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Today's Winner: Gold
Today's main winning asset class was gold, with ongoing weakness across most other assets, except for bonds of course, which continues to price in concerns about deflation. The divergence we noted so frequently last week, between stocks and bonds is now a thing of the past, and has been replaced by that between gold and bonds. Yet gold's rise is hardly driven by expectations of inflation as oil, a much more inflation sensitive commodity tanked. In other words, the QE lite thesis is playing out as predicted, although Goldman's prediction yesterday about a surge in gold likely also put the idiot mutual fund money in the bid for spot. Technically, gold is parked at resistance at the highest level over the past 40 days. All those who have been frothing about an imminent liquidation-induced plunge like that experienced on July 16, have been silenced. Should the 1,220 resistance be breached tomorrow, the next level to keep track of will be the record highs from June. At that point whether the LBMA will follow up with its patented choke (g)old, is anyone's guess.
And for the Fib fans, gold has now retraced 50% of the recent drop from the all time high of $1265.
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Drole. Cruel.... but fair. +1
Hedge gold stock with Ritchie Brothers Auctioneer, profit?
Larry Kudlow (I know, I know... eveeel capitalistic banker) basically agrees that gold is heading up:
"Did the Fed choose stimulus over dollar stability? The greenback fell and gold rose after the FOMC signaled today that it would keep its balance sheet steady by reinvesting the proceeds of mortgage bonds into Treasuries. This is the first Fed policy shift in about a year. It comes in response to a slower economy and disappointing job numbers, with the Fed downgrading its economic outlook in its FOMC statement.
By itself, this is a modest move. But it could be the start of something bigger. If recovery conditions continue to slow, the Fed could be more aggressive by monetizing more Treasury debt and expanding the balance sheet to print money. If it does that, the dollar will depreciate more and gold will rise more. A lot more."
The only thing wrong with Kudlow's analysis here is his use of the word "if" in place of "when".
Like when you said "if gold goes to 25000, we should have a zerohedge convention?"
I guess that since he said if, he doesn't mean it though. He must have been joking.
Johnny, first you go around saying gold to $0 and now you say it will be $25,000. What's up with that?
Naw, I said 54000. That's more reasonable once we become Zimbabwe.
"I'll have a picnic if the gold price hits 25000 soon."
When akak said exactly the same thing you berated him more than a dozen times over the statement. He said exactly the same thing as you did.
He has nothing to say because he cannot stand being called exactly on the words he uses.
Too bad, so sad.
I didn't get the memo: Are we cheerleading for Gold today or are we supposed to be contrary to Goldman and say it's going to dip?
"My first take was that as smart as this Tyler Durden is, his assessment on this one is off the mark.
Having watched Goldman "Hannibal Lecter" Sachs very closely over the years and reported on their activities all that time, my bet is the opposite.
GS is all over the gold market.
For a decade or more they were the ringleader of The Gold Cartel, but have disappeared in the last year or so. Can’t find them anywhere on the short side.
But, most importantly, Goldman has a direct line to the US Treasury.
In addition to a number of GS alums ending up as Treasury Secretaries like Robert Rubin and Hank Paulson, many others are staffing a number of Treasury positions.
That direct contact means they know just how bad things are and just what the Fed is going to have to do to try and save the day.
Information such as that is why they have infiltrated the Treasury. Bet on GS on this one, not against them."
Bill Murphy @ LeMet
Gold did well yesterday during all the carnage and again today.
The MACD's have turned up for both the metal and the shares, Gold has taken out it's 50 day moving average while the shares are bumping right up against their's.
This IS the start of a huge leg upward, a few more days of sideways to positive action should do the trick to unleash technical traders in gold's direction...time will tell.
Read the Best... Junk the Rest
Thanks David for sharing what Le Metropole has to say, I am too cheap to subscribe.
But, really, for most of us it really doesn't matter (much) if prices are anywhere from $900 - $1500 in the short term. It is cheap insurance v .gov and banksters. If it goes to $55,000 (fofoa.blogsport.com) and society remains intact, well guess Who the Winners Are?
Agree. This stuff is merely a small hedge for us proles. 5-10% seems like a fair chunk to be in PMs. I'm not looking to double or triple my investment. I'm looking to cover my ass if inflation explodes. Or even still be alright in the case of deflation.
