Gold at $1200

Discussion in 'Politics, Religion, Social Issues' started by itcheroni, Dec 1, 2009.

?

Have you bought gold?

  1. No, and I don't plan on it.

    105 vote(s)
    65.6%
  2. No, but I plan to buy some.

    12 vote(s)
    7.5%
  3. Yes, I own physical gold.

    28 vote(s)
    17.5%
  4. Yes, I own stocks/ETFs/futures contracts/etc.

    15 vote(s)
    9.4%
  1. itcheroni macrumors 6502a

    Joined:
    Sep 23, 2005
    Location:
    CA
    #1
    Gold, for the first time, closed above $1200 today. This is a serious indicator for the global economy. For everyone who believes our government's handling of the economy is on the right course, the rest of the world is paying $1200 for insurance against our economy. And they'll pay a lot more very soon. Since the beginning of ever, societies have shifted from commodity based currencies to fiat currencies and back. Currently, I don't think any country uses a commodity backed currency because the dollar used to represent a note for gold equivalent, making it "as good as gold." Now gold is $1200/ounce and in a few month to a year, it'll $1650. And after, the sky is the limit. And in 10 years or so, there will be several countries using commodity backed currencies.

    To gauge how early we are in my timeline, I wanted to see how many here have bought gold.
     
  2. rhsgolfer33 macrumors 6502a

    Joined:
    Jan 6, 2006
    #2
    Can I pay my expenses with gold? No? Then I guess I probably won't trading my dollars in for gold anytime soon.
     
  3. Eraserhead macrumors G4

    Eraserhead

    Joined:
    Nov 3, 2005
    Location:
    UK
    #3
    Or it could just be yet another bubble. Like housing and Dubai.

    Which ones did you have in mind?
     
  4. itcheroni thread starter macrumors 6502a

    Joined:
    Sep 23, 2005
    Location:
    CA
    #4
    I'm guessing this isn't as big a deal for you guys as it is for me. haha.

    Housing and Dubai can be explained. A crash in gold would be unexplainable. Don't get me wrong, gold could go to $1600 and back down to $1100, but it will be right back up. 2010 will be a very volatile year but we will ultimately be at $1650+ in one year. It will go up exponentially from there.
     
  5. .Andy macrumors 68030

    .Andy

    Joined:
    Jul 18, 2004
    Location:
    The Mergui Archipelago
    #5
    Exponentially you say?
     
  6. Eraserhead macrumors G4

    Eraserhead

    Joined:
    Nov 3, 2005
    Location:
    UK
    #6
    If its too good to be true it probably is.

    Why would you invest in gold (which is just shiny metal) over say Chinese or Malaysian currency? They're both under-valued, and are controlled by successful governments.
     
  7. itcheroni thread starter macrumors 6502a

    Joined:
    Sep 23, 2005
    Location:
    CA
    #7
    Yes.
     
  8. itcheroni thread starter macrumors 6502a

    Joined:
    Sep 23, 2005
    Location:
    CA
    #8
    If I had all my assets in yuan, I wouldn't really care about gold. But for people who have dollars and pounds, gold is the safest bet to not losing all your money.
     
  9. GfPQqmcRKUvP macrumors 68040

    GfPQqmcRKUvP

    Joined:
    Sep 29, 2005
    Location:
    Terminus
    #9
    If your prediction, which you're presenting as an inevitable course of events, were correct, gold would already be exponentially higher.
     
  10. .Andy macrumors 68030

    .Andy

    Joined:
    Jul 18, 2004
    Location:
    The Mergui Archipelago
    #10
    Don't be such a downer Badandy. What possible conflict of interest could a website run by a precious metals investor have in overinflating the long-term outlook for gold?
     
  11. Eraserhead macrumors G4

    Eraserhead

    Joined:
    Nov 3, 2005
    Location:
    UK
    #11
    Bankers are perfectly capable of making mistakes with their valuations ;). That said gold is "well known" enough that that is unlikely here.
     
  12. djellison macrumors 68020

    Joined:
    Feb 2, 2007
    Location:
    Pasadena CA
    #12
    Looks to me like we're undergoing the exact same pattern as the late '70's - and we're already past the point to which it will fall again and potentially be another case of recovery lasting 28 years.
     
  13. CarlisleUnited macrumors 6502

    Joined:
    Jan 30, 2007
    Location:
    Nederland
  14. barkomatic macrumors 68040

    Joined:
    Aug 8, 2008
    Location:
    Manhattan
    #14
    Gold is actually not at its high if you look at the price in terms of inflation adjusted dollars. Anyway, the sure sign that a bubble is forming/has formed is when people become overconfident in their investment.

