.

Fri, 04/30/2010 - 11:29 | 325517 THE DORK OF CORK
THE DORK OF CORK's picture

Trav7777 - I think you are right up to a point but you also have to factor in how coming off the gold standard affected companies and government's ability to build new energy capital.

After the ultimate symbol of capital was downgraded the last check on the Keynesian monetarist consumption accelerator was no more.

Countries or companies who wished to push against the Washington consensus had to for example go into massive fiscal debt to build nuclear and the like yet the debt costs were similar for a country which wished to turbocharge consumption.

They also felt the heat from the FEDs proxies such as the IMF.

There will have to be a subdivision where more consumption above income is heavily penalised with extreme interest and productive non oil based capital spending getting essentially free money.

 

Fri, 04/30/2010 - 11:53 | 325575 trav7777
trav7777's picture

I look at it like this:  the world has been on ZIRP since Japan hit the supply-side wall in the late 80s.

Against that backdrop, and steadily rising price trends, I can name several commodities for which there have been peak supply rates followed by declines and no amount of repricing has affected this.  Peak is a real phenomenon and no amount of monetary crap can undo it.  Being on or off the gold standard changes nothing.

The US maintained the BW gold standard until domestic supply peaked.  We're down 40% in production since then.  Free money, gold, none of this matters.  The earth's ability to produce or deliver the commodity is all that is relevant.

Fri, 04/30/2010 - 12:12 | 325630 THE DORK OF CORK
THE DORK OF CORK's picture

Well the earths ability to produce is dependent on how much energy we can produce and then utilise this energy to extract.

The Monetary system does matter , some free marketeers believe it is some sort of natural phenomena, it is of course a man made symbolic construct.

However it is the rules we choose to live with - as I said earlier the present system is geared towards consumption and does not recognize that fossil fuels are finite.

So the obvious solution is to recognize oil depletion in its accounting.

The solution is to give free money to enterprises that increase the non oil / gas energy capital and to penalise consumption above income levels.

Eventually the system will again get into some sort of balance as the increased energy capital will slowly overpower depletion.

Fri, 04/30/2010 - 11:02 | 325473 MaxFrost
MaxFrost's picture

Gold? Are you nuts? There's no practical commercial use for it, it doesn't pay interest, you can't eat it, and they won't accept it at my local shop!

Hah! Just kidding! Gold bitchez!

Fri, 04/30/2010 - 10:53 | 325456 Anton LaVey
Anton LaVey's picture

And see this, also :

http://jessescrossroadscafe.blogspot.com/2010/04/guess-who-took-delivery...

I have the utmost respect for Jesse, and this little entry on his blog is a bombshell.

Fri, 04/30/2010 - 11:35 | 325538 Hulk
Hulk's picture

Its just a matter of time now that taking physical delivery will show what  a farce the paper gold market is... prepare for a repeat of an age old history lesson.

Fri, 04/30/2010 - 11:13 | 325496 THE DORK OF CORK
THE DORK OF CORK's picture

This could set the cat amongst the pigeons.

I am starting to think that keeping 20% Euro cash / gov bonds is a falsely conservative play.

Fri, 04/30/2010 - 04:56 | 325050 THE DORK OF CORK
THE DORK OF CORK's picture

We live in a strange financial world - our betters seem to think that the removal of some government bond blocks will be the best way to preserve the integrity of the debt pyramid.

If they continue with this madness we will be left with just the gold base - lets at least try to mark down bank balance sheets to their true value which is zero or negative , seize the deposits to build new but smaller banks with much lower fractional reserves , give the bank bondholders the equity if they want which will be next to useless mortgage paper and issue new debt free government paper to rebuild some constructive physical capital and counter the contraction in the economy that will be result from the above policey decisions.

Fri, 04/30/2010 - 03:29 | 325011 Gordon_Gekko
Gordon_Gekko's picture

It is not a "reasonable" investment - it is the ONLY investment right now.

Fri, 04/30/2010 - 13:10 | 325730 chumbawamba
chumbawamba's picture

Food, water and shelter are not investments, they are necessities; requirements.  At this juncture in human history, gold can be added to that list.

Calling it an "investment" just shows the type of mentality that prevails in the world today.  Earthquakes are rupturing the land, volcanoes are spewing toxic dust into the atmosphere, man-made disasters are spoiling the oceans, war, famine, pestilence, greed, gluttony, stupidity...we are in times of Biblical proportions, and yet these guys still want to talk about investments.

It doesn't get any sillier than that.

I am Chumbawamba.

Fri, 04/30/2010 - 16:35 | 326085 Ripped Chunk
Ripped Chunk's picture

!

Fri, 04/30/2010 - 13:52 | 325809 tmosley
tmosley's picture

You can invest in necessities.  One might buy enough rice to feed his whole neighborhood for a year, and enough guns and ammo to defend it, then he can get damn near anything he wants in trade in the even of a supply chain collapse.

Fri, 04/30/2010 - 13:46 | 325799 Hulk
Fri, 04/30/2010 - 11:58 | 325587 sheeple
sheeple's picture

Frustration roams when sheeples (cough cough, some are bankers) confidently argues that "gold could not buy grocery", or "you live in a cave" ... having said that, ppl that I talk to who possesses gold are very knowledgeable on global current events and great students to historic literatures, coincident?

Fri, 04/30/2010 - 03:17 | 325005 AnAnonymous
AnAnonymous's picture

Sovereign defaults?

 

Lets see.

One key element in the current organization is that most of the supporting countries (the ones ultimately valorizing the freshly emitted credits) are unilaterally indebted to supported countries(the ones emitting the credits)

This opens the door to unilateral manipulation of their debt, a good way to keep them when they are desesperately needed.

Now what will happen if some countries part of the supported countries default?

That'd be a justification for the farmed countries just to walk away. Leading to some harsh answers as an extorter cant allow the cattle they are living on to quit the scheme.

 

So what? These sovereign defaults should only be spoken of when they do happen. Not their prospect.

 

Gold: it is the right time to buy physical gold as later, it might no longer possible. In the vast transfer of wealth going on, seizing the opportunity is compulsory because tomorrow, when the extraction capabilities are no longer, gold will only be available through recirculation. Meaning that extortion will grow much less easy.

 

Gold as a currency is nutsery. Most people claiming this will be first in line to sell their gold to return in cash as soon as the opportunity rises.

 

To operate an effective transfer, a combination of big carreers and small carreers is the best. Big carreers,  cannot match some effects provided by number.

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