If you are betting the farm on any type of investment, you are not investing, you are gambling. Diversification across many asset types is key.
I think many people on here come across as contrarian gamblers, addicted to the idea of their bets winning. Be it gold exploding, or the stock market imploding, they seek the rush of being right when the masses (or the deemed "authorities" in a field) are wrong. Schadenfreude squared.
Dingleberry is a married fart.
DB, there might be times in life when you have to gamble. If you are convinced that you don't want to feed the beast and be part of the system then you gamble and get out of consum.Gold is actually a positive optimistical bet for the future! Only sane people are looking for the only sane solution. UST, corporate bonds, sovereign debt of the world are dirt and gambling, not gold. If you only run for dirty profits everyday cheating other people (who don't even dream what happens to their money!), of course you are a nice part of the system you say you hate. How stupid are people who don't understand that they should not play this dirty rigged market?
The only people who think that it's rigged are the people trading on "principles" instead of technicals.
The market is what it is. You only think it's rigged because you can't see it for what it is.
" market is what is.
What is it my dear JB? A dirty place full of thieves? Can you characterise the market? How do you call this sharks bowle? Part of a healthy economy? Inevitable corruption and lies?
If I can't see it, how do You see it?
You now know why i said before that your generation is not different from the others before. As long as you seem to make some profit you stay in line. Being so young and so corrupt is really sad. You are just as dirty unethical as the others before you. SCUM.
Jonny, you're (your, your're, yer, yore, yaw) boring enough to drive a man to drink. Thanks.
I agree with your sentiment about taking calculated risk. Much akin to when a fighter pilot is thrust into a dogfight after thousands of hours of plain old flying. Preparation for the moment where you need calculated aggression.
I just don't see the apocalypse on the horizon. I think we are in for some troubled times, but nothing crazy. There will be turmoil, but I just don't see the US collapsing. Our entitlement programs may go belly up, and our military may shrink it's budget in half or even to a quarter of what it is today. We may default. Still, I think the world isn't going to ignore us if we do.
When The Shit Hits The Fan, it will happen so quick, that the Flash Crash will seem like a nanosecond in memory.
It is always better to be a year early, than 5 minutes too late.
You will be much happier after the "instant denoument" if you have 50% of your holdings in physical gold, rather than a meager 5-10%.
Wait. And then weep.
.
As I said above, I just don't see the apocalypse coming nigh. This is just part of a greater cycle where the PTB restack the deck.
The best preparation that one can have is a skill set that is valuable no matter what the situation. And I am very comfortable with that.
Excellent rebuttal to last night's post. Thanks for sharing.
Go Gold - kill that fucking debt baby.
Wow, M2 sure decided to explode from last week.
Mine may not be the first post but since no on felt the need to do so...
GOLD BITCHEZ!!!!!
+ a well deserved $1210 for being first.
go away
The winner will be gold it's a matter of time. TPTB still have the smoke to influence the price and for the most part view gold as the enemy. Volcker was very clear about this fact. I believe their make believe world is crumbling and soon will be ancient history. The problem is the entire financial system will crash around them.
Thank God for Scotch and gold.
I Like GOLD. I Like SILVER. I will LOVE it if the Goldmans et al are heavily short into the next rocket launch for the PM's. Keep the faith and Go to church...
And today's loser: JohnnyBravo, aka MasterBates.
(Today's and every day's loser, that is.)
I predict it will not be more than 15 femtoseconds before that hysterical gold-hating troll instinctively sniffs out this thread and begins to vomit his anti-gold bile all over it. That is one prediction that I am willing to make!
And why does Johnny hate gold so vehemently?
"Because gold is honest money, it is disliked by dishonest men."
He has been saying recently that he expects gold to rise to somewhere around 1220 before plummeting. Some sort of chart thing. If it goes through 1220 and stays higher he won't be around for a while. Go gold!
Wow. And it did that - exactly.
I'm glad that somebody else remembers that prediction, so that I don't have to post it. Most of the people here aren't honest and wouldn't admit that I said that.
I said it was in a rising wedge at 1250+, and the wedge broke down.
