Topic: Unlocked Gold thread. (Read 3990 times)

There are 2 points that people who buy gold need to understand.  First, you don't buy something when it's at record high levels, especially when you know it's been inflated because of changeable conditions.  Secondly, if economies start collapsing, nobody is going to be buying gold jewelry and it has very little industrial use.  Yeah, it's 500 microns thick on gold contacts on practically all electronic cabling but that's like $0.10 worth of gold on hard drive pins for example.  Yes it's a good inter-country medium if currencies collapse but it isn't going to be worth a damn thing if nobody wants it.  So anyone who bought into gold like 3 years ago, good for you, SELL IT!  Anyone looking to buy now is a crazy person and is totally going to lose their asses when it crashes.

End of the year and gold is doing what I was expecting it to do in January. With MF Global, all bets are off. I underestimated the impact and rapidity that incident would have, as well as the magnitude of printing. Nothing fundamental has change - the problems have actually gotten even worse. The existing system is so rotted out that there is virtually no way to win - it'll be an uphill battle to make enough paper gains to keep pace with base currency inflation, not to mention the changing whims of politicians and their laws.

According to Jim Willie, large entities on the buy side (opposition to JPM, et al) are now dumping paper on the markets in order to acquire metal at a discount and in quantity. In addition to professionals exiting these fraudulent paper-dominated exchanges, this is forcing the separation of value between the paper and physical gold markets.

Paper could easily stagnate or plummet while real assets become scarce, leading to shortages and higher prices despite officially-stated ones being relatively stable. The divergence in gold is enormous and accelerating. It really is physical or nothing now.

On the Bitcoin side, I'm noticing quite an increase in awareness and sustained capital inflow into the market on a weekly basis (minimum to maintain current price level is about $200,000 per week). Until the bubble, Bitcoin growth was over 9% and has so far slowed to around 8.4% - weekly. Reversion to the mean may bring that growth rate up further toward 9% again. The chart scale is logarithmic and shows a 5% post-bubble rate, as well as a 5% continuous growth rate for comparison.



For a cursory comparison, we can look at the progress of gold and bitcoin over about 80 years and 70 weeks, respectively. Aside from the artificially (and semi-arbitrarily) fixed rate gold was set at for nearly 40 years, the USD-denominated growth patterns are obviously similar. While correlation does not imply causation, existence of isometric patterns begs a deeper investigation of the underlying mechanisms. Again, the chart is logarithmic, with a relative basis of 1.00.

Isn't there some gold-related event on Dec. 22nd? I remember reading about it in the old gold thread.

Looks like people are still searching for the dollar devaluation. The current situation cannot last.

The price of gold has been held back so far this month. I've had little time to look into it.

I have some money in funds which contain commodities futures so I will get out on the next peak and go all into physical gold; the safest bet for the upcoming calamities. I have considered putting some money into stocks but prefer safety for now.

What would happen if the ECB enacted QE next month? Would it take long before the US would need to answer in kind? How many bankers hold official positions and have protected financial institutions over all others? The banks will make some concessions over the next few months, but they'll get it all back and more shortly after - or else they'll lose all control.

There have been numerous large rallies in gold lasting less than one month (gold shot up >$100 at the beginning of this month). Unless another blatantly criminal act is committed, time's up for the CME and bullion banks. I think fresh fraud will be saved for early next year. QE fills the banks' coffers first, no matter where it comes from - that allows them to flood more money into the short side of the PMs (and/or pull their huge numbers of bids). That whipsaw action will knock out new longs in gold/silver through January, just in time to have brought down the open interest on the February and March gold & silver contracts as it has for years. If that doesn't work, they'll declare a bank holiday or find some other excuse to 'legally' avoid delivery.

Patterns arise for reasons, and this is a big one. I wasn't too concerned about exchanges defaulting this year, but I guarantee this is the last time contracts will be honored with any remnant of legitimacy. The final breaking of functional price discovery will occur in 2012 due to lack of participation in markets by anyone sane - the western markets will become the banks. At that point, gold will officially be quoted at insanely low values while everything else remains artificially elevated.

Another round of stimulus would allow the US to boost the illusion of prosperity just long enough to round out the year with either a re-election or another lackey set in place; if it's to be a final term for the current president, the gloves come off and the nation enters dictatorship under the guise of an emergency (war?).

Though you still think it is likely to fall back in Jan as it has the last three years?

To get to 2000usd by the end of December there will have to be a big rally like through August. That is entirely possible. Interesting to see what happens then...

Yes, I'm still expecting a significant spike to the $2,000 range before year-end.

It's also becoming harder to lend any credibility whatsoever to official announcements; contradictory 'leaks' and rumors, reporting of large volume transactions in obscure locations, probably not disclosing even more. This is the same brinkmanship displayed by politicians earlier in the year, and it will run right up to the last moment.

The exchanges won't officially default, and there may be some truly sleazy tricks pulled to ensure that fact. MF Global was very likely an intentional effort to cull futures positions.

Only one day remains before clients notify the exchange of delivery requests. Gold OI is still 3x the stated warehouse stocks and silver OI remains at more than 2x available stocks, although preliminary numbers show the gold OI at 1.5x and silver OI almost even. Almost all of the contracts that bailed from December have rolled to February (gold) or March (silver).

