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Cash Out Of Gold And Send Kids To College?

Tyler Durden's picture




 

From GoldCore

Cash Out Of Gold And Send Kids To College?

Today's AM fix was USD 1,608.50, EUR 1,310.92, and GBP 1,030.69 per ounce.

Yesterday’s AM fix was USD 1,612.75, EUR 1,307.46 and GBP 1,029.79 per ounce.

Gold climbed $4.90 or 0.03% in New York yesterday and closed at $1,617.70/oz. Silver fell to $27.86 then rallied and finished with a gain of 0.39%.

Gold appears to in lock down mode this week with prices trapped in an unusually narrow 1% or $15 range between $1,603/oz and $1,618/oz.

Gold Spot $/oz Daily,20 days & 20 minutes - (Bloomberg)

Support is at $1,585/oz to $1,590/oz and at $1,570/oz. Resistance is at last week’s high of $1,628/oz.

Technically, the narrowing wedge pattern suggests that a close below or above these levels could lead to rapid and sharp moves down or up.

Gold was initially flat in Asia but took a dip and has remained weak in European trading.

XAU/GBP Exchange Rate Daily  - (Bloomberg)

Gold is on track for its 2nd weekly gain – possibly due to concerns about the Chinese, US and global economy. Slowdowns in all major economies mean that it’s not really a question of if the central banks will employ fiscal stimulus packages, only when.

An indication of continuing demand, especially institutional, for gold was seen in the data from ETF Securities' which showed gold ETF holdings up a very large 216,000 ounces or 6.7 tons on Thursday.

Cash Out Of Gold And Send Kids To College?

The Financial Times published an interesting article on Wednesday by a Tokyo-based analyst with Arcus Research, Peter Tasker, entitled of 'Cash out of gold and send kids to college'.

The article is interesting as it is an articulate synopsis of those who are either negative on and or bearish on gold. It clearly shows the continuing failure to understand the importance of gold as a diversification and as financial insurance.

Tasker incorrectly states that gold is "just another financial asset, as vulnerable to the shifts of investor sentiment as an emerging market."

He conveniently ignores over 2,000 years of history showing how gold is a store of value. He also ignores recent academic research showing gold to be a hedging instrument and a safe haven asset.

Another fact unacknowledged is how gold has clearly been a store of value since the current financial and economic crisis began in 2007. Since then gold has protected people from depreciating financial assets (such as equities and noncore bonds) and from depreciating fiat currencies such as the dollar, the pound and more recently the euro. 

Further evidence that gold is not just "another financial asset" is seen in the fact that some of the largest buyers of gold bullion bars today are central banks.

They are buying physical gold bullion in order to diversify their foreign exchange holdings and to own a physical hard asset that will protect in the event of currency crises or an international monetary crisis.

That gold remains a store of value is also seen in the fact that the other most important buyers of gold in the world are store of wealth buyers in Asia and the Middle East (particularly China and India but also in Turkey, Iran, Indonesia, Thailand, Malaysia, Vietnam etc).

Millions of these buyers do not view gold as a risky "financial asset." They know through experience that gold is a store of wealth and are buying near pure gold jewellery and bullion coins and bars in order to protect against currency debasement.  

Were Peter to have a conversation with a few Spanish, Irish or Greek investors he would quickly realize why gold is not just another “risk on” asset.

Japanese, British and American investors would be wise to diversify into assets that have protected periphery European investors in recent months.

He also suggests that gold is a bubble as "the price has simply become too rich".

He makes a comparison with the "great historical bubbles", such as "Japanese stocks in the 1980s" and the "Nasdaq in the 1990s".  This comparison is simplistic and misleading as the percentage price gains in both the Nikkei and Nasdaq bubbles was orders of magnitude greater than gold's gradual rise since in 2000.

Indeed if one looks at gold's performance in an all important long term perspective (see video showing ‘Gold Undervalued From Long Term Perspective’ <3 mins, 20 seconds>), one sees that gold's gains in recent years are very sustainable and gold is merely playing catch up after the massive under performance and bear market of the 1980's and 1990's.

The Financial Times is fairly good in covering the gold market and allowing a plurality of opinion regarding gold. Every so often simplistic, unbalanced articles about gold are published.

XAU/EUR Exchange Rate Daily - (Bloomberg)

Such articles by 'experts' have the effect of confusing and misleading other journalists and the wider public and contribute to weak hands selling their gold holdings. This was seen again in recent days.

What is interesting is that such articles are often a contrarian indicator. They often come at a time of heightened negative sentiment against gold and can often mark an intermediate low in the gold price.

These articles are also a good contrarian indicator as they show that there remains a fundamental lack of knowledge about and appreciation of gold and its importance as a diversification for portfolios.

Incidentally, in the volatile year that has been 2011, gold has still outperformed many assets and seen its wealth preservation attributes shine again.

