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Guest Post: Should I Buy Gold At Its All-Time High?

Tyler Durden's picture


Submitted by Simon Black of Sovereign Man

Should I buy gold at its all-time high?

There’s one question that I’ve been seeing over and over for the last several weeks as the price of gold has taken out its all-time highs and continued a nearly uninterrupted ascent: Should I buy gold now?

It’s understandable, especially for people who don’t own precious metals yet. Nobody wants to be the sucker who buys gold at the top, only to watch it crater back to $1200 or below. But here’s some food for thought–

The US dollar is shattering historic lows against currencies like the Swiss franc, Australian dollar, and Singapore dollar. Any currency that isn’t a complete disaster is now being viewed as a safe haven. And the mainstream world is now, finally, waking up to the reality that the United States might actually default.

Never mind that the government has been insolvent for years and the evidence of such has been widely available to anyone willing to look at basic facts. Literally, only in the last week have people finally began to consider the possibility of a US default.

Here in Europe, the situation is arguably even worse.  No one is being shy about a default in Greece– it’s discussed openly now by policymakers, and major financial institutions are preparing for a restructuring. And with its public debt more than 120% of GDP, Italy will not be far behind.

Governments no longer have the benefit of operating behind a curtain; their financial imprudence and technical insolvencies are now under the spotlight for all to see… and confidence is fading quickly.

The more people lose confidence in the dollar and euro, the more they look for alternatives. Large institutions and money mangers collectively control trillions of dollars within the financial system. Unallocated capital– funds held as cash and not being actively invested at the moment– must be held somehow, somewhere.

This is the chief reason why so many smaller currencies are surging. Compared to the dollar and euro, the Swiss franc looks incredibly safe, and money managers have a much higher degree of confidence that their Swiss bonds will be repaid than they have in the US or eurozone.

The more capital flows into these smaller currencies, the more they’ll appreciate against the dollar and euro. It’s simple matter of supply and demand– increased demand for the Swiss franc coupled with excess supply of US dollars means a stronger franc in US dollar terms.

Ultimately, this is the primary reason for gold to go higher in the long term.

Large financial institutions are increasingly looking at gold as a safe haven; it’s becoming less of a speculation and more of a store of value… and unlike most of the other available asset classes, precious metals are not politically sensitive.

Even stronger currencies like the Swiss franc have limits to their appreciation. At some point, the Swiss National Bank will impose capital controls to thwart the rise of its currency. Oil and agricultural commodity prices will likely be regulated and speculation outlawed if prices become too high.

But if gold goes to $2,000… $3,000… it may be an embarrassment to central banks, but it won’t become a populist issue.  You won’t see any Tunisian merchants setting themselves ablaze because the price of gold is too high… and not too many politicians looking to fix the price.

Even if they do try to regulate gold prices or even make it illegal, you can be sure that the gold trade will continue to thrive in the rest of the world– especially in Asia and the Middle East.

So instead of worrying about buying gold at its all time high, ask yourself another question instead: Over the next few years, do you expect that these broken, bankrupt governments will inspire confidence among institutional investors, or do you think that confidence will continue to erode?

If you’re leaning towards the latter, you can be sure that more money will flow into gold, and that prices will rise.

Yes, there will be price fluctuations. Whenever the US government announces that it has finally reached a debt deal, there will probably be a correction. Given what’s coming in the next several months and years– debt downgrades, more budget battles, government shutdowns, asset seizures, etc., any correction will be a small blip along a long-term rising trend line.

And in case you’re still worried that you’d be a sucker to buy gold at $1600, consider that, if you don’t, in three years you’ll probably feel like a sucker for not buying gold at $1600 when you still had the chance.


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Wed, 07/27/2011 - 13:21 | 1498424 chumbawamba
chumbawamba's picture

Gold is cheap, bitches.

I am Chumbawamba.

Wed, 07/27/2011 - 13:37 | 1498485 Stoploss
Stoploss's picture

I asked myself the same question when gold was at it's all time nominal high of $487.00


Glad i answered it right.

Wed, 07/27/2011 - 14:00 | 1498554 redpill
redpill's picture

I disagree with the premise.  Gold is worth exactly what it was when you bought it at $487.


The real question is, "Should I Sell Dollars At Their All-Time Low?"


Wed, 07/27/2011 - 14:05 | 1498574 TomJoad
TomJoad's picture

And BINGO was his name-O!

Wed, 07/27/2011 - 15:14 | 1498866 gmrpeabody
gmrpeabody's picture

It need not be difficult. Sell a third when it goes into overbought territory. Buy a third when it falls into oversold territory.

If you hold none currently, but your first third now, if it falls much more, add your second third. If it falls even more than that, add your last third and then refer to the above. When you are all in, your pm holdings should be 10-30% of you porfolio, depending on your stomach and vision of the future.

Keep it simple, stupid.

Wed, 07/27/2011 - 16:55 | 1499266 DoChenRollingBearing
DoChenRollingBearing's picture

Gold will go DOWN over the next few days, because I just bought some today.

Gee Mr presents a good plan if you do not have any (or much).

Chumba is right, gold is CHEAP!  See you guys at our party when we reach FOFOA's $55,000.


Wed, 07/27/2011 - 21:00 | 1500046 Spitzer
Spitzer's picture

I just bought 20 oz phsical in Canadian dollars. It was options exp and the CAD was at an all time high. Total after it hit my pocket, $31,120 CAD,

Somebody has to paint the tape.

Thu, 07/28/2011 - 00:07 | 1500316 JW n FL
JW n FL's picture

you will be happy a year from now.. no worries. throw it in the safe and continue on with your evening.

Wed, 07/27/2011 - 14:13 | 1498621 Oh regional Indian
Oh regional Indian's picture

Awesome Red Pill. Train of thought is correct of course, but all time low? I think the FRN can and therefore will have it's day of implosion.

Soonish too. AS I said on another thread, mark 15th august. I saw a huge sign for that being Dollar Tipping point day.

And as for the premise of this Black Tale, I say NO!

Buy Silver. 


