Gold

[quote author="green_cactus" date=1258017204]Gold has a tremendous industrial use; especially when it comes to electronics. I don't quite buy the industrial demand as a major difference with platinum (and noble metals in general). I just can't look at the gold chart without thinking "speculation".</blockquote>


I just look at the gold chart and think repatriation.



Inflation is almost as boring as deflation so I've decided to start using repatriation. The mania in gold hasn't even started.



If gold was money for centuries, and all the sudden we become so smart that gold is no longer money for the last 40 years(says the smart people who have run massive companies into the ground); who is to say that everybody hasn't been wrong for the past 40 years?



From the looks of it, we are dead wrong.
 
[quote author="roundcorners" date=1258002804]Panda.. finally dumped half of my US equities holdings, today... this is one day where everything was up, Gold, Dollar, Oil, Dow.. very strange... Geithner had to really pump the dollar up a little for the Japanese today...</blockquote>


It is time for Geithner to jaw bone the falling dollar.
 
[quote author="awgee" date=1258022531][quote author="green_cactus" date=1258017204]Gold has a tremendous industrial use; especially when it comes to electronics. I don't quite buy the industrial demand as a major difference with platinum (and noble metals in general). I just can't look at the gold chart without thinking "speculation".</blockquote>
Okay, since you seem to know that gold has a tremendous industrial use; especially when it come to electronics,

how much gold as a percentage of either above ground gold in existence or yearly mined gold or any other way you care to consider is used for electronics and all industrial uses combined?</blockquote>


There was a flow chart of some sort that tells you how the gold was used, and vast majority of it are in non-industrial usage, such as coin/bar/jewelery. Very small portion are used in electronic, etc..
 
[quote author="Astute Observer" date=1258083269][quote author="awgee" date=1258022531][quote author="green_cactus" date=1258017204]Gold has a tremendous industrial use; especially when it comes to electronics. I don't quite buy the industrial demand as a major difference with platinum (and noble metals in general). I just can't look at the gold chart without thinking "speculation".</blockquote>
Okay, since you seem to know that gold has a tremendous industrial use; especially when it come to electronics,

how much gold as a percentage of either above ground gold in existence or yearly mined gold or any other way you care to consider is used for electronics and all industrial uses combined?</blockquote>


There was a flow chart of some sort that tells you how the gold was used, and vast majority of it are in non-industrial usage, such as coin/bar/jewelery. Very small portion are used in electronic, etc..</blockquote>


In terms of basic material for industrial production, sliver and copper has a much wider application than Gold. And yes, the gold commodities market is rigged just like oil and everything else.
 
<object width="325" height="250"><embed src="http://www.youtube.com/v/youtube" type="application/x-shockwave-flash" width="325" height="250"></embed></object>
 
WELCOME TO PANDA'S HOUSE!



<img src="http://winewriter.files.wordpress.com/2008/04/american-dollar-toilet-paper.jpg" alt="" />
 
[quote author="PANDA" date=1257987769]I don't know Bondtrader.... I would like to see Gold back down to 920 - 960 one last time so i can buy more, but it appears that Gold is headed to $1200 and Silver $25 by year end.</blockquote>


For those of us who are not watching the daily pricing, can you let us know when this happens, if ever?
 
Just a couple quick thought on gold,



1. Gold market is as manipulated as the stock market at the current stage. Keep remind yourself these two magic words "Carry Trade". Gold price went up simply because dollar was trashed by the Fed, stop talking about stuff like higher consumer demand for gold, when oil hit $147 in 2008 in the middle of a deep recession , is there really that much demand for oil in the world?



2. Fed hates gold above $1000, because higher gold, higher inflation pressure, then more pressure for the Fed to raise rates, which we all know they can not do, they will run gold price back down below $1000 sooner or later



3. Last time I check, we still have deflation and as long as the banks are not lending and the velocity of money doesn't recover, meaning if money is not flowing, we will not have inflation. With that said, yes, we are having commodity inflation but deflation everywhere else for the moment.
 
FYI, an interesting <a href="http://blogs.ft.com/maverecon/2009/11/gold-a-six-thousand-year-old-bubble/">article about gold as a fiat commodity</a> that was linked on <a href="http://www.ritholtz.com/blog/">The Big Picture</a>.
 
Is Gold up for a short term correction any time soon? I mean nothing can go straight up forever. MoreKaos, are you still continuing to short at these levels? Though I don't think this is the ulimate top for Gold.... I am waiting for a correction here.
 