    The current price of gold is being driven up by speculators. There is little intrinsic value to gold--its used in jewelry but has very limited industrial applications. It's price is solely determined by the market just like any currency--and it can rise and fall like any currency. There are other metals which do have industrial applications and which I consider to be a better long term investment. Unless of course you don't think China has much of an industrial future. ;)

    The economy will not be in the dump forever, and when it finally begins to get on its legs again the price of gold will fall as people explore more profitable investments.

    That being said, its ok to have a few gold coins stashed away but hopefully you're not spending all your money on gold. The current prices are very high and if you're buying gold now just understand it *could* be back to $700 an ounce or lower in a few years. In the interim, it could very well rise to $1500 or higher on speculative activity.

    I have traded gold for 10 years.
     
  15. Rodimus Prime macrumors G4

    Rodimus Prime

    Joined:
    Oct 9, 2006
    #15
    hmm prices of gold there seem to line up pretty well with the economy.
    when it goes bad price of gold goes up. when it is booming price of gold goes down.
     
  16. heehee macrumors 68020

    heehee

    Joined:
    Jul 31, 2006
    Location:
    Same country as Santa Claus
    #16
    My boss is a big believer in gold. He is the founder of one of the largest (by market cap) gold mining companies in the world. I can PM you if you want to know the company. All of the companies he owns right now, he doesn't take a salary, he puts his money where his mouth is. He has over $100 million in gold bullion right now and expects it to go much higher.

    Other than the inflation chart posted above, here are some of the reasons why, gold/dow ratio, it's forecasted to be at 2:1 or even 1:1. Gold percentage gain from 1968 - 1980 and 2001 - present.

    Edit: I own junior gold stocks and ETFs.
     

    Attached Files:

  17. awmazz macrumors 65816

    Joined:
    Jul 4, 2007
    #17
    That's $1,200 US dollars. What's the US dollar been doing? Gold is actually not much higher than when it was $700 US dollars 12 months ago for people outside the USA.

    And adjust for inflation, it's far far lower in value than even its highest peak 30 years ago.

    [​IMG]

    Anyway, it's a consumer product. The Indians and Chinese have all been buying it up for jewellery with their new found wealth over the last ten years. The spike in the late 70s was Japanese economic boom jewellery consumer demand bringing the speculators in en masse in the late '70s.

    It cost USD $320 an ounce to dig it out of the ground in 1999, so it was selling for less than it actually cost to physically produce 10 years ago when the consumer demand dried up after the SE Asian 'Tiger' economies hit the wall and they all started hocking their new jewellery.
     
  18. itcheroni thread starter macrumors 6502a

    Joined:
    Sep 23, 2005
    Location:
    CA
    #18
    That is a very misleading chart. Why does it stop at lowest point when it is double that right now? If you look at my gold chart, you'll see that there was a low near 2000, which signaled the end of the bear market and the beginning of the bull market for gold/commodities. The bear market lasted from about 1983-2000. We are only 9 years into the bull market. We've got another 5-10 years to go. Oil is in no ways hanging around $78 indefinitely. Warren Buffet says he bought a railroad as a wager on the American economy. It's funny that it is also a great hedge against high oil prices.

    There are two main purposes for gold. One is jewelry. The second, and more importantly, is a store of purchasing power/money. No country is currently using it as a currency and as this poll shows, very few people are using it as a store of wealth. This is certainly not a sign of a bubble.

    I should clarify that I don't believe the real value of gold will skyrocket but rather the metric by which we measure it, the dollar, will collapse. If I add a million notches on a yardstick, I haven't gotten taller even if the yardstick says I'm a 100,000 feet tall. That being said, gold's real value will also go up when countries and the masses begin using gold as money.

    I don't understand your point. That chart is simply a plotting of the price of gold across time. The second chart is the price of gold adjusting for inflation using the government's CPI across time. This chart will look the same no matter who inputted the data. In fact, this is a much better chart that the one above on oil because it shows a much longer time horizon while the oil one is cropped to convey a particular message. And doesn't it only make sense that a person with an interest in gold would post a chart on gold? It would be very difficult to try and find an entity with no interest in gold posting a chart on gold. Might I suggest not basing decisions on association? You can do whatever you want, but it might be a good idea to think things through rather than immediately searching for something that might "discredit" the source. You will always find a reason to not listen to someone with whom you disagree, but it doesn't mean you are necessarily correct.
     
  19. splitpea macrumors 6502a

    Joined:
    Oct 21, 2009
    Location:
    Among the starlings
    #19
    Yeah, that's the scary part.
     