Wed, 07/27/2011 - 14:14 | 1498629 slewie the pi-rat
slewie the pi-rat's picture

is the trend your friend?

if yes, then yes, sell.  very carefully.  duh.

silver was recently 30:1 v. gold (before the margin increased)

now, silver is 40:1 v. gold

silver is on sale!  trust me!



Wed, 07/27/2011 - 14:18 | 1498649 slewie the pi-rat
slewie the pi-rat's picture

i was gonna post that lightning hasn't struck me, yet.

then i saw ORI'z post!



Wed, 07/27/2011 - 14:24 | 1498669 Oh regional Indian
Oh regional Indian's picture

C'mon Slewie! Silver hug!!!



Wed, 07/27/2011 - 14:59 | 1498815 slewie the pi-rat
slewie the pi-rat's picture

well, ok.

you were pretty tough on i_shah the other day; i though g_bat was gonna kick you right in the cunt, there

Thu, 07/28/2011 - 01:07 | 1500373 Oh regional Indian
Oh regional Indian's picture

i-shah is a pretender to the sufi throne Slewie. A silver tongued pretender is all. 


Wed, 07/27/2011 - 14:33 | 1498718 clymer
clymer's picture

When people start to reject dollars en mass, Ole ink jet Bennie will screaming, red faced and wild eyed "GOLD IS NOT MONEY!!", while screwing himself into the floor boards, like a twisted Rumpelstiltskin.


..paints a funny picture anyway

Wed, 07/27/2011 - 20:12 | 1499964 Papasmurf
Papasmurf's picture

What makes you think Ben cares?  He's a hired hand.  He has no skin in the game.  

Wed, 07/27/2011 - 20:35 | 1500012 Triggernometry
Triggernometry's picture

Exactly.  I've been buying silver for over a year now thanks to reading ZH.  Since then, the GSR has steadily decreased until the margin hikes.  When silver closed around $49 that one weekend, the GSR was around 36:1, so I went into my local coin shop and traded 36 eagles per one gold eagle.  After the margin hikes I traded two gold eagles for 44 silver eagles EACH.

To be clear, I converted 72 silver eagles into 88 silver eagles within the span of three weeks.  The only cost was fuel(neglibile since the coin shop is 8 miles away), and $100($50 flat "swap" fee each time because he always rounds the GSR down).

I like to describe playing the GSR like this: there's heavy traffic on the highway, 2 lanes each way; sure you can stay in one lane and still get there, but most often you'll get there quicker if you know when to change lanes.

There will be more margin hikes, expect it.

Wed, 07/27/2011 - 14:36 | 1498741 Stoploss
Stoploss's picture

The REAL QUESTION IS exactly who will you "sell" your worthless DEBT BACKED FRN's to?? The gold i TRADED for my worthless frn's, will be integrated into what ever the next fiat cycle is, if that should happen. So, tell me again how debt is wealth?

I realize this is hard to understand from your perspective, but, wish and try as you might, no one can stop this, we were warned, and chose to disregard the warning. Fortunately, this will bury the Keynesian theory, hopefully forever. We are now in catch 22, there is one more step to go, it is important to understand that any step taken will not reverse the course under any circumstances. That realization is forthcoming.

Thu, 07/28/2011 - 00:54 | 1500362 tiger7905
tiger7905's picture

Some thoughts from McEwen on the debt crisis and it's impact on gold.

Wed, 07/27/2011 - 21:11 | 1500074 strannick
strannick's picture

If you think the dollar is low now, wait til next week, (ad nauseum)

Wed, 07/27/2011 - 21:12 | 1500076 strannick
strannick's picture

If you think the dollar is low now, wait til next week, (ad nauseum)

Wed, 07/27/2011 - 14:15 | 1498641 Roger O. Thornhill
Roger O. Thornhill's picture

I bought in big right after the tech bubble when it was around 320/oz. I was called insane for buying it - my broker friends literally turned on me like rapid dogs.  But the tech bubble made me realize that there were no more adults in the room running things. I also bought more at 1K as I realized we really were on a runaway train with a conductor (the bernanke) as high as a kite on ketamine, crack and LSD.

Now, if I didn't already own some I would say, buy it at the dips.

DIPS = each time the Govt lies and says they have a plan that will work.

It happens every few months. Then gold drops for a bit on the lie - then a few weeks later the lie is exposed and gold goes back up. There is no easy fix anymore, so you know when they talk about one that they are lying. Simple. A real fix will be something that will scare the crap out of the American populace as well as the rest of the world. 

Gold will only fall back if there is a full acceptance of a (reasonable) austerity plan. You will know it is a real plan because it will scare the crap out of Krugman, Lies-man, et al. Ultimately, with the players in office now, I doubt we'll see that effective plan (both scary and effective) until it is far too late.

Also I think in the end they'll have to print their way out of this as deflation is not an option to them. Plus I have history on my side. Only Volcker had the balls to act in a responsible way, and that was a fluke - the best futures indicator is that Obama showed Volcker the door in January.

Wed, 07/27/2011 - 18:14 | 1499605 Pool Shark
Pool Shark's picture

What does the "O" stand for Roger?

Wed, 07/27/2011 - 18:44 | 1499693 Roger O. Thornhill
Roger O. Thornhill's picture






Thu, 07/28/2011 - 00:15 | 1500320 JW n FL
JW n FL's picture

+++++++++++++++ for great taste in old flicks and being a gold bug! next thing ya know you will tell me you believe in the Holy Bible and the Constitution of the United States! at which point the FBI will Flag You for being a Home Grown Terrorist. But I will dig you! and so will your other Brothers and Sisters here! who knew there were chicks with brains out there? news to me, it was.

Wed, 07/27/2011 - 13:54 | 1498518 GeneMarchbanks
GeneMarchbanks's picture

Should I buy at an All-Time High? It doesn't matter, you'll get a chance to buy at its next all time high and then again and again and again and again...

Meanwhile I'll stick to the dips.

Wed, 07/27/2011 - 13:56 | 1498545 Manthong
Manthong's picture

If you look at one of the charts from this post (this chart has shown up twice in the last few days), there is a pullback each and every time the debt ceiling is raised.

Maybe it will be different for the first time now, but the chart indicates 100% historically that a pullback of some kind occurs after the debt ceiling is rased.