Then I said in the 1160's it would retrace up to 1220.
Now it has retraced.
Resume downtrend.
Everyone, JB went short at 1220. Lets remember that.
he told me
LOL. I didn't tell you anything. I wouldn't short something so boring...
But yeah, remember that I told you it's about to drop when you're claiming "manipulation" next week when its sub 1200!
Nobody should care what you say, JB. People here are thinking long term. Your predictions might be good, but they don't matter. Of course your foes would be happy to see honesty winning the daily battle in gold wars, but nobody really expects it. Serious people here only want to know when it's best buying for the far future, buy better, lose less. But buying gold they always win, if not short term, surely long term. You might be only a small survivor to pay for your school, a poor small trader, but your mistake is to believe the rest of ZH are like you. Sadly you are representative for your generation: ignorant, without ethics. Because gold IS ethics, long dismissed by the greedy brutal sick American society.
Actually, it wasn't MY generation that drove the fucking country into a ditch.
My generation hasn't borrowed 15 trillion since 1980.
My generation didn't outsource all the jobs to China and India.
My generation didn't start wars in Iraq and Afghanistan.
My generation didn't devalue the currency.
That would be the baby boomer generation that ruined America.
Now they want their social security and entitlements, after they've robbed America to bankruptcy for 30 years.
I used trading to pay my way. I'm proud of that. If I had started with more money, I'd be a millionaire. It is what it is.
If you think that gold will be higher once the crisis is over, you are mistaken.
Prices do matter. I'd rather buy at 900 than 1200, etc.
I beg your pardon, JB, you are perfectly right. it's not your generation who made this havoc we are in. It's going on for a long, long time. But you generation is also part of this continuing ignorance and greed. You, yourself are greedy. What do you need your mil for? Life is not equal with money. Money should be enough to let you live at SOME freedom. Because people cannot live in complete freedom, they ask for limitations. So what do you want your fortune for? Buy a girl, consumerism, ipads, travel? Some people here want to survive in a decent way what's going to come. I think you understand that but i don't see why you seem to be negative against gold. Of course everybody is angry when you buy at the peak and next day it's some %s down but these are only unimportant emotions out of greed, because we are not rational and nobody knows how much you'll need some day. Nobody knows the real price you have to pay to survive or even feel comfortable after the unraveling of this whole mess generated so long before!
But you generation is also part of this continuing ignorance and greed. You, yourself are greedy.
desgust,
Have you ever read any Ayn Rand? A lot of folks don't care for her (either you like her or you don't, there's no middle ground) but I think she's quite brilliant.
She talks about the virtue of selfishness and the vice of altruism. If you give her a chance, she makes a lot of sense. Rand says that you should willfully pursue your own goals based on your own values. She says that our culture has mistakenly preached altruism over selfishness and encouraged sacrifice and that this will be our downfall. Altruistic sacrifice, in Rand's view, means that individuals are encouraged or forced into doing things they would not voluntarily do at the expense of their own lives and their own values.
As a simple example, Rand says that charity is a good thing if you give to someone you want to give to but not if you are forced to give charity to those whom you would rather not.
What I'm getting at here is that "greediness," is not Johnny's problem. His problem is that he has sacrificed himself to a system which he feels is inescapable and therefore he embraces it, giving it what Rand calls, "the sanction of the victim."
Johnny is a pain in the ass but he is, to some degree, a victim.
Ayn Rand Interview with Tom Snyder on The Tomorrow Show:
http://www.youtube.com/watch?v=4doTzCs9lEc
too bad, i can't past her F A C E.
That's funny. When she speaks I can't look away. Spellbound, I believe, is the word.
"If you think that gold will be higher once the crisis is over, you are mistaken."
The crisis doesn't end until the fiat currencies of countries now approaching or beyond debt = 100% GDP fail. I think my Gold will be in pretty good shape once the crisis is over.
My true wish would be that my Gold will fail to be a good investment... but most of us know that is simply impossible.
Dupe post, sorry.
desgust, no, I think that because he is young and has not read (or at least t hought through) History and is not a FATHER, that might explain it better.
I have just been called to dinner: filet mignon and Duhart Moulon. Mmm!