Gold has risen by 8.7% in euro terms, by 3.1% in US dollar terms and by 2.3% in sterling terms so far in 2011.

Never let the facts get in the way of a good gold bashing article.

Tasker accepts that US equities, despite being in a 12 year bull market, are still not cheap and yet he does not advise people to cash out of US equities.

Not acknowledged is the fact that only a tiny minority of investors have any allocation to gold whatsoever and therefore are not in a position to “cash out of gold” even if they were imprudent to do so.

Finally, investors and savers who have an allocation to gold will, in the coming years, be the people who can as Tasker concludes "buy a nice house, hire some workers, send your kids to college and eat big breakfasts".

That is gold's value – it is a proven store of wealth that protects people's living standards from government profligacy and financial asset and currency depreciation.

'Cash out of gold and send kids to college' can be read here.

Our video about gold as a store of value versus cash which debunks Tasker’s article can be watched here.

Cross Currency Table – (Bloomberg)

 

NEWSWIRE

(Bloomberg) -- China Cracks Down on Extortion of Gold Exchange Members: Xinhua

Chinese police caught 10 people on suspicion of hacking computer systems and extorting 14 member companies of Hong Kong’s

Chinese Gold and Silver Exchange Society early this year, Xinhua News Agency reported yesterday, citing police in Hunan province.

?Six of the people were detained, Xinhua said

?The people are suspected of trying to extort 100,000-300,000 yuan from the member companies for allowing the companies’  websites to continue operating, according to Xinhua

For breaking news and commentary on financial markets and gold, follow us on Twitter.

NEWS

Gold Bulls Strengthen on Outlook for Additional Stimulus - Bloomberg

Gold ticks down, investors still eye China stimulus – Reuters

Gold Little Changed Amid Firm Dollar – RTT News

Gold, corn and oil among top assets in crisis - FT

COMMENTARY

Gold rush in China could see it sweep past India - Mineweb

ANALYSIS - Waiting for QE3: gold's last hurrah? - Reuters

What Happens to Greece’s Gold when They Exit the Eurozone - GoldSeek

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Fri, 08/10/2012 - 08:06 | 2693554 JonNadler
JonNadler's picture

he forgot to mention that you can't eat gold!

Fri, 08/10/2012 - 08:09 | 2693560 Popo
Popo's picture

Well...to be fair:  Gold *is* wildly subject to investor sentiment.   However,  that sentiment is currently very very good.

But I meet plenty of goldbugs who like gold for the wrong reason:  Because they think it always goes up.   That there's crazy talk, and it's the same crazy belief that slaughtered the real-estate sheep.

Fri, 08/10/2012 - 08:11 | 2693564 SGS
SGS's picture

Ponzi goyim lemming continuum endures once again.

Fri, 08/10/2012 - 08:14 | 2693569 Badabing
Badabing's picture

Oh I forgot that currency is based on its edibility, good point.

 

 

 

dick

Fri, 08/10/2012 - 08:38 | 2693590 strannick
strannick's picture

Once in college they can study Keynsian economics, and then write articles about how bad gold is to pay off their student loans

Fri, 08/10/2012 - 08:43 | 2693631 francis_sawyer
francis_sawyer's picture

Sell your kids & buy gold...

Fri, 08/10/2012 - 08:48 | 2693633 GetZeeGold
GetZeeGold's picture

 

 

Hi Johnny.....some advise. Steal as much gold as you can...cause we're totally screwing you over right now.

 

Forget college.....get gold. When those rocket scientists are working for you....you can borrow one of their degrees.

 

Fri, 08/10/2012 - 09:43 | 2693770 tocointhephrase
tocointhephrase's picture

THEY ALSO FAIL TO MENTION SILVER IN THAT CHART....HMMMMMM? EDIT:OVER THE LAST 5 YEARS SILVER HAS BEEN IN THE TOP THREE FOR PERFORMANCE!!!

Fri, 08/10/2012 - 11:20 | 2694169 boogerbently
boogerbently's picture

I LOVE the "Gravity" theory in equity analysis. (What goes up must come down)

" gold is a bubble as "the price has simply become too rich"."

I imagine they've been saying this since gold was $35/oz.

Sat, 08/11/2012 - 01:28 | 2696450 TwoShortPlanks
TwoShortPlanks's picture

Gold must really be a fucked investment if Corn with Pubic Hair has performed better.

Fri, 08/10/2012 - 08:20 | 2693582 Red Heeler
Red Heeler's picture

"Well...to be fair: Gold *is* wildly subject to investor sentiment. "

Well...to be fair: Gold *is* mildly subject to paper manipulation.

Fri, 08/10/2012 - 10:33 | 2694012 KK Tipton
KK Tipton's picture

How much is 1oz. of FRN paper money worth compared to gold?