Wed, 07/27/2011 - 14:14 | 1498633 DosZap
DosZap's picture


Scary thought your handle.............LOL

Correctomundo, it's because the idiots actually think something positive has occurred.

When in reality, the real cost of  metal just went up, and the currency dropped even more..But, hey......take advantage.

It's already beginng Gold is down to $1,616.00 from $1,625.00, and Silver has lost $0.52, from $41.00.

Wed, 07/27/2011 - 14:38 | 1498747 Jonas Parker
Jonas Parker's picture

But what' will dip first - the price of gold or the value of the dollar?

Wed, 07/27/2011 - 13:52 | 1498535 Ra-Marduk
Ra-Marduk's picture

The gold is cheap -- I fully agree.  And $1600 is nothing compared to what is around the bend.

The I am Chumbawanba bit means you are an idiot.  Listen Chumba, we went over this before, drop that nonsense you baffoon.  Have you gotten busted for drinking and driving since your last episode about a month back?

Wed, 07/27/2011 - 16:31 | 1499174 CompassionateFascist
CompassionateFascist's picture

Trust no one who is wearing a paper bag on their head.

Wed, 07/27/2011 - 17:00 | 1499289 DoChenRollingBearing
DoChenRollingBearing's picture

LOL, gets another green one!

Wed, 07/27/2011 - 13:54 | 1498540 slaughterer
slaughterer's picture

"Should I buy gold at its all-time high?"

Of course not.  Only if you want to lose money. 

Wed, 07/27/2011 - 14:19 | 1498656 Dr. No
Dr. No's picture

excellent logic critique.  Need to keep people thinking.

Wed, 07/27/2011 - 21:04 | 1500055 Spitzer
Spitzer's picture

I bought but I am Canadian. My dollar is at a 3 year high.  I figured, time to sell.

Wed, 07/27/2011 - 14:05 | 1498579 fuu
fuu's picture

Is this a poll? Damn they are both correct statements. Choices, choices.

Wed, 07/27/2011 - 14:28 | 1498695 mt paul
mt paul's picture


is not gold

Wed, 07/27/2011 - 16:44 | 1499225 Canuckistan Al
Canuckistan Al's picture

Be fair, Bernanke didn't lie. Gold is NOT money!, It's WAY better than money and more effective than Zanax, helps me sleep well at night.

No FRNs can claim that for me anyway.

Thu, 07/28/2011 - 00:18 | 1500322 JW n FL
JW n FL's picture

the Central Planners are getting nostalgic for the metal.. from their buying habits are telling me any way.

Wed, 07/27/2011 - 16:08 | 1499093 CompassionateFascist
CompassionateFascist's picture

If I were us....I'd stop thinking about PMs in terms of dollars at all. When the dollar goes to 0, PMs go to infinity. They'll be "worth" whatever they'll buy at the local farmers' mkt or barter site. They'll be worth...your Life.

Wed, 07/27/2011 - 16:19 | 1499134 Id fight Gandhi
Id fight Gandhi's picture

Correct answer is gold is fairly priced. It's always fairly priced.

Wed, 07/27/2011 - 20:36 | 1500014 Reptil
Reptil's picture

I just found this out: from januari 2012 it's not going to be cheap anymore. Excuse me please if this is old news, I don't believe I've seen it before.

Hidden in a healthcare bill there is supposedly a tax on gold coins and bullion effective januari 2012.
Not that it matters much for us, most of the folks here either have enough gold, or are planning to buy asap.

the populace however... is going to be fleeced.
very weird that constitutional money (gold) is going to be taxed...

Thu, 07/28/2011 - 00:23 | 1500327 StychoKiller
StychoKiller's picture

Reporting $600 (or more!) transactions on IRS 1099 forms has already been yanked out!  Start taking notes, friend.

Wed, 07/27/2011 - 13:22 | 1498430 russki standart
russki standart's picture

Simon Black Rulez!

Wed, 07/27/2011 - 13:24 | 1498433 carbonmutant
carbonmutant's picture

I wonder what the gold /ipad exchange rate will be in 3 years...

Wed, 07/27/2011 - 13:39 | 1498494 Sudden Debt
Sudden Debt's picture

Which version? In 3 years we'll be at version Ipad 7.0 with the build in ice crusher and coctail shaker.


Wed, 07/27/2011 - 13:55 | 1498541 carbonmutant
carbonmutant's picture

Needs to come with an app for measuring the tungsten content of your money...

Wed, 07/27/2011 - 15:56 | 1499032 MissCellany
MissCellany's picture

But it still won't have a danged USB port...

Wed, 07/27/2011 - 13:24 | 1498434 Bard
Bard's picture
No, you shouldn't. After debt ceiling it will go to 1500 as far as now from 1500 to 1600. Then i will buy more during this summer.
Wed, 07/27/2011 - 13:52 | 1498537 No Bid
No Bid's picture

Agreed.  Nothing goes straight up.  This is not the dip.  Buy the dip.

Wed, 07/27/2011 - 14:05 | 1498575 barkingbill
barkingbill's picture

wise words, but some people only have the courage to buy things when they are going up. so then they miss dip and never buy. 

Wed, 07/27/2011 - 15:53 | 1498973 tekhneek
tekhneek's picture

It's this kind of thinking that is the problem if you ask me (I know no one did.)

Dollar cost average your acquisitions of both gold/silver. Waiting for the top/bottom is, in my opinion, very dangerous right now. At any moment something could cause even more economic collapse and currency devaluation. There is a possibility of "default" and if something like this were to send gold/silver in the $1700/$50 range then it will be difficult to say if that's the top, or if it will keep going. You run the risk of waiting for a correction that, since silver's been consolidating for months now, might never come. I bought silver @$12, $17, $28, $34 and now I bought more at $40/oz. I didn't want to buy it, but I dollar cost average my acquisitions and don't le the price in terms of dollars bother me.

If you're buying gold/silver at the "bottom" because you're planning on getting a higher return then good for you, that's a dangerous game that most lose. From experience setting a bi-weekly date, or a monthly date is best. I understand the debt ceilling talks/etc but if as I want to point out you're buying this for a quick gain or quick return you're doing this for the wrong reasons. Your investment time-frame for precious metals should be in the decade range. Not the week or month range. With this mentality, it's a screaming buy @$1600 and even more so since it has broken that ceiling it's already hit $1625. Who's to say it doesn't scream past $1700?