You want some history? Here's a true story.
Once upon a time, there was a prosperous country that had the best economy in the world.
Then the baby boomers were born, and stole from it for 50 years.
Now the country is bankrupt, as the baby boomers look to steal even more. Social security and free health care for all of them - even if they did outsource all the jobs and borrow 100% of GDP over the last 30 years.
America is now bankrupt thanks to the baby boomers.
The End.
Once upon a time the land was full of young baby boomers who cried, "The former generation has screwed up the world, but we are better and nicer and gooder and smarter and do you know where I can go catch a buzz and find some groovy chicks."
Well, actually no one other than Greg Brady (who, ironically became a teen idol named Johnny Bravo in one Brady Bunch episode) ever said "groovy chicks," but I digress.
The point is this. Folks have been hearing that old person/young person debate for thousands of years. Once you gain a little experience you'll have a better perspective on these things.
There is truth in what you say Bravo re boomers screwing everything up. But, there are a LOT of other factors as well.
History itself teaches that civilizations rise and fall. Fiat money systems always fall.
Alas, yes, we boomers did more than our share. But, far as I am concerned, the single biggest factor re our financial malaise is OVERSPENDING by .gov. All the bankster shenanigans, bad Fed policies, etc., all contribute as well. But, it's the SPENDING that has gotten is to where we are.
...
I must correct myself from above. It was Duhart Milon that we had with dinner, I feel like such a moron rookie, blowing a decent name from Bordeaux.
You wanna man up about it, JB? I'll tell you what, one year from today (September 12th, 2011) you can give me one American gold eagle for today's price from APMEX, including delivery, which comes to $1297.84. You can cover this bet at any time you wish, but I will deliver payment (say via paypal, or a similar service), which will be credited to your account upon my receipt of the gold.
This bet is perfect for you and your fellow gold trolls, because it rewards or punishes based upon how right or wrong the given party is. Know that I will only accept physical delivery of an American Gold Eagle. This means that even if spot is $250, and you find that you have to pay a $7000 premium to get physical bullion, you still must pay it. Of course, if spot is $250, and an eagle is available for $50 more than that, you will prfit handsomely.
What do you say? Are you man or coward?
He is a total, complete, and unreserved Coward.
Johnny Bravo will never, never, never take that bet.
He knows he will lose.
.
LOL at facilitators.
http://www.eagleforum.org/educate/1998/nov98/focus.html
We should all be of one mind so that we can be manipulated into being wrong on a massive scale.
Now that was an interesting read.
Why do some posters return repeatedly to a forum that would appear to hold no interest for them, to provoke anger and to belittle, whilst remaining oddly calm?
V O M I T , cause he can†
Nice to see you back, akak!
I noticed I didn't see you the entire time that gold's rising wedge broke down, like I predicted.
It's a shame that the chart is about to break down again and I won't be able to see you make more gold to 25000 calls.
Oh well.
Sell now, or forever hold your peace!
Nice to see you JB. I guess it was just a rumor then that you and your boss JonNadler were knocking back double-shots of Belvedere drowning JPM's sorrows...
As I mentioned above, most of us (at least the lesser argumentative ones) want our gold as insurance v .gov and banksters ruining the world economy. I also remind our friends that it really does not make much (much) of a difference to at least some of us whether gold is from $900 - $1500, it is still CHEAP insurance!
It's only insurance if it is worth more than you bought it for.
As for the rumors, I posted a lot earlier today, you must have missed it.
I don't hide when my predictions are wrong like the *others* here.
I even make predictions, not just say "goled to 54000 bitchez!" That alone deserves respect.
Have a nice day!
Naah, I was just yanking your chain about rumors of you & your boss Nadler drowning your sorrows.
I did follow the earlier thread today on gold and the back and forth you argumentative types have.
You too, re nice day!
You have always been decent to me, and you will never see me be anything but decent back to you.
So yeah, I truly mean that you should have a nice day.
You called me a name akak!
Now I'm going to go cry like a little bitch to Tyler!
Wahhhh!!!! Tyler!! Somebody disagrees with me! Now I'm going to accuse them of making personal attacks on me!
You guys are a bunch of babies and WRONG with your investment calls on top of it.