 

Now there's a left field question....not really responding to your exact comment.

 

Anybody? Somebody put a stack of $20's on a scale plz.

 

 

Fri, 08/10/2012 - 10:45 | 2694056 blunderdog
blunderdog's picture

FRNs weigh about a gram each.

Fri, 08/10/2012 - 11:53 | 2694253 KK Tipton
KK Tipton's picture

I just threw a $20 on an electronic scale and it didn't even register.

A thin gold/diamond ring here weighed 1 gram.

Silver ring was 4 grams.

US nickel is 5 grams.

 

Though I did toss the gold ring and the $20 on the scale and got 2 grams.
Scale is not very sensitive. FRN might be just under 1gm?

 

Edit - 1 troy ounce is 31 grams.

http://gold.yabz.com/measurements.htm

Lots of interesting gold info at that site.

 

 

Fri, 08/10/2012 - 12:38 | 2694411 blunderdog
blunderdog's picture

FRNs weigh about a gram each.

That's how the cheap bill counting machines WORK.

Fri, 08/10/2012 - 13:11 | 2694484 Red Heeler
Red Heeler's picture

"Anybody? Somebody put a stack of $20's on a scale plz."

The answer is: 29.

29 Jacksons x $20 = $580.

Fri, 08/10/2012 - 09:05 | 2693704 Snidley Whipsnae
Snidley Whipsnae's picture

Real estate isn't very portable unless it's a mobile home.

Real estate hasn't been used as money for the last 5 thousand years.

and... most people that own gold know that it's purchasing power does fluctuate but returns to 'normal' once economies stabilize.

Those that believe that gold is a 'get rich quick' scheme are the minority, imo.

Gold is to prevent 'getting poor quickly'.

Fri, 08/10/2012 - 09:24 | 2693734 CH1
CH1's picture

A college diploma is the most insanely over-proced paper on the planet!

Fri, 08/10/2012 - 13:28 | 2694538 aerojet
aerojet's picture

I just received the alumni magazine for one of the hoity-toity graduate schools I attended.  It made me a little bit queasy reading about all the various bs awards and honors the faculty bestows on each other.  The amount and dollar value of some of the grants they received was also eye-opening.  The whole thing is a scam--I felt it when I was there, and I still feel the same way, and that's why I'm not working in higher education. 

Fri, 08/10/2012 - 11:48 | 2694254 ElvisDog
ElvisDog's picture

Real estate also needs constant maintenance and upkeep costs. The only upkeep cost with gold is the cost of storing it, which can be as little as $75-100 a year for a safe deposit box. A house will cost at least $5000-10000 a year to maintain when property taxes and insurace are included.

Fri, 08/10/2012 - 15:21 | 2694994 smiler03
smiler03's picture

You can live in Real Estate.

Fri, 08/10/2012 - 09:28 | 2693791 adamas
adamas's picture

get a grip.... Real Estate was an appreciating asset for one reason and one only , banks were perpetually loosening lending criteria for 40 years , pumping floods of fresh new fiat into housing , everyone jumped aboard like good little sheep thinking that buying a house on a credit card was the way to retire early and rich. now debt is collapsing , mortgages are unavailable , housing will revert to its true value, the value of its component parts, wood/brick/copper pipes. Gold on the other hand forms the base of Exters pyramid.... the layer above are US treasuries, once the fascination with lending money to banksrupt uncle Sam wanes there is only one place on earth for funds to go in size....GOLD ... hope this helps...

Fri, 08/10/2012 - 11:21 | 2694173 Death and Gravity
Death and Gravity's picture

Partially true. Real estate has indeed been appreciating for decades due to, one: reduced credit-giving restraints by banks, second: increased money supply in the western world, and third and most important: The fact that you cannot make more land, but it's easy to make more humans, with associated human needs, ie. a place to live and work.

Mortgages and RE values are falling (not collapsing) due to the fact that the non-propertied wage workers are likewise falling into unemployment and outright poverty, with an inability to service their mortgage payments, simply because there is no money from work income to pay it.

As long as mainstream economics do not acknowledge this fundamental fact in resource scarcity of land, there will be a ever widening cleft between property owners and non-propertied wage workers, which NO amount of welfareist redistribution will solve.

Fri, 08/10/2012 - 11:27 | 2694189 Paul Atreides
Paul Atreides's picture

LOL fuckin troll at it again, shillin for the government...you're scum!

Fri, 08/10/2012 - 13:30 | 2694546 aerojet
aerojet's picture

You can make more humans, but most will live in abject poverty and never purchase real estate.

Fri, 08/10/2012 - 08:14 | 2693572 Colombian Gringo
Colombian Gringo's picture

Yes you can. You can swallow a small gold coin and it will come out the other end untarnished.

Swallow a fed reserve note, and notice how it reverts to its real nature, crap.