People and the markets are generally pissed off and tired of this bullshit government/debt ceiling/printing money/recession/depression talks. You have surging demand from central banks for the first time, you have a monetary metal that's also industrious and more rare than gold some say.

Don't ask yourself if you're buying at the top -- Ask yourself why you're buying and buy for that reason. Ignore the dollar amount because I am nearly certain 12 months after you purchased it, you will be in the black on your investment. I bought silver in november of 2010 when people were calling the "top" for silver at $30/oz. I dollar cost averaged and got it on a dip to $28 or so. This turned out in my favor, but now looking back, I've made about $12 off of every ounce I bought. I don't measure my gains in US dollars though... I look at overall purchasing power.

Oh yeah and there's that whole "price suppression" thing we've got going on. Throw in the ratchet effect the Fed's dealing with and I'd say you have some pretty good reasons to buy as much as you can at whatever price... and that whole HKMEx coming online and possibly printing a much different free market price for gold and silver... Keep in mind the price you're paying right now is already artificial in nature. If they lost the grip (not saying this is going to happen tomorrow) tomorrow for example, I don't think it would go to $1700. I think it would go much, much higher.

Just my two cents and how I've learned to let the price move where it will while I build up my physical savings account.

Wed, 07/27/2011 - 17:06 | 1499318 DoChenRollingBearing
DoChenRollingBearing's picture

Very nicely written tekhneek.

+ $1605

My plan is even simpler, when I have some fiats come my way, I just and buy.  I look at the price, sure, but it does not influence my purchase decision.  I never try to time my purchases (no BTFD), instead, it has worked over the deacdes if I BTFSpike!  I have been buying gold since the 1980s.

Physical only!

Wed, 07/27/2011 - 17:30 | 1499436 Ag1761
Ag1761's picture

Couldn,t agree more. Fundamentals havent changed, just more emphasis.

I made decision at the start of this year to stop saving, economise for 2 years and buy £1000 of pysical every month. Whether I got 50 Oz at the start of the year or 25 Oz this month I don't care, it's my hedge against the collapse of the currency. I'm buying while I can abd while stocks are available.

If things get really bad then I win because any fiat I have is likely to be a risky asset, likely worth not much but my silver will always be worth a lot or a little and will always be tradeable. Unlike a failed currency.

It's a hedge, you decide what you can afford to do and go buy physical. Whether it's a few grams of gold a month or a few Oz of silver or a monster box, look at the fundamentals and make the decision.

If anyone doesn't understand this, then go fuck yourself, see you in hell.

Keep on stackin


Wed, 07/27/2011 - 13:23 | 1498436 Segestan
Segestan's picture

Finally a realistic view from sovereign man.

Wed, 07/27/2011 - 13:52 | 1498532 Hmm...
Hmm...'s picture

I agree.  this was one of the better gold related articles written here in a while.  I am one of those concerned about the rapid rise in gold, and this has paralyzed me.


Wed, 07/27/2011 - 13:24 | 1498443 Phillips Capital
Phillips Capital's picture


Wed, 07/27/2011 - 13:26 | 1498448 r101958
r101958's picture

Only if you are in it for the long haul.

Wed, 07/27/2011 - 13:28 | 1498453 Gold Dog
Gold Dog's picture

Do what I do.Every time you get a paycheck buy 50 GAEs and put them away.

Your stack will grow in no time!


Wed, 07/27/2011 - 13:40 | 1498497 slow_roast
slow_roast's picture

You buy $75k+ in gold coins every time you get a paycheck?  *cough*bullshit*cough*

Wed, 07/27/2011 - 14:01 | 1498556 DosZap
DosZap's picture


Thanks I needed that!.

First real laugh I have had here in a LONG time.(<:

If so, He/She is one lucky dude/ette.................

Wed, 07/27/2011 - 13:41 | 1498500 Pladizow
Pladizow's picture

You allocate $80K from every paycheck to gold?!?

That is if by GAE you mean Gold American Eagle and 50 was not a type error.

Or perhaps you get fewer paychecks then the average person.

Or perhaps you are very wealthy!

Wed, 07/27/2011 - 13:42 | 1498503 slow_roast
slow_roast's picture

You buy $75k+ in gold coins every time you get a paycheck?  *cough*bullshit*cough*

Wed, 07/27/2011 - 14:06 | 1498583 Sgt.Sausage
Sgt.Sausage's picture

==> a paycheck buy 50 GAEs and put them away.

Methinks you meant:

" buy a $50 GAE"

Wed, 07/27/2011 - 15:58 | 1499044 Gold Dog
Gold Dog's picture

C'mon....I cannot believe anyone bought into that!

Wed, 07/27/2011 - 13:29 | 1498455 traderjoe
traderjoe's picture

Um, dollar cost average? You never know when the true de-coupling hits...

Wed, 07/27/2011 - 13:33 | 1498458 Cognitive Dissonance
Cognitive Dissonance's picture



Over the next few years, do you expect that these broken, bankrupt governments will inspire confidence among institutional investors, or do you think that confidence will continue to erode?

My money is on the fiat crack addicts. Or should I say my Gold (and Silver) is on the fiat crack addicts.

Fiat Crack

Wed, 07/27/2011 - 13:39 | 1498488 Dr. Richard Head
Dr. Richard Head's picture

Fish gotta swim, fiat has to create debt. 

Wed, 07/27/2011 - 13:39 | 1498489 Dr. Richard Head
Dr. Richard Head's picture

Fish gotta swim, fiat has to create debt. 

Wed, 07/27/2011 - 14:43 | 1498764 Jonas Parker
Jonas Parker's picture

Fish gotta swim, birds gotta fly,

Fiats gotta crash, ...

But I don't gotta crash with it!

Wed, 07/27/2011 - 13:52 | 1498534 GeneMarchbanks
GeneMarchbanks's picture

Ditto. Addicts getting real scratchy lately; little *gold* bugs crawling all over their skin.