You wanna man up about it, JB? I'll tell you what, one year from today (September 12th, 2011) you can give me one American gold eagle for today's price from APMEX, including delivery, which comes to $1297.84. You can cover this bet at any time you wish, but I will deliver payment (say via paypal, or a similar service), which will be credited to your account upon my receipt of the gold.
This bet is perfect for you and your fellow gold trolls, because it rewards or punishes based upon how right or wrong the given party is. Know that I will only accept physical delivery of an American Gold Eagle. This means that even if spot is $250, and you find that you have to pay a $7000 premium to get physical bullion, you still must pay it. Of course, if spot is $250, and an eagle is available for $50 more than that, you will prfit handsomely.
What do you say? Are you man or coward?
Hey, hey, hey, hey!
Why the hate, JB?
I know JPM doesn't pay it's webmunchkins like it used to, but, hey, times are tough.
You are right in that we ZH'ers are quick to pull the trigger.
So was Daniel Shays.
Read. Learn. Be a patriot.
Johnny, you've got to have two dicks. Nobody could wank themselves this stupid or this silly playing with only one!
http://www.artdaily.com/index.asp?int_sec=2&int_new=39904
more info
http://www.huffingtonpost.com/2010/08/12/100000-bill-rare-coins-hi_n_679...
"the fair features seldom-seen gold treasurers brought from the Smithsonian Institution's vaults including America's first $20 gold coin - valued by independent experts at $15 million today - and its last $20 coin."
say goodbye, g o o d b y e
Hey where's Johnny Bravo?
I am no fan of Juanny Barfo's but his price point of $1220 has still not been met. I am just pointing that out before he does because I believe it will be busted in the next few days as gold continues to rise like it has during this secular bull run.
P.S. - Michael Pento is on Bloomberg and Pim Foxx presently.
Gold could drop to $1000 or $900 in the short-term, and it still would not invalidate the argument for and advantages of holding gold during this time of unprecedented world financial and monetary upheaval, chaos and uncertainty.
Like any good disinformation agent and disingenuous propagandist, he tries to spread discouragement and confusion with short-term minutia and irrelevent side arguments, and by engaging in dishonest and ad hominem personal attacks, while the underlying and fundamental reasons for holding gold today are not only still in place, but being strengthened and reinforced by the reckless and unsustainable actions of world governments to build the largest financial bubble in history with their own unpayable and exponentially-growing debt.
You know I'm with you ak.
Owner, holder, buyer, believer. I am a Gold Champion.
The only person making personal attacks is you and your buddies akak.
The proof is in this thread, and in any other thread where you reply to me.
All I do is make the correct calls based on technicals. My newest call (with a price target of 1220) has been correct.
I also said that I thought it would break down slightly below 1220, but I'm only 4 dollars away from 1220 anyway.
Who cares? The fact is that I was right, and you're the only person making personal attacks.
I would expect somebody of your profound oracular wisdom to be out making billions, and not trolling an online forum spreading lies and hate towards gold and its advocates. I mean, since you're always right and all.
I guess trolling is the hobby of billionaires, eh?
Give me sufficient start up capital and I'll start making real money.
I wish I was a billionaire. Alas, I'm only a college student that has already made enough money trading to pay for school and go full time without working.
Anyway, any more personal attacks, or are you just going to claim that I'm the one making them when it's you?
I should be making billions, but I only have thousands to trade with. It's sad.
Give me sufficient start up capital and I'll start making real money.
Typical fuckin' communist. Always an excuse for his failures, always with his hand out.
Sorry, I don't have more money than thousands. That's all I was able to earn in my short working life before the baby boomers stole all the money and drove the economy into a ditch.
I didn't fail at all. I made about 50k out of 7k. Unfortunately, I use that money to pay tuition and live.
I'm GenX. I've had to pay for your education and I want my money back on that defective product.
Signed, sealed, and delivered.
A True Loser.
A sad sack College Student with piss-all money.
Who is commenting on a board with traders who are part of the real world of players.
What a turd.
.
That's your claim? 7K into 50, and you go to school fulltime and have no other job?
Suddenly you don't annoy me anymore. I just pity you. Not because of the amount of money, but because of how hard you have worked to TALK it into something.
