The Gold thread


True, but they don't have to buy any more dollars either, just by holding the current position and buying gold to meet the dollar loss of value would be enough given the huge sums here?
 
RiceCakes said:
True, but they don't have to buy any more dollars either, just by holding the current position and buying gold to meet the dollar loss of value would be enough given the huge sums here?
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I'd be surprised if they do but I guess anything is possible. Personally I think the US dollar will strengthen in the months to come. Central banks get very nervous when the dollar weakens rather than when it strengthens. Beyond vague threats I cannot see any CB operating in a manner that could be fatal for the dollar.

Eventually though (and this is why I am bullish on gold) the US's profligate spending and massive trade imbalance will catch up with it. It mightn't necessarily be the end of the dollar but a currency crisis of some sort is inevitable. Then we'll be talking about gold in thousands of dollars rather than hundreds.

Chris Laird's article on the same was very persuasive and his track record on predicting the movement of gold is second to none:

http://www.kitco.com/ind/laird/sep142006.html
 
Hi R305, the good thing about averaging in, is you can average out as well. Trim a little here and there when your market value exceeds book value, you'll have to do that anyway to maintain a 30% exposure.
 
yes..i am adding more gold also..the 200 day moving average is on a nice upward trend..

you have to wonder about Chris Laird though..when he thinks that gold could reach $50,000 an ounce in the future...this is surely mad?
 
smiley said:
you have to wonder about Chris Laird though..when he thinks that gold could reach $50,000 an ounce in the future...this is surely mad?
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Not necessarily. However, in his scenario, those dollars would be seriously devalued from their present level.
 
room305 said:
in his scenario, those dollars would be seriously devalued from their present level.
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Reminds me of a funny line I read the other day:

"I have a complaint about $ bills: they are too small and not sufficiently absorbent for the role they are being prepared for: toilet paper."

 


That seems to make sense alright. But if the ETF is priced in dollars but bought with euros, would a collapse in the dollar not mean you sell the fund at the dollar rate, effectively losing on transferring it back into euros?

Or should the increase in gold (if it comes) make up the difference in the decrease?

Sorry for the stupid questions but I tend to try and avoid mixing currencies as much as possible so I'm wary of making a basic error in buying a dollar-denominated fund.
 
Saw a piece on CNN last night where the analyst said that Gold was on a bit of a J curve and that he expected prices to fall by 30% in the next few months.
 
walk2dewater said:
Hi R305, the good thing about averaging in, is you can average out as well.
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sidelining a bit here but what's the point in averaging in? I know the theory is to reduce the effect of any downturns HOWEVER if you accept the fact (maybe not in gold) that the market goes up on average 2 days for each day it goes down, then it makes more sense to go all in at the start?
 
If you went all in and bought gold at the May peak of $730 an ounce, it mightn't feel like the best decision you ever made as you watched it slide to $550 an ounce in the following months.
 


first you'd have to look at the daily up to the daily down.

say it rises for 2 days to one day down, but rises at 5% and drops at 20%.

markets drop quikcer than they rise, all other things bieng equal, the herd.
mentality.

the nominal value of gold will always rise, so 50k an ounce is entirly plausible....

averaging in is more of a play on the mid term average rising....
 
Given that most reports indicate that gold would rise on a dollar collapse, would those of us in euroland be better off buying into a euro denominated gold stock?
Or would it matter?
Thanks for any replies.
 
I suspect that the rise in gold will be offset by the fall in the dollar. After all, why should gold priced in euros change just because the dollar is depreciating.
 
I understand that the ETF's don't have a currency risk but I bought into a certain gold mining fund through Rabobank. Have now realized its base currency is dollars (although Rabo's website is confusing me on this!) Am I right in thinking that means that when the dollar falls, even if the mining companies do well, I could lose any gain when selling and converting back to Euros?
 

There is a general inverse correlation with gold and the $. When the $ weakens gold generally has a compensating increase. Likewise with oil at present - there is positive type correlation - as oil falls there is a somewhat positive correlating downward pressure on gold. As with all markets there is a mix of variables that pull it one way or the other. Investing was never supposed to be easy -
 
genki33 said:
Given that most reports indicate that gold would rise on a dollar collapse, would those of us in euroland be better off buying into a euro denominated gold stock?
Or would it matter?
Thanks for any replies.
Click to expand...

jpd said:
I suspect that the rise in gold will be offset by the fall in the dollar. After all, why should gold priced in euros change just because the dollar is depreciating.
Click to expand...


A US$ crisis (e.g. Asians/China/OPEC sell off their hoard of US bonds) will cause gold to do a moonshot against all paper currencies, and that is the main reason for betting on gold at this point. It is a valid point, made and commented on earlier in the thread, that US$ weakness will at least initially be reflected in a lower rate against the €. But this difference would be far outweighted by the accompanying spike in gold.

Furthermore, gold has been an historical hedge against inflation. Do your own websearch to prove this. If you believe true general price inflation is higher than official figures then you should buy gold. Gold is the ultimate safehaven. [so then why is gold tanking at the moment? short answer: the herd is treating gold like a commodity. I don't think gold will be $580/oz for long]

Anyone interested in investing in this asset should read this
http://en.wikipedia.org/wiki/XAU#Gold.27s_value_versus_money_supply
 
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