Wed, 07/27/2011 - 13:53 | 1498536 Cognitive Dissonance
Cognitive Dissonance's picture

Let us try that excellent image again from another source.

Fiat Crack

Wed, 07/27/2011 - 13:32 | 1498464 HungrySeagull
HungrySeagull's picture


I plan to once today's slaughter in Silver gets cleared away like deadwood.

Price up or down, what does it matter as long you have physical control?

Wed, 07/27/2011 - 13:33 | 1498468 alangreedspank
alangreedspank's picture


Whatever is it you're buying, buying at tops is never a good thing. Wait for some minor corrections at least. The seasaws on the way to 2,000 and +


Wed, 07/27/2011 - 17:10 | 1499337 DoChenRollingBearing
DoChenRollingBearing's picture


I have been BTFSpike since the 1980s.  I am WAY ahead on my physical holdings.  Gold is something you CAN buy and HOLD.

Chumba kicked off this comment thread right.  Gold IS cheap!

Doubt me?

Top gold analyst out there IMO.

Wed, 07/27/2011 - 13:34 | 1498470 caerus
caerus's picture

just watched story on CNN advising people how to SELL their gold...John Q Public is on the wrong side of this trade...

1980 Au high: $850
2011 Au $850 adjusted for inflation per BLS: $2328.44

Au may have hit a nominal high but it still has a ways to go to test the 1980 $850 level once inflation is factored in

But what do I know

Wed, 07/27/2011 - 14:07 | 1498589 Thisson
Thisson's picture

In 1980, gold traded at 6x the value of the S&P 500 according to Barry Ritholz's charts (source:

Today, that would be $7884 per troy ounce.  That's a lot higher than the $2328.44 you get from your inflation-adjustment calculation.  In other words, gold can go significantly higher.

Wed, 07/27/2011 - 15:00 | 1498818 Temporalist
Temporalist's picture

Peter Schiff often mentions 1:1 Dow to Gold so $12,000+ perhaps or they'll meet somewhere in the middle between the two.

Wed, 07/27/2011 - 16:04 | 1499071 mayhem_korner
mayhem_korner's picture

I think 6,000 is a more likely intersection.

Wed, 07/27/2011 - 15:21 | 1498857 caerus
caerus's picture

agreed...problem is how are you going to calculate the value of Au? Relative to some other asset calculation compares the price of Au to the $...yours to the value of the ES...however you then must figure (it seems to me) the value of the ES in $...I may be wrong but that seems like two steps instead of one..I don't disagree with you btw and find your figure intriguing to say the least...

btw the comparison to the 1980 high is NOT a projection. It is a backwards looking comparison simple point...Au is NOT as expensive as in 1980...finis

Wed, 07/27/2011 - 21:10 | 1500070 Spitzer
Spitzer's picture

Thanks for that.

Wed, 07/27/2011 - 13:33 | 1498471 BrianOFlanagan
BrianOFlanagan's picture

crowded trade

Wed, 07/27/2011 - 13:48 | 1498522 Pladizow
Pladizow's picture

Please explain how so, if less then 2% of global financial assets are in gold?

Wed, 07/27/2011 - 13:57 | 1498546 Bay of Pigs
Bay of Pigs's picture

He can't and won't explain it. He might try to bullshit about it, but he has no credibility on that issue.

You are correct on gold not being a "crowded trade". In fact, it's the opposite of that.

Wed, 07/27/2011 - 17:13 | 1499353 DoChenRollingBearing
DoChenRollingBearing's picture

And only 1% - 3% of Americans own physical, non-jewelry gold.

Give you another green Bay!

Wed, 07/27/2011 - 14:05 | 1498560 HungrySeagull
HungrySeagull's picture

What ever you do, you own it, dont sell. Hang in there.

I am experiencing the same long periods between sell at a profit in Silver this afternoon because the people want to buy at lower and lower prices and forcing the sellers to drop prices to sell... the weak ones who need money now.

I am a strong one and can wait a while.


Gold Eagles did not move for about 5 days while the impasse over (Mexican stand off) between the sellers and buyers at the 50 dollar spread. Someone collasped it and suddenly the Eagle bullion spread is half and the buying and selling has resumed for now.

Someone IS buying and more someones is selling.

This is not the time to be getting into paper money. I have that written into my heart. Call me a bull if you want... but be careful until this whole poltical soap opera playes out for the USA one way or the other by AUG 2.

IGNORE THE MEDIA whipping the people into a froth.... That is all noise.

As far as Reid's comment of boner's big wet kiss, I say Reid's bill is a dry hump in the ass.

Wed, 07/27/2011 - 16:53 | 1499264 Canuckistan Al
Canuckistan Al's picture

Yuppers, every spare fiat I can "part with" gets "monetized" in PMs.

Wed, 07/27/2011 - 13:50 | 1498526 DonnieD
DonnieD's picture

acquiring, not trading.

Wed, 07/27/2011 - 13:35 | 1498478 Doyle Hargraves
Doyle Hargraves's picture

In REAL terms Gold is nowhere near a top. In REAL terms $ has lost 95%+ of its purchasing power since the fed was opened in 1913...

Wed, 07/27/2011 - 13:39 | 1498480 Quinvarius
Quinvarius's picture

gold is 16 times cheaper now vs the money supply than it was in 1980 peak terms.  it is no where near a top.  this is 1980 gold at 50 dollars.

Wed, 07/27/2011 - 13:37 | 1498482 digalert
digalert's picture

confession: PM owner


Having a particular knack at buying precisely the top, I bought some silver near $50 only to get smacked down. However, since I've bought silver at 9, 15, 28, 36...price doesn't matter. Now silver's pushing $41, marching higher.

The USD is going down intentionally!

Wed, 07/27/2011 - 13:55 | 1498542 SRV - ES339
SRV - ES339's picture

u, me, and George Castanza :-)

Sold all my silver (PSLV) Friday thinking congress couldn't possilbly let a default happen... my bad (waiting... and waiting for the next dip)!

Wed, 07/27/2011 - 16:08 | 1499092 mayhem_korner
mayhem_korner's picture

PSLV isn't silver.  Get in the game.