Douche.
More evidence of the double whammy economy (inflation during deflation): Stocks flop 2 days in a row on alarming economic data and a Fed downgrade of the economy, the dollar index rises, buuuuuut:
Sugar up 0.66%, Lumber up 0.76%, Orange juice up 1.6%, Corn up 2.7%, Wheat up 2.9%, Pork bellies up 2.9%, coffee up 3%, cotton up 3.3%, Rice up 3.3%, Soybeans up 4.5%, Soy Meal up 6.7%. Don't forget copper and palladium, both already up at boom time price levels despite severe recession. And the ministry of truth says that CPI is completely benign. As food inflates, soon there'll be a market for potatoes and collard greens on CBOT
real nice to be able to front run aint it???? the goldman PUMP and the cramer PUMP
that is the only main reason its up so much
if you weren't wildly axed, today's winner was govvies. Except for gold which also performed quite well.
GS has been bullish for a really long time on gold. It is hard to use them as a counter indicator. They have not been flipping much.
Hahahaha!
But seriously: Tyler, would you please remove my account from ZH immediately.
Warmest Regards To All
today, i lost my gold virginity. bought 10 canadian maples. $1,287.60 per coin with shipping + insurance. next stop, 590! ....mossberg 590
Very nice. I got one of those. Almost took my shoulder off.
Should have bought the mossberg 12-gauge pistol grip shotgun.
Congrats. How does it feel?
good. i hope i end up giving the coins away for free to my daughter in 25 years.
EXACTLY my plan.
+ $1210
Maybe by then: + $55,000
Good for you swanpoint! You'll probably get hungry for more, buying gold is kind of addictive...
Mr. Mossberg is the only one of the trio I do not have (Mr. Kalashinkov and Mr. Beretta I do have).
Garands, baby, Garands.
Once you start, you never stop.
next stop, 590! ....mossberg 590
See if your dealer can get you a 590A. It's the model made for the military. With the M-7 bayonet it looks rather...impressive.
http://www.muamalatcouncil.com/news/34-general-articles/103-kelantan-lau...
On the 12th August the government of Kelantan will start moving with the current, Divine Current, and every stroke in the direction of the current would bring Kelantan 10 times farther than a stroke against it; the first stroke will be the payment of 25% of salaries to public servants in Dinar and Dirham; all state companies will be accepting payments in Dinar and Dirham is another stroke; 600 shops will receive stickers “We Accept Dinar and Dirham” – yet another stroke.
http://www.muamalatcouncil.com/component/content/article/100-the-kelanta...
Gold/silverstandard in Malaysia on 12 august 2010???
Please make sure that you login under different names to junk me!
Also, when you make a personal attack on me, make sure you go cry to Tyler telling him I attacked you!
I buy Phsical Gold because it above all it is an act REBELLION.
Yessiree Bob - better than giving the finger to the Feds.
Jonny, we will be proven right when gold goes to 200.
Tell them about gold in 1980 and how it fell to 250 and how if you bought during those three seconds when gold was 850 you lost all your money, tell them Jonny
You can't eat gold too
if gold went from 850 to 250, it will go from 1250 to.... a Kitco gaptcha
Possibly.
Then again, real estate prices are still low.
And property taxes aren't paying out the dividends they used to.
Oh Ben...
I'll see you for dinner Jonny
Ahh! Bravo's boss got here at long last. Silly me, I had heard (and spread) a rumor that you two were knocking back double-shots of Belvedere drowning your sorrows there near JPM's HQ.
Glad you, too, are OK! Whew!
Carry on...
Johnny when its cold out and you have just burnt the last of your fiat to keep warm and you haven,t got a pot to piss in,what will you do ? ...................
Retreat to my mountain compound, shooting goldbugs and looting their gold all the way.
Typical anti-gold propagandist answer. I will kill everyone if I don't have gold or food or water or anything. I will kill anyone at any time because I can do that if I don't have anything.
I continue to wait for a liquidation-indiced selloff so I can buy, which is no doubt why it continues not to happen.