[quote author="morekaos" date=1258602482]Yup</blockquote>


For someone who owns a yatch on Long Beach... I don't doubt your timing on your shorts :)
 
<a href="http://www.ritholtz.com/blog/2009/11/a-deja-vu-moment-in-gold/">A D?j? Vu Moment in Gold?</a>



Those who believe the rally in gold is sending the wrong message on inflation might take comfort from the fact that the price of the yellow metal relative to that of the 30-year Treasury bond is approaching a 30-year high.



http://www.ritholtz.com/blog/wp-content/uploads/2009/11/goldbond.JPG



Perhaps not coincidentally, the earlier run-up marked the peak of hysteria about inflation ? and a multi-decade top in gold.



Of course, there may be other reasons why precious metals (and other commodities, for that matter) are rallying, including safe haven buying and the torrent of cheap money flowing into a wide range of speculative asset classes.



Still, it seems like the gold bulls may be getting a bit ahead of themselves.
 
[quote author="graphrix" date=1258605331]I just placed a big bet in the Panda challenge that GLD will be down before Dec. 19th. We will see how that pays off.</blockquote>


Count me in, Dec GLD 105 put and UUP for a TRADE.



Oil took about 8 yrs to finally reach a peak. It's roughly the same for Gold ($255 around beginning of 2001). We remember all too well how oil had its runup before it crushes, not to mention the angle of ascent for oil is a lot steeper. With that said, I don't expect a 20-30% correction on Gold in the near term, a pull back of 5-10% is very likely, then it certainly can edge higher. The inverse head and shoulder pattern formed since the beginning of 08 (broken out to the upside recently) suggested a potential top arond $1250.



I'm not changing my long term bullish view on gold until it become part of everyday American conversation, until Panda is telling me to dump my long term holding of gold. The precondition for gold to have its finally leg of melt up was that no one believe it could including the hardcore gold bugs (Panda) and the precondition required for gold to go back under $500 is that no one in their right mind would believe its possible.



But of course it is. A trade is a trade.
 
[quote author="BondTrader" date=1258173620]Just a couple quick thought on gold,



1. Gold market is as manipulated as the stock market at the current stage. Keep remind yourself these two magic words "Carry Trade". Gold price went up simply because dollar was trashed by the Fed, stop talking about stuff like higher consumer demand for gold, when oil hit $147 in 2008 in the middle of a deep recession , is there really that much demand for oil in the world?



2. Fed hates gold above $1000, because higher gold, higher inflation pressure, then more pressure for the Fed to raise rates, which we all know they can not do, they will run gold price back down below $1000 sooner or later



3. Last time I check, we still have deflation and as long as the banks are not lending and the velocity of money doesn't recover, meaning if money is not flowing, we will not have inflation. With that said, yes, we are having commodity inflation but deflation everywhere else for the moment.</blockquote>


Paul Kasriel on the carry trade -









<em>U.S. Dollar Carry Trade?



There is a lot of chatter that global speculators are borrowing greenbacks at bargain basement interest rates and buying higher-yielding assets denominated in foreign currencies. Some have suggested that this dollar-carry trade is creating yet another asset-price bubble. Other than the fact that the U.S. dollar has been depreciating on a trade-weighted basis in recent months, where is the evidence for this dollar-carry trade? In other words, where is this alleged massive bubblicious U.S. dollar credit creation showing up? I will tell you where it is not showing up - on the books of U.S. commercial banks. In the 26 weeks ended October 28, 2009, loans and investments at U.S.- domiciled commercial banks have contracted at an annual (Devil's) rate of 6.66% (see Chart 1).



Chart 1



Although total bank credit is contracting, one element of it - Treasury and Agency securities - is growing at an annual rate of 19% (see Chart 2). Banks' marginal cost of funds, the effective federal funds rate, is about 1/8%. Banks can purchase 2-year maturity Treasury securities yielding about 0.8% or bit a better (see Chart 3). Although this is not a huge positive differential, this yield-curve trade does not incur any charges against risk-based capital for banks. So, although per 100 thousand dollars, this trade does not earn much, because it incurs no risk-based capital charges, banks can engage in many hundred of thousands of dollars of the trade. This trade played a big role in recapitalizing U.S. banks in the early 1990s and it is playing the same role today.</em>
 
Just read that trader sentiment on gold is 97% bullish. Ya think those last 3% may go long? Yeah, I didn't think so.
 
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