I haven't sold any of what I bought, ever.  I no longer think in terms of the purchase price...simply the purchasing power of what I have (which is about 1,250 bbls of WTI).

Wed, 07/27/2011 - 17:17 | 1499377 DoChenRollingBearing
DoChenRollingBearing's picture

Same.  I NEVER have sold my PMs other than a one-time trade of some Ag for Au when the gold:silver ration bumped down to about 35 a few weeks ago.

"It's all about the ounces!"


Wed, 07/27/2011 - 15:31 | 1498923 XenoFrog
XenoFrog's picture

I'm in the same boat, though it's even worse. Any time I check the spot price and update my excel sheet, the price always falls. It's uncanny how I can move a market with only a few keyboard clicks.

Wed, 07/27/2011 - 16:11 | 1499105 mayhem_korner
mayhem_korner's picture

Reprogram your excel sheet to measure the gold in something tangible - gallons of gas, loaves of bread, etc.  You'll be disappointed a lot less often.

Wed, 07/27/2011 - 16:45 | 1499231 CompassionateFascist
CompassionateFascist's picture

Jews buy gold. Aryans buy silver.

Wed, 07/27/2011 - 17:21 | 1499389 DoChenRollingBearing
DoChenRollingBearing's picture

@ Xeno,

Almost every time I buy physical gold (like today) the price goes down.  For awhile.

But, since I have been buying gold, poco a poco, for decades, when I BTFSpike, I do not worry.  Gold has ALWAYS seemed "expensive" when I have bought it.  But, it keeps going up.  And we all know why.

Wed, 07/27/2011 - 13:37 | 1498484 Henry Chinaski
Henry Chinaski's picture

I felt like a sucker buying at $950... $1,100... $1,400... but I held steady thanks to the encouragement of my ZH cohorts.

Wed, 07/27/2011 - 17:24 | 1499398 DoChenRollingBearing
DoChenRollingBearing's picture


Green one for you.

Zero Hedge and FOFOA helped me to buy a lot more physical Au than I other wise would have.  Even though I have been a buyer since the 1980s.

I bought today, so the price will go down (of course).  But, that's OK!  Just wait:

"All else will be left behind when the Gold Mothership takes off."

ZH-er Gordon_Gekko

Wed, 07/27/2011 - 13:39 | 1498490 Dr. No
Dr. No's picture

If you have no gold, you wont like the answer: yes buy some.  If you already have a healthy mix, diversify: buy tangable assets such as guns, farm land, etc.  Only use the change in your seat cushions to speculate on paper (and that includes paper gold you may buy in a brokerage account).

Wed, 07/27/2011 - 13:58 | 1498549 Oboneterm
Oboneterm's picture guns and roses.....guns are going to be the future...better than AU...



Wed, 07/27/2011 - 13:40 | 1498496 Caviar Emptor
Caviar Emptor's picture

There will never be a top in gold. That's because money printing, devaluations, currency dilution and proliferation of paper assets like stocks and derivatives will never stop. In fact it's going to accelerate. And with that economic risks multiply. There's too much paper relative to things to buy. So gold will never have a real top. That has stood the test of time

Wed, 07/27/2011 - 13:53 | 1498539 SheepDog-One
SheepDog-One's picture

Theyre just trying desperately to keep americans from realizing their paper promises are totaly worthless, and keep them from realizing gold is the age old banker fiat crusher.

Wed, 07/27/2011 - 13:46 | 1498506 Hook Line and S...
Hook Line and Sphincter's picture


FOFOA, Turk, Embry and Sprott... all employed by the PTB as limited hangout operation operatives targeting students of monetary theory, angled at manipulating their perception and setting them up for the terrible consequence of false wealth preservation.

Fiat is forever. You all underestimate the power of the money creators.

Gold has no intrinsic value outside its shiny color, and it doesn't taste very good.


(Somehow Johnny Bravos cock ended up in my mouth...sorry about that amigos.)



Wed, 07/27/2011 - 13:50 | 1498525 SheepDog-One
SheepDog-One's picture

Fiat all thru history has a maximum lifespan of 100 years. Most fiats have far shorter lifespans. We've been more than lucky to even get this far.

Wed, 07/27/2011 - 17:28 | 1499411 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1600 Hook and SheepDog.

Greens for you!


Green for Caviar as well!

Wed, 07/27/2011 - 13:45 | 1498509 swissinv
swissinv's picture

look at the XAU/CHF and CHF/USD - do you see that gold was much higher a few months ago then now (when price in Swisses)? Maybe should buy some gold because you don't wanna be the sucker holding USD when it drops to nil!

Wed, 07/27/2011 - 13:45 | 1498515 jackpile
jackpile's picture

The simple corrolary is, do you want to wait to sell your dollars when they are worth less and less (against metals and other currencies)...

Wed, 07/27/2011 - 13:47 | 1498519 RunningMan
RunningMan's picture

My wife recently asked when I was going to stop buying 'coins'... I told her it was a simple exchange of currency (dollars for gold and silver eagles). When she turns around and tells me to buy more, then I'll know the end game is near.

Wed, 07/27/2011 - 15:06 | 1498842 Temporalist
Temporalist's picture

When she asks how many you have tell her you sold them. When she tells you her friends now bought some and recommend buying sell your house and move to a new country.

Wed, 07/27/2011 - 13:48 | 1498520 SheepDog-One
SheepDog-One's picture

<---Hold Gold

<---Hold Uncle Gorilla full retard paper

Wed, 07/27/2011 - 13:51 | 1498530 SheepDog-One
SheepDog-One's picture

So far 1 vote for holding full retard paper. Hey go for it.

Wed, 07/27/2011 - 16:54 | 1499270 RockyRacoon
RockyRacoon's picture

The construction of the questions in your poll were a bit biased, sorta like the Fox News polls!

But clever nonetheless.

Wed, 07/27/2011 - 17:30 | 1499438 DoChenRollingBearing
DoChenRollingBearing's picture

Excellent SheepDog.

