Ask a gold question

[Shiny Things]

If anyone here is familiar with the gold dunar you wull understand that some coins habe an advantage over generic bulliins in that it has numismatics value. Some of the dinar gold coins in my collection are trading above the prevailing price of gold due to its numismatics

OK, sure, but you pay the numismatic premium when you buy and you receive it back when you sell. Unless the numismatic premium itself rises, you might as well just be trading GLD or spot gold. Why bother paying the extra? Does the numi premium change over time?

 

[Shiny Things]

(derp derp derp derp)
Expert or no, I think we can make an educated guess as to the future. Consider the facts:

(derp derp derp)

What is actually happening is that the failed economy is allowed to continue and grow on QE money. The economy exists as long as QE exists. Ergo no QE -> no economy. So never mind the "numbers". Since are meaningless.

Consider rather the damage caused by QE. Naturally, an increase in supply of money leads to loss in purchasing power of said money. Naturally, loss in purchasing power can lead to owners of said money fleeing it for safer wealth vehicles (especially since the "easing" is so huge).

Gold, chosen by the market historically, is the safest wealth vehicle. On this basis we can make an educated guess that, whatever the short term numbers, gold must eventually climb to heights never been seeing before. On this basis revising those portfolio allocations may not be a bad idea.

Ladies and gentlemen, this is some absolutely primo derp right here.

Shahmatt is absolutely fixated on his belief that QE will cause hyperinflation, and won't listen to any evidence to the contrary - and it's cost him about a quarter of his net worth in the last six months.

Don't be derpy. Derp kills.

 

[Shiny Things]

I think the past couple of years the prices of gold have largely decoupled from the Fed's monetary policies. Case in point desoite liberal monetary policies past two years gold has reached astronomical highs driven purely by sentiment.

What? That's exactly what I'm arguing. When monetary policy is loose, gold prices go higher; when monetary policy tightens, gold prices go down.

I'm saying that if the Fed hikes over the next couple of years, as it looks likely they'll do (assuming the US economy stays on its current trajectory), gold's going to keep grinding lower.

 

[prophetjul]

with such an overweightage in gold, i wonder have you done any backtesting with such portfolio? if you look at the long term data, inflation adjusted returns of gold are mediocre compared to stocks.

just run some data from 1990, 1980, 1970 to current and compare the returns of gold with S&P.

Inflation Adjusted Gold Return Calculator

but if you run from 2000 to current, gold has outperformed stocks. i guess you believe the gold super bull cycle will still continue. but if it isnt?

Its no use when theres a limitation to the early dates.

Should try to compare with DJ from 1929.

BTW some DJ stocks have gone into limbo!

 

[prophetjul]

I guess he is just holding out for a huge correction in the stock market before he gets in.

That said, I am curious about long term gold bulls, aren't they afraid of a repeat of history, 1980s to early 2000s gold bear?

You should see what happened from 1974 to 1980

gold went from approx. $200 in 1974 to $100 in 1976.........


AND zoomed to $850 on 21 Jan 1980.


Whos to say it wont be repeated again?
Its a wildreamz!

the world's financial system/economy is worse than that in 1929.
The bubbles these days are much much bigger than that of yesteryears.

All they are doing nowadays is plastering those broken bubbles with paper debt.....in hope

 

[genie47]

The point is with so many who have been vested for so long in the markets like 5 years or more will know that you will eventually be wrong about the markets. Be it stocks, bonds or gold. If it happens, it should not wreck your life savings. Stay diversified and do not be overconfident in one investment.

Take it from Nick Taleb. Your portfolio has to be Black Swan Robust.

Vested in stocks, bonds, gold, a ladder of FD and CIMB Starsaver account.

 

[prophetjul]

????????

I have a question:

Central banks were net sellers of gold in the early 2000s.
I remembered that idiotic UK Chancellor Gordon Brown sold about 395 tons of gold over 17 auctions from July 1999 to March 2002, at an average price of about US$275 per ounce

Now they are net buyers.
Why? Do they know something we don't?

2003 = -630 tons
2004 = -479 tons
2005 = -663 tons
2006 = -365 tons
2007 = -484 tons
2008 = -235 tons
2009 = -34 tons
2010 = +77 tons
2011 = +457 tons
2012 = +533 tons

 

[genie47]

No, they don't know. They are just doing things to manipulate the money supply behind the scene making things very unstable.

Me? I just have a portfolio that needs to be balanced.

 

[farouk]

I guess he is just holding out for a huge correction in the stock market before he gets in.

That said, I am curious about long term gold bulls, aren't they afraid of a repeat of history, 1980s to early 2000s gold bear?

I think this is the psyche of gold investors that many gold bears do not understand. Gold is a store of value not an incremental asset such as securities and my mix in it is as a hedge against inflation. The price movement of gold matters very little to me because a. It is just part of the portfolio mix and b.coins such as the nabawi gold dinar increases over time.