 

Fri, 08/10/2012 - 08:25 | 2693588 Death and Gravity
Death and Gravity's picture

FRN by another name:

Brownbacks.

Fri, 08/10/2012 - 10:05 | 2693923 tabasco71
tabasco71's picture

He doesn't need to - corn lets its returns do the talking.... duh!!

 

Case of putting your money where your mouth is

Fri, 08/10/2012 - 10:13 | 2693946 jimod
jimod's picture

But you can eat cattle. The Watusi and the Masai are right! 

Fri, 08/10/2012 - 11:02 | 2694114 DoChenRollingBearing
DoChenRollingBearing's picture

Ah!  JonNadler strikes again!  Where's Bravo?  

And thay guy who says it onlt costs $5 to get it out of the ground?

Fri, 08/10/2012 - 08:07 | 2693556 Aziz
Aziz's picture

Drop out of college, cash into gold.

Fri, 08/10/2012 - 08:14 | 2693570 AU5K
AU5K's picture

+1

Fri, 08/10/2012 - 08:18 | 2693577 malikai
malikai's picture

That thought in 1999/2000 would have been absolutely rediculous!

Nevermind the fact that those who did have that thought are now wondering what to do with their stunning gains.

Fri, 08/10/2012 - 08:32 | 2693601 GMadScientist
GMadScientist's picture

One 1/10 oz coin at a time...Lulz

Fri, 08/10/2012 - 09:18 | 2693749 youngman
youngman's picture

I get mad when people say a "college" degree is what you need....that is to broad brushed for me.....if you study engineering...write code...medical... ...you will get a job.....if you study AFRICAN LESBIAN WRITERS....you will not get a job...to many people do the latter.....they pile up the government loans ..."study" for 8 years...Maybe go to GRAD school....because that is where the dreadlocks really look cool....they have no intention of paying the loans back...they believe that the government will come in and save them.....pay them off or forgive them..College is a right in their minds....also a job..healtcare..housing....it should all be supplied by government....see where this is going..

Fri, 08/10/2012 - 09:48 | 2693848 blunderdog
blunderdog's picture

    if you study engineering...write code...medical.

That's bullshit, though.  There are plenty of engineers and coders who are working crap jobs, or on the bricks.

Medical stuff's different because it's a government-funded industry.

Fri, 08/10/2012 - 13:32 | 2694560 aerojet
aerojet's picture

I would only add that while they are doing all that higher educatin' they are getting a near total indoctrination into leftist ideology.

Fri, 08/10/2012 - 14:54 | 2694893 blunderdog
blunderdog's picture

You ever been to a college?

Fri, 08/10/2012 - 08:09 | 2693557 Badabing
Badabing's picture

 

Cash Out Of Gold And Send Kids To College?

Only if they teach “Gold is real money 101”

Fri, 08/10/2012 - 08:14 | 2693561 hugovanderbubble
hugovanderbubble's picture

Gold will suffer from Debt Haircuts But other assets will suffer much more.

So in relative terms yes Long Physical Gold

Fri, 08/10/2012 - 08:11 | 2693562 TideFighter
TideFighter's picture

Soon China will have all of our gold and our graduates.

Fri, 08/10/2012 - 08:17 | 2693576 SGS
SGS's picture

no one wants your graduates.  Washed up drunk and cocaine induced 4 year degrees coupled with the clap and a little clymitia is so 90's.  THis education thing is OVER.

 

SELL CORN BUY GOLD.

 

BOOM.

Fri, 08/10/2012 - 08:24 | 2693587 Death and Gravity
Death and Gravity's picture

Sell Corn buy Cannabis.

"Dat ain't corn, boy!"

Fri, 08/10/2012 - 08:34 | 2693603 GMadScientist
GMadScientist's picture

You didn't smoke that Acapulco gold!

Fri, 08/10/2012 - 11:04 | 2694122 DoChenRollingBearing
DoChenRollingBearing's picture

It took a village!

Fri, 08/10/2012 - 08:54 | 2693670 El Oregonian
El Oregonian's picture

Sell corn by REAL food, instead of Monsanto produced GMO insecticide called corn...

Fri, 08/10/2012 - 09:20 | 2693751 youngman
youngman's picture

"sittin on my sack of seeds"...remember that song

Fri, 08/10/2012 - 11:33 | 2694202 TheFourthStooge-ing
TheFourthStooge-ing's picture

Smokin' them wildwood flowers got to be a habit
We never seen no harm
We thought it was kind-a handy
Take a trip and never leave the farm

http://www.youtube.com/watch?v=UyY-6oh0Ow8

Fri, 08/10/2012 - 08:12 | 2693563 Death and Gravity
Death and Gravity's picture

Ahhh.... in short: "drop your financial safety, and pump money into the education bubble, and indebt your kids for life".

Such a shill for the status quo, that author is. Sigh.

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