Score is now 

26 gold

-7 paper

Wed, 07/27/2011 - 13:52 | 1498533 I_Rowboat
I_Rowboat's picture

I bought 17 gold maple leafs at $1220 and 100oz of silver bars in early-December of 2009, shortly before gold popped and it languished big-time for many months.  This was my first PM purchase and  I thought I was an idiot (jury still out,  but for other reasons), but I'm pretty glad about not getting panic-y and selling it all to cut my losses.  I've since then bought much more silver, (the spot price of which has more than doubled), and the gold's making 25% (or holding steady, while the dollar declines by an inverse amount - take your pick).

Anyways, I'll cash out eventually to finish building my house, which I'm doing entirely myself and with no debt whatsoever.  And the car is paid for.  So without a mortgage or car payment, hopefully PM's will still be affordable enough that I can convert some of each paycheck into more precious shineys.

Wed, 07/27/2011 - 13:56 | 1498544 DonnieD
DonnieD's picture

I can't believe anyone is dumb enough to take $1,600 of your worthless dollars and give you gold in return.

Wed, 07/27/2011 - 14:05 | 1498577 WonderDawg
WonderDawg's picture

I know, crazy isn't it? I can use my "worthless" dollars to buy food, and guns, and ammo, and gas, and silver, and hookers and an eightball. Wait a minute. I guess my dollars aren't worthless after all.

Wed, 07/27/2011 - 14:11 | 1498616 Hook Line and S...
Hook Line and Sphincter's picture

Better get some penicillin with those FRN's... i did

Wed, 07/27/2011 - 15:12 | 1498861 WonderDawg
WonderDawg's picture

Good call, something else to stock up on. I think toothbrushes and ibuprofen tablets will also make good barter material after SHTF.

Wed, 07/27/2011 - 14:06 | 1498581 Dr. No
Dr. No's picture

The dollars are not worthless.  Its all about a healthy balance,  You need a minimum of three shoeboxes: 1 with gold coins.  1 with cash currency, 1 with a gun.

Wed, 07/27/2011 - 16:22 | 1499151 ping
ping's picture

Get a bigger, fireproof box first! Then hide that dude under the biggest compost heap your garden can support. No SOB is looking under that for your hidden stash ;o)

Wed, 07/27/2011 - 16:51 | 1499254 CompassionateFascist
CompassionateFascist's picture

Kill the SOB first; by the time he is looking for your PMs, you will be dead.

Wed, 07/27/2011 - 16:56 | 1499279 RockyRacoon
RockyRacoon's picture

Take nice healthy dump on the compost pile in the light of the silvery moon every night.

No interlopers!

Wed, 07/27/2011 - 14:00 | 1498552 Reptil
Reptil's picture

I got both... still have to pay the bills. Booked a holliday to a warm place with palmtrees and caprinhas. Seems like a good plan. LOL

to answer your question: the choice is between running the risk of a 30% loss (though I don't think we'll ever see gold below 1400) or OTOH a 100% loss (hyperinflation). Seeing how the FED keep printing, according to the article here on ZH; it looks like they're actually steering towards a collapse.

I spent the last hour watching very recent videos of cops in the USA beating up people in the street and tasering people to death in diverse cities in the USA. Whatever the reason, that show of brute violence is a show of weakness, not strenght. They look unnerved and agressive. Something's up, I can feel it.

Wed, 07/27/2011 - 14:00 | 1498553 Slin
Slin's picture

There was an article here maybe amonth back.  It talked about how gold longs could be crushed through manipulation of the ten yr.  Does anyone have a link, or remember who wrote it?  Some good side trades in 10 yr recently.  Thx

Wed, 07/27/2011 - 14:02 | 1498559 Sgt.Sausage
Sgt.Sausage's picture

I bought at $612.

I bought at $775

I bought at the "all time high" of $850

I bought at the "all time high" of $975

I bought at the "all time high" of $1,100

I bought at the "all time high" of $1,250

I bought at the "all time high" of $1,330

I bought at the "all time high" of $1,425

I bought at the "all time high" of $1,500

I bought at the "all time high" of $1,590

and yes, Virginia, by Friday I will buy aht the "all time high" of $16xx


I buy every other payday (payday on 15th of the month to pay bills, payday on 1st of month ==> discretionary income). I have been doing so for 4 solid years now, and have some smaller purchases over the years prior to my newer policy of buy every month. Unless/until I have something resembling "confidence" in the dollar again, I will continue to buy every month. Month after month. Regardless of price.

Too bad I keep getting involved in boating accidents and bad poker games. I can't seem to hold on to the stuff. I just keeps getting lost.


Wed, 07/27/2011 - 14:42 | 1498760 Smiley
Smiley's picture

Most relevant post award!

Wed, 07/27/2011 - 14:47 | 1498770 Smiley
Smiley's picture

Most relevant post award!


*damn the site is real laggy today*

Wed, 07/27/2011 - 16:33 | 1499177 ping
ping's picture

Good plan all round - buying what you can afford, not speculating, not overreaching. Pacing it, and looking at gold as your real savings account, not a get rich quick scheme. I'm lousy at judging tops, but doing it your way, all I notice is the annual appreciation :o) 

And hey - with a constantly appreciating asset, who really cares about a smallish pullback? It's all just 'noise' on the chart. ('I only made 95% of the possible profit when measured at this random point in time? Noooo! Damn, you, fate!')


Wed, 07/27/2011 - 17:05 | 1499314 alangreedspank
alangreedspank's picture


I did that a while with silver. Won't do it for gold, way to costy at the moment.

Wed, 07/27/2011 - 17:33 | 1499457 DoChenRollingBearing
DoChenRollingBearing's picture

EXACTLY my experience as well.  It is OK to BTFSs if you think in years long terms...

Wed, 07/27/2011 - 14:05 | 1498572 Dr. Engali
Dr. Engali's picture

I hear more people saying there will be a correction when they reach a debt agreement. That leads me to believe that it won't correct.

Wed, 07/27/2011 - 14:15 | 1498640 Dr. No
Dr. No's picture

or that they wont reach an agreement.

Wed, 07/27/2011 - 16:56 | 1499280 CompassionateFascist
CompassionateFascist's picture

They'll reach an agreement, if not by Aug. 2nd then by the 15th. TPs excepted, Repubes are as invested in the debt Ponzi as the Dems.