 

[farouk]

To those who have been asking about numismatics and the purchase of gold coins over the purchase of gold stocks

1. My humble opinion is to pay a little more for the rarer coins from overseas especially the middle east. Coins like the maple leaf and kijang are fine but they keep making it every year hence there is ni numismatic value over the inherent value of the gold. Hence when gold prices drop you are left with a common piece of gold

2. Coins like the nabawi gold dinar issued in some special occasions like the inauguration of the saudi king increase in value over time. Numismatics increase in value over time. You may pay a premium for it intially over its inherent value but it will increase over time.

 

[farouk]

I have a question:

Central banks were net sellers of gold in the early 2000s.
I remembered that idiotic UK Chancellor Gordon Brown sold about 395 tons of gold over 17 auctions from July 1999 to March 2002, at an average price of about US$275 per ounce

Now they are net buyers.
Why? Do they know something we don't?

2003 = -630 tons
2004 = -479 tons
2005 = -663 tons
2006 = -365 tons
2007 = -484 tons
2008 = -235 tons
2009 = -34 tons
2010 = +77 tons
2011 = +457 tons
2012 = +533 tons

Fiat money is a dangerous medium to store your countries reserve. Gold may decline but fiat currency can just totally disintegrate

 

[limster]

Fiat money is a dangerous medium to store your countries reserve. Gold may decline but fiat currency can just totally disintegrate

If fiat money disintegrates, you can keep all the gold you want; those with guns will just take your gold away. You can read all those survivalist websites where they discuss how to prevent the govt from seizing your gold when the US dollar collapses....

 

[prophetjul]

Fiat money is a dangerous medium to store your countries reserve. Gold may decline but fiat currency can just totally disintegrate

Fiat is a creation by Central Banks..

Are you saying they have no confidence in their own creation

or is there something else going on?

 

[Shiny Things]

I have a question:

Central banks were net sellers of gold in the early 2000s.
I remembered that idiotic UK Chancellor Gordon Brown sold about 395 tons of gold over 17 auctions from July 1999 to March 2002, at an average price of about US$275 per ounce

Now they are net buyers.
Why?

Because, with a very few exceptions (the RBA, the Fed, and the Nordic SWFs), central banks and SWFs are the worst, slowest, laziest, dumbest, latest-to-the-party investors in the world.

Examples:
Gordon Brown (and everyone else) flogged their gold holdings at the ding-dong low, then bought them back ten years later at the ding-dong high.

Temasek went BOLIVIAN long Merrills and UBS stock in 2007, and Sino-Forest stock in 2011.

Central banks are, in general, only good as contrarian indicators.

The exceptions are the RBA and the Fed when they're intervening in FX. Those two have exceptional form when it comes to currency interventions. They say "don't fight the Fed", but they need to add "don't fight the RBA".

 

[chopra]

Because, with a very few exceptions (the RBA, the Fed, and the Nordic SWFs), central banks and SWFs are the worst, slowest, laziest, dumbest, latest-to-the-party investors in the world.

Believe there's political agenda in their positions.

 

[Shiny Things]

2. Coins like the nabawi gold dinar issued in some special occasions like the inauguration of the saudi king increase in value over time. Numismatics increase in value over time. You may pay a premium for it intially over its inherent value but it will increase over time.

Cheers, that's a great explanation. I'm still not convinced, though - I feel like any increase in the numi premium would be more than wiped out by the spread cost when you sell the coin, but hey; it takes two to make a market.

 

[Wood4]

Don't always assume central banks know a lot about gold trade or many other matters .

 

[prophetjul]

Don't assume they don't.

Imagine this....they take down the fiat system with a currency crisis.....

and press................RESET.

 

[Shahmatt]

with such an overweightage in gold, i wonder have you done any backtesting with such portfolio? if you look at the long term data, inflation adjusted returns of gold are mediocre compared to stocks.

just run some data from 1990, 1980, 1970 to current and compare the returns of gold with S&P.

Inflation Adjusted Gold Return Calculator

but if you run from 2000 to current, gold has outperformed stocks. i guess you believe the gold super bull cycle will still continue. but if it isnt?

I guess he is just holding out for a huge correction in the stock market before he gets in.

That said, I am curious about long term gold bulls, aren't they afraid of a repeat of history, 1980s to early 2000s gold bear?

I think gold may or may not be a hedge against inflation. The old rules may or may not apply. To be honest I don't really care about the past.

Gold gets its demand as money due to it being natural money. It is right now low priced due to improved confidence in fiat currencies. I think this confidence is misplaced due to the easing policies. I think once the market realizes this then there will be a rise in gold demand. I intend to make a killing when this happens!

Ladies and gentlemen, this is some absolutely primo derp right here.

Shahmatt is absolutely fixated on his belief that QE will cause hyperinflation, and won't listen to any evidence to the contrary - and it's cost him about a quarter of his net worth in the last six months.

Don't be derpy. Derp kills.

The trouble is that we all seem to have differing definitions of what inflation is. To me inflation is money printing and not price increases. Therefore on this basis inflation has already happened. I believe that price increases are a consequence of inflation.

What is your definition of inflation?

 

[peterchan75]

Don't we all need more money in our bank account ? Where does the money come from if the money supply don't expand ?