Even with the PM Dec OI squeezing by, it is not in the bullion banks' best interests to simply deliver everything and leave nothing for the extreme demand during 1st quarter of 2012.


The more testing services, the better. Plenty of scammers will flood the markets over the next several years. Another tool: ultrasonic testing.

For peace of mind, it's best to skip the deals that could easily turn out to not be such great deals by going with reputable dealers. Some beginning gold investing information.

I looked into this. Very illuminating, all these people buying gold but no testing.

Conductivity only tests surface, acid only tests surface, specifc gravity can work but hard to be that accurate in small amounts.

XRay is better. Im thinking of buying one to help people test.

Hope this helps

 -j

So, miscreanity, next month should show a sudden sharp rally for gold before the year's end, according to your thinking?

Acid tests seem to be commonly used.

I wouldn't trust any gold bullion. Metallurgists can create very sophisticated alloys designed to fool common tests.

http://lunaticg.blogspot.com/2010/12/alert-hong-kong-bullion-scam.html

That would require sacrificing one of the bars, would it not?  Or is there some way to ensure they aren't just gold plated?  I guess you could measure volume with water and make sure it's the right density, but that wouldn't identify a clever forgery.  Maybe I'm just being paranoid.  I'll see if a local Jeweler can help me out.  Thanks for the suggestion.

I think a jewelry store could do a gold test for free.  If it's real gold, who cares where it's from.

why not check if it's gold. if it is, it's only a "slight" scam, right?

Hey you gold bugs.  I just received a few gram bars in the mail.  They are from ebay, and the auction claimed they were from Istanbul Gold Refinery.  However, the seal on these is a simple oval with IGR in it instead of the complex design with IAR I see elsewhere.  Are these legit, or did I get scammed?  If I did, what's my best course of action?  Contact the seller and give him the chance to pack up and take the money or chargeback through paypal?

If you adjust the price for the 95% value loss the dollar has incurred since the creation of the Fed in 1913, the prices look pretty good.

i've written a piece on the juniors in my forum. (shameless ad, don't bother going there if you don't want to subscribe) 

I have never personally invested in precious metal futures, but my understanding is that it is considered high risk. A lot of stuff can happen between you writing a check and gold coming out of the ground. I am also skeptical of the wisdom of buying at historically high prices. It may be hard to follow through with the most important rule; Buy low, sell high.

Nice rally :-P

in this very interesting interview http://www.youtube.com/watch?v=hSyJjC_jBWQ Doug Casey talks about "junior" miners. I think he says 80% of them will never mine a gram of metal. However, he also says junior miners are a good investment.

Tomorrow at 9AM EST we find out if Great Basin Gold (GBG) is vastly oversold, or if it is indeed priced correctly.  Could be interesting.

Stocks involving gold mining require more research since you have to look at each individual company and their management.
But either gold or gold mining stock is a good buy right now.

shouldn't an ad like that be done like this:

"i totally agree.  i put up some very illuminating charts illustrating this on my website."

(I hope the url is correct, also note, cypherdoc: the link(s) in the other thread seems to lead to a 404)

EDIT: put quotation marks on quote

Bitcoins and physical gold are both screaming long-term buys even at current price levels. I have acknowledged elsewhere that I'm usually early on my calls; it looks like I might have been a week or two early again with gold - pay attention to open interest in precious metals in relation to volume as the banks & gov't are now running the clock out to the very last second before pulling back from the brink.

Numerous mining stocks are undervalued in relation to their product, but as many dangers as opportunities exist with them. Beyond the risks among explorers and juniors, poor management might issue excessive shares, diluting ownership in the same way that base monetary inflation erodes wealth. Pay attention to share issuance over the past few years before initiating any position. The Got Gold Report has an excellent list of junior mining companies. Still, perform your due diligence before jumping in.

Alf Field's major speech, which he came out of retirement to give, has been posted at Jim Sinclair's site. There is plenty for everyone, from Elliott wave analysis to monetary theory.

A warning: the potential of a Dubai default caused panic during a major US holiday. The banks' backs are against the wall, so expect the unexpected in dirty tricks (e.g. MF Global client assets 'disappearing').

Traveling at the moment so reply time will be slow. Best to cypherdoc on the new venture.

i totally agree.  i put up some very illuminating charts illustrating this on my website.

I disagree on nearly all points.  Gold is not rallying, stocks are not floundering.  I am long a small position in a miner, as well as physical gold, but I consider both to be a hold at best.

Since it appears cypherdoc will lock the other thread and I don't know when, I thought I'd create a new one.

First question for discussion. Many say gold miner stocks are very undervalued considering the bull market in gold with the miner stocks lagging behind. But with the costs of production increasing and (depending on your opinion this is) the negative outlook for the stock markets in general, is this a reasonable assessment? Should we be buying gold mining stocks instead of physical gold or should we limit our exposure to them?

Another question: Certain investors will recommend looking around for explorer stocks for the potential of massive rises over time. This comes with the risk that these explorers will not be able to start profitable mining operations. Is it a good idea to gamble with some of these more risky stocks?