  20. GfPQqmcRKUvP macrumors 68040

    GfPQqmcRKUvP

    Joined:
    Sep 29, 2005
    Location:
    Terminus
    #20
    No, you think we have another 5-10 years to go. For example, let's say that AMZN (Amazon) stock is trading at $142. People like you, but advocates for AMZN, will say, unequivocally, that the stock will go up to $200 by the end of the year. But if that rise is as inevitable as they think it is, AMZN would already be at $200 (or at least valued with a reasonable discount rate to the present).

    Which countries?


    Personally, I would have rather seen a disclosure concerning your current positions on gold in the original post. Secondly, maybe an acknowledgement of counter-arguments and why they're wrong. After all, if your predictions are actually as accurate as you posit they are, you'd be the king of investing.
     
  21. Zombie Acorn macrumors 65816

    Zombie Acorn

    Joined:
    Feb 2, 2009
    Location:
    Toronto, Ontario
    #21
    Buying twinkies in mass right now would probably be a good investment where our dollar is going. :) At least you know you won't go hungry.

    Also adjusting the gold rise compensating for inflation is wrong, the reason people are investing is BECAUSE of inflation.
     
  22. Eraserhead macrumors G4

    Eraserhead

    Joined:
    Nov 3, 2005
    Location:
    UK
    #22
    I already asked that - no response.
     
  23. itcheroni thread starter macrumors 6502a

    Joined:
    Sep 23, 2005
    Location:
    CA
    #23
    Whoever wants to be in the running for the next reserve currency as well as those who want a stable currency.


    China was hoping to buy the IMF gold but got cut off by India. They are buying on dips, thus making it really hard for gold to dip too much. They have gone from being a net producer to a net buyer of gold as they hedge against their dollar holdings.

    http://news.goldseek.com/BullionVault/1259592961.php

    India just bought 200 metric tons from the IMF and they want to buy the remaining 200. They paid about $1048 a couple weeks ago and that was the highest price ever at the time. I can bet you they're not buying it to make jewelry.

    http://online.wsj.com/article/SB125722876971624729.html

    Even Vietnam and Sri Lanka

    http://article.wn.com/view/2009/11/19/Vietnam_importing_6_tonnes_of_gold_in_November/

    http://www.ft.com/cms/s/0/5fd5ab32-d9c4-11de-ad94-00144feabdc0.html

    And all these country have a lot more to buy. China will want to buy several thousand metric tons of gold to balance their holdings.

    http://wallstreetpit.com/12567-gold-may-hit-2600-if-china-increases-its-holdings


    Essentially, I don't know. I'm not sure which countries will do what but people holding dollars or some other weak currency may be wiped out. Maybe those countries will try to stabilize with gold or maybe only countries that aren't in trouble are the only ones with the wherewithal to do so.

    I have every last penny in various gold and commodity positions(ABX AUY GDX COP EWZ). I withdraw what I need to pay the bills. If gold does crash or just moves down much more than I anticipate, I'd be toast.

    And these aren't my ideas. I'm just copying the people who make the most sense to me.
     
  24. Tesselator macrumors 601

    Tesselator

    Joined:
    Jan 9, 2008
    Location:
    Japan
    #24
    I have about $250,000 in gold coinage right now (if I sell it at $1,000 per/oz.). I knew it was going up back when it was about $400 per oz. I may buy more now as I know (again this time as I did before) with 100% certainty, that in 12 to 16 months it will hit $2,400 ~ $3,000 per oz. (at that point I'll sell it all as we will soon after be on a world currency and gold will again normalize against salaries and etc.)

    Back when it was about $600 an oz. I posted to everyone that it would be good to buy gold for them but everyone just laughed at me and told me what BS gold was. The discussion digressed into some absurd back and forth about "the gold standard" and how gold was a lousy form of currency.

    I'm having the last laugh now I guess. I'll be laughing again in about a year from now too. ;)
     
  25. rhsgolfer33 macrumors 6502a

    Joined:
    Jan 6, 2006
    #25
    Not really. We can adjust for inflation because the price of gold is measured in dollars, we're adjusting the price in dollars not the gold... Also, people invest in gold for expected future inflation, the price of gold is being adjusted for inflation that already has happened and has been measured.

    Wow. As someone with a moderate finance background I cannot believe anyone would sink all of their money into one spot. Do you know how many times people have been ruined by putting all of their money into a someone else's "sure thing?"

    How can you possibly know with 100% certainty what will gold will be doing in the next 12-16 months? As Badandy already pointed out, basic financial theory dictates that if something was certainly going to be at XYZ price in 12-16 months, it would already be trading at some reasonable present value of that amount. It is essentially an application of the efficient market hypothesis; basically, prices reflect all known information and will change to reflect all new information instantly. If people were 100% certain of what gold would be trading at in 12-16 months, it would already be trading at that price.
     

Share This Page