Wed, 07/27/2011 - 14:08 | 1498591 Bam_Man
Bam_Man's picture

This definitely gets my vote for "dumbest question of the day".

Wed, 07/27/2011 - 14:08 | 1498594 Hook Line and S...
Hook Line and Sphincter's picture

I'm starting to believe that ZH'r suffer from a form of historical normalcy bias. In this case, just because Gold has acted as insurance against a fiat system in the past, DOES NOT insure that it will protect against a gov on psycotropic medication this time. Think of all the variations this time around...  

  • nuclear firecrackers and outrageous sci fi technology (GMO/RFIDS/HAARP)
  • pure genius manipulation in iterations of markets that never existed in prior times (comex, etc)
  • a global reserve status currency
  • derivatives
  • occult powers making the elites erections harder and stronger than in the past
  • a truly idiotic populace on legalized drugs and vibrating at reality TV's hertzian frequency

just to name a few. 

O.K., REALITY BREAK... gravity in a fiat system always works, but in this case gravity is lessened, and we've got longer to go than we may WANT to believe.

Wed, 07/27/2011 - 16:36 | 1499184 ping
ping's picture, er, you got any of these 'occult powers' up for sale?

Just asking. For science.

Wed, 07/27/2011 - 14:08 | 1498595 I Got Worms
I Got Worms's picture

When I have funds, I buy. That simple. Been doing so for 3 years, since seeing the light. It's amazing what a little here, and a little there, can accumulate over time.

To me, gold and silver are buys at any price. I have a more philisophical attachment to it than the bullshit in my 401k (that I am stuck in as long as I have this job, or would've cashed it in yesterday).

Wed, 07/27/2011 - 14:12 | 1498608 dxj
dxj's picture

All the rationalizations are ridiculous. As long as we have negative real rates of interest, gold will climb. Buy the dips and don't sell until the central bank is openly buying from the public for $8,000/oz or $10,000/oz (or whatever it will be at that time).

Wed, 07/27/2011 - 14:13 | 1498612 dxj
dxj's picture


Wed, 07/27/2011 - 14:13 | 1498617 THE DORK OF CORK
THE DORK OF CORK's picture

I have been thinking about buying shitty looking dollars myself.

I don't suppose any of yee guys caught Lorenzos little interview on CNBS recently.

The man is clearly psychotic and I believe truly represents the Maltusian views of the ECB - Listen to his closing remarks.... astounding.

Liesman a true company man could not believe what he was hearing and laughed darkly.

The Eurozone cannot be a stable currency area now - its finished for me.

This view reflects the narrow FOFOA view of Europe - I do not believe he is European.

Yes have austerity but it is useless without the imagination to use this new surplus for technological & capital development.

The place is infested with rent seekers - its fucked.

Wed, 07/27/2011 - 16:46 | 1499234 JW n FL
JW n FL's picture

ALL of Europe to Pay Taxes! for the Euro!!

One World.. Oops! not yet.. just One Europe Government Coming REAL! Soon!! that or default and losing half of the Countries Wealth from those whom would opt out of the REAL Union!

Nice Video!! Thanks!

***** The man is clearly psychotic and I believe truly represents the Maltusian views of the ECB - Listen to his closing remarks.... astounding. ******

Wed, 07/27/2011 - 18:05 | 1499581 THE DORK OF CORK
THE DORK OF CORK's picture

 JW Lorenzos formative years were very very educational….also starring Baron J.C. Trichet , with a special appearence by Axel Weber and various guests………..


Wed, 07/27/2011 - 18:47 | 1499514 anonnn
anonnn's picture

Indeed, the rentiers.

"infested with rent seekers "...who, when feeling threatened, employ 800# bullies to maintain their status. Such describes "fascism".

The fasces, symbol of fascism, is a bundle of rods/sticks around an axe. The fasces was carried in Roman times by heralds to anounce power of travelling magistrates to punish [beating] or kill [axe], at will.

[per James Henry Breasted, founder of University of Chicago's Oriental Institute, established abt 1920 by John D. Rockefeller of Standard Oil's trust umbrella of operations.]

Wed, 07/27/2011 - 14:13 | 1498625 jomama
jomama's picture

makes a lot more sense if you consider that it's actually the BennyBux all time low.

Wed, 07/27/2011 - 14:20 | 1498660 Chump
Chump's picture

Good place for me to put it out there...

I'm a poor man with a shit job and no prospects despite a professional license and certifications out the wazoo.  Long story short, I have enough "stuff" to weather the coming storm, but my PMs amount to a couple handfuls of Morgan Dollars.  Sad, I know, but given that I have roughly 5K to play with, where do I go from here?

I can make a case for each of the following:

-Keep it in cash, liquidity is good.

-Put it in silver, I'm poor and it's the poor man's gold

-Get some small denominations of gold, or some combination of this and the above.

I ponder and ponder, but I keep ending up at option 1.  Time is running out for me.  Well, it's running out for everyone but folks like me are literally on the front lines of this shit.  I don't often ask for advice but in this case I'd appreciate some.

Wed, 07/27/2011 - 14:26 | 1498672 HungrySeagull
HungrySeagull's picture

Well keep one month's expenses for your household on hand, use about 2 thousand to buy at a low price Silver Bullion Coin ASE or similar. Where you buy at per ounce is your base price.

Establish where you will need to sell at a profit, examine the exhanges availible to you and when your sell order executes, roll the gross minus your fees into buying at a price lower than your base price in ounce. (If you can) and sell at the same profit price point or higher.)

You cannot day trade this sort of thing, you set a price and wait for the sell order to come through when you know you make a profit.


Keep the other two thousand or so in a vault.

Wed, 07/27/2011 - 15:55 | 1499029 Chump
Chump's picture

This seems like a good idea but I'm not sure about tying up 2K doing it, especially since my experience trading is...non-existent.  Still, you've opened my eyes to another avenue besides my 3 options.  Thank you.

Wed, 07/27/2011 - 21:05 | 1500060 destiny
destiny's picture

invest as much as you can/want

make a loan (what the hell...) and buy PMs with it...your loan will be reimbursed faster than you think and you'll still make a good profit.

Do NOT follow this link or you will be banned from the site!