If the Fed wants to reflate the stock market and housing market they just need to stop supressing gold prices. Even if they don't, either a depression or a debt based currency will eventually defeat the ongong gold supression efforts. A deep delfationary depression will cause deficits to explode as tax revenues go down the tank causing gold to climb towards the clouds as faith is lost in the US ability to repay and thus in Federal Reserve Notes, dollars. On the other hand if the dollar loses value to to the realizaton of never ending QE you might as well get the benefit of actual reflation by letting gold float.
In any case, silver has a massive leverage on gold and is such a small market under such concentrated short supression that it would not take much to take most of the physical silver off the London and US exchanges.
What few people understand about silver is this:
Silver remains at 1/6th of its inflation adjusted high price and they especially don't know anything about the research releated to the depleted inventories of available above ground inventories of silver as related in this article:
http://www.bullionmark.com.au/component/content/article/17.html
Amazing Silver
by Max DeFault
My latest research involved looking at the amount of ounces in existence (all the metal ever mined plus recycle minus consumption) back to 1900 and developing a series of metrics based on price and population.
The first chart shows that 1 billion ounces of gold existed in 1900 versus 5 billion ounces today in 2008. This makes sense. Gold is valuable, therefore hoarded and its industrial uses are largely reclaimed through recycling. Roughly speaking, new mine supply adds to the ounces in existence.
However, 12 billion ounces of silver existed in 1900 but only 1 billion remain in 2008. Yes thats right, less than 1 billion ounces and there is 5 times more gold available than silver! Why is this so? Well, silver has far more industrial uses than gold. It is critical to electronics, whitegoods, medical technology, solar technology, industrial equipment, water purification, photography, nano technology, military weapons etc etc. Silver is critical in our daily lives. However the low price of silver makes recycling uneconomic, so silver used is silver consumed and lost forever. Secondly, silver is mined as a bi product of other metals such as zinc, lead, copper and gold. Silver is scarce in the earth and very expensive to mine. World silver mine supply could decline substantially in the next 2 years as economic conditions worsen around the globe. Silver mines themselves are going bust (ie Macmin silver in Australia) but also the base metal miners who mine some silver as a bi product have now become uneconomic and closing at an accelerated pace. Peak silver is with us!
Overlaying the population of 1.6 billion we see the world per capita gold at 0.6 ounces in 1900. In 2008 this has increased slightly to 0.7 ounces per capita despite the population increasing to 6.75 billion. So gold has been added to world supply slightly faster than population growth. Silver on the other hand has declined from 7.5 ounces per capita in 1900 to just over 0.1 ounces per person on the planet. See chart below.
If we then bring price into the mix the story becomes even more compelling. If we take the 1900 gold price of $20 and silver price of $0.65 and multiply by the ounces at the same period we get a value or market cap for gold and silver. By dividing silver into gold we can see relative market caps in a ratio. In 1900 this ratio was 2.6. for every dollar of silver in the world there was $2.6 dollars of gold. Astoundingly in 2008 there is $400 in gold in the world for ever dollar of silver. Silver is scarce and dramatically under valued versus gold.
The final chart highlights the much publicised gold to silver ratio. Simply the price of silver divided into the price of gold. Given the 700 year average is 15 the currently level of 80 appears extreme.
I wish to stress that I am very bullish on gold bullion. I expect to see gold prices of between $3000 - $6500 in the next 5 - 10 years. However I am ultra bullish on silver. If the history, data, fundamentals, technicals, pricing and even market structure can overwhelm the political forces holding silver down, prices could reach unimaginable levels almost overnight.
Silver price over 600 years
Click here to see larger image
Whilst this chart is a few years out of date it clearly indicates in the very long run how undervalued silver is in absolute terms and relative to gold. The historical high for silver was set 531 years ago in 1477, topping at (using the purchasing power of 1998 dollars) a princely $806 an ounce. By comparison, the price of silver is less than $15 an ounce today, and was only about $5 an ounce in 1998, after having bottomed at under $4 an ounce in 1992. Now, fast-forward to today as our 2009 dollars, which have fallen 50% in purchasing power since 1998, means that the all-time high price of silver, set in 1477, now stands at $1,012 an ounce, measured in the buying power of 2009 dollars! Over a thousand dollars an ounce! For silver! In case you haven't noticed, we're unmistakably coming off the lows of a 530-year bear market in silver and, theoretically, entering a long bull market, which ought to be exciting for people who have a lot riding on silver gaining so much in price, or even just keeping up with this kind of thing, like, for instance, Israel Friedman, writing at InvestmentRarities.com, who notes that there are 5 billion ounces of gold sitting around someplace in the world, but that there are only 1 billion ounces of silver, even though 5 times as much silver is mined every year than gold. Therefore, silver is being consumed at prodigious rates, which is why Mr. Friedman says, "Silver is needed to maintain and improve future standards of living. Gold is needed for luxury and emotional reasons. Silver is for the optimist, gold for the pessimist."In that optimistic vein, Mr. Friedman says, "I honestly believe that silver must eventually sell for five to ten times what the price of gold may be". Let’s hope he is right!
Twenty five years ago my Grandfather told me to buy gold. He was living in Europe during WWII. After the war he became rich from gold and diamonds. I have never bought any gold. For the record I agree with JB and Mako.
Don't forget our friend...Was he front running his Goldman alumnni in his prescient Gold call yesterday ???
http://seekingalpha.com/article/220163-cramer-s-mad-money-the-sell-off-is-a-golden-opportunity-8-11-10
It's currently 8:20PM & for fun I counted Johnny Bravo's "hits" so far today. Total hits this thread .... 52 out of 195. Over 25% activity from the JB. Well done!
It's currently 8:20PM & for fun I counted Johnny Bravo's "hits" so far today. Total hits this thread .... 52 out of 195. Over 25% activity from the JB. Well done!
It's currently 8:20PM & for fun I counted Johnny Bravo's "hits" so far today. Total hits this thread .... 52 out of 195. Over 25% activity from the JB. Well done!
"Inflation IS growth. Without inflation, prices would never increase, and neither would profits. 2% inflation is good."
I thought the only people who still believed this were politicians and mentalists like Krugman. I thought the general public would have realised by now that this is a load of bollocks. Guess not.
There was a slight deflationary trend throughout the 19th century which paralleled the Industrial Revolution. So obviously Johnny is very, very wrong when he says: "Inflation IS growth. Without inflation, prices would never increase, and neither would profits. 2% inflation is good."
Johnny Bravo is an invention of zerohedge to get the discussion going. JB is not a colllege student. He is nothing that he says he is. All of you who get so emotional when he attacks gold, when he talks about rising wedges and charts...just chill out. He's only here to get you talking your book, revealing your true positions.
There's an advantage to getting you to be honest when he's not really even there. It is kinda like taking a poll. If the emotional commenter actually says something profound or wise, or posts a site on the internet where excellent information can be found, JB's inventor gets the benefit without having to do the work.
Chill out goldbugs. The fundamentals haven't changed. Nothing has changed. Charts [or rather JB's "technicals"] reveal nothing about gold. Fiat, stocks, trading for profit--it's all an illusion. Buy gold. Sleep well.
Whether he is an inventon or not, we chatter because we like to chatter. That's why we're here. Johnny is a great catalyst. He mimics conventional wisdom in form and function. He repeats the same mistaken arguments over and over, just like the MSM or your Cousin Joey. That forces folks to come up with ever stronger arguments in support of their views.
As for posters disclosing that which should not be disclosed, I don't see how JB's fictitious nature draws out any information which we would not also willing supply to an appreciative newbie.
I chatter because I am.
I listen because there are some very intelligent folks here and I want to pick up as much from them as I can.
Inflation IS growth. Without inflation, prices would never increase, and neither would profits.
JB is ZH comment (therefore content) inflation. Without JB, comments would never increase, neither would profits (nuggets).
You are correct Crockett, however JB has had you.
That sounds kinky. And not in a good way. Not at all...
However, I do enjoy the back and forth. But if you want to talk about running up the post count/page views, have you ever checked out any of the Middle East threads? They're explosive (much like the Middle East itself).
CLIT, rising wedges
now that is an exciting movement.
Rising wedgies?
Raising veggies. It's an orgasmic thing -- I mean organic.
I understand the SEC is giving Sprott a hard time in clearing their Silver Bullion IPO. Wonder why given the similarity to the Gold Bullion Trust.
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