Gold

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[quote author="CalGal" date=1218957085]<blockquote>... gold in the last bull market rose from $42 an ounce to its <span style="color: red;"><strong>all-time high of around $850 - $877 in 1980</strong></span>... </blockquote>
<span style="color: red;"><strong>Price of Gold August 2008 (28 years later) 785</strong></span>



:ohh:



For the people who are buying gold, I hope they know when to sell.</blockquote>


That's my point CalGal,



If the Irvine Company came to you and said that they will sell you all their Irvine SFRs they built in Turtle Rock for less than 1980 prices wouldn't you buy it?? Panda would buy ten of them at a heartbeat.



Panda
 
[quote author="PANDA" date=1218948300]Were we to repeat history of the last century and go back to a 1 to 1 ratio, you'd be looking at a gold price of $11,000 an ounce, assuming the Dow stays where it is at and does not decline any further. If DOW goes to down to September 30, 2002 price at $7528 that would put one ounce of gold at $7528. I will not be suprised to see our DOW go from 11,000 to 7500 within the next 5 years. Again, i am trying to be realistic, gold price at $2200 a ounce is a very realistic figure in the near future.

</blockquote>


I just don't see why history should repeat itself exactly the same way. The last gold spike was an era with 20% inflation wasn't it? If that were to happen, wouldn't that pretty much imply house prices would have to stabilize or even go up again as the value of the dollar went down the drain vs. hard assets? The scenario you're implying seems to imply a very quick return to the house bubble era.



Saying gold would go up to 2200$ tells us more about the dollar than gold. Gold is a fixed store of value, the dollar is the thing that fluctuates along with it.
 
[quote author="PANDA" date=1218962838]

That's my point CalGal,



If the Irvine Company came to you and said that they will sell you all their Irvine SFRs they built in Turtle Rock for less than 1980 prices wouldn't you buy it?? Panda would buy ten of them at a heartbeat.



Panda</blockquote>


What if you asked them what price they planned to sell them for next year and they said they'd sell it for the 1960s prices, would you still buy it? :-) That's exactly what's happening right now, people don't care what price the houses are at if they still believe they will be worth less in the future. As an investor, I couldn't care less if they sold the houses for half price if I didn't believe the houses would offer a good ROI in a reasonable amount of time.



I just think you're over-simplifying. Buy low, sell high, but you could pick "low" or "high" depending on any number of timeframes or reference points that you choose.



Just to be clear, I still plan to buy more gold myself at some point, I'm just trying to be devil's advocate - over-confidence can be investor's worst enemy.
 
People spend years educating themselves and specializing in the commodities market. It's not for the weak at heart. As long as you can handle the lows as well as the highs - then go for it. Just remember, trading stocks and commodities is a gamble. Please only trade what you are willing to lose. I've seen too many people lose their hard-earned life savings in a blink of an eye.
 
I'm not sure if anyone would know the answer to this question. My data for gold prices only goes back to 1968 and was wondering if anyone knows what the gold prices were between 1960 - 1970. I'm think that the price of gold probably moved in a flat line hovering around $35 an ounce and started to make upward movement in the 70s. Can anyone validate if my information is correct?



I think the DOW also moved in flat line between 1970 - 1980, however did the DOW have an upward movement between 1960 - 1970?



Panda
 
Here's tabular data for gold price for every year neginning from 1800. No chart though, you'll need to make a chart yourself in Excel.



<a href="http://www.finfacts.com/Private/curency/goldmarketprice.htm">Gold prices</a>



Even without a chart, the history of the price of gold is pretty simple.



From 1800 to 1932, gold was at about 20$ almost the whole time, for more than a hundred years.



Then in 1932, it became illegal to own gold after the great depression, gold prices got stuck at 35$ from 1932-1971 as the currency got devalued.



Nixon then ended Bretton Woods in 1971 and gold actually started fluctuating, peaking out at 850$ in 1980, a 24-fold increase. I guess people were so gaga about gold not having a fixed price that there was no reference point to value it properly.



Gold zig-zagged its way back down to it's recent low of 300$ in 2001 and rose back to its now current price of 800ish$ in 2008.



Basically you can pretty much ignore any gold prices before 1970 because gold was set to a fixed price by the government back then and, well, you couldn't trade it anyway.
 
It's interesting that a few crazy days of drops in commodities and everyone is ready to run. I really don't think that any of the fundamentals have changed and this week in stocks sort of proves that. There is no way that the possibility of a bubble in commodities comes anywhere near what has happened in housing and how it has affected the entire market. Sit tight with your gold, you're ok.
 
[quote author="muzie" date=1219304925]

The last gold spike happened with 20% wage inflation. That's just not happening, for now - on the contrary we have massive wealth destruction and wages have been flat for a while.</blockquote>


To be honest, I haven't seen any massive wealth destruction. The US markets are down, but nothing compared to the rest of the world. If anything, I've seen the US government try to prop up housing and the banks in order to keep the credit flowing to the consumer.



Then again, I live in Irvine, so I'm shielded from the real world. When everyone in Irvine starts driving scooters and riding bicycles, then I know its bad.
 
[quote author="awgee" date=1219721662]Is the dollar going to strenghten?




Will the price of gold and oil collapse?




<a href="http://www.europac.net/#">Peter Schiff's view</a>




and click on "Investors Chase Phantoms"</blockquote>


Hmmm, well I've got some issues with that Peter Schiff guy after having read his "marketing" material a while ago. (He's selling an e-book, and his marketing letter was basically "How you can make a million from 10$ in 5 minutes a day" or something along those lines).



Here's Mish Shedlock debating Schiff's vew, arguing for a deflationary view:

<a href="http://globaleconomicanalysis.blogspot.com/2007/12/peter-schiff-replies-to-deflation.html">Peter Schiff Replies to Deflation Rebuttal </a>



I don't think gold's going to crash, but it's <strong>NOT</strong> the slamdunk that some people here and elsewhere make it out to be.
 
Geeez...



The precious metals are taking some serious beating as of late. I can't even fully comprehend on what is going on with the fundamentals.



Gold is down at $761.90 and Silver down at $10.96, and I thought that Gold's bottom would be around $800. This market is like a roller coaster where there is no place to hide in any sector. I'm sure even the biggest commodity bulls are now folding and exiting the market. I am in precious metals for the long haul so i am holding on even if Gold drops to $300 and Silver to $4.



I have to admit that i am glad that I had atleast 60% of my entire portfolio in safe CDs and U.S. Money Markets, or i would be seriously shopping for home in Santa Ana. It seems like the winners for 2008 were the ones that didn't play the market at all and had 100% in Cash.

Panda
 
[quote author="PANDA" date=1221089440]Geeez...



The precious metals are taking some seriously beating as of late. <strong>I am not even fully understanding what is going on.</strong> Gold is down at $761.90 and Silver down at $10.96, this market is like a roller coaster. I'm sure even the biggest commodity bulls are now folding and exiting the market. I am long term so i am holding even if Gold drops to $300 and Silver to $4.



I am sure glad that i had atleast 60% in safe CDs and U.S. Money Markets, or i would be seriously shopping for home in Santa Ana. It seems like the winners for 2008 were the ones that didn't play the market at all and had 100% in Cash.</blockquote>


I don't think you ever did LOL
 
Optimus,



I said fundamentals is not making sense, not that i don't have any knowledge in investing in precious metals. Gold and Silver are at or very close to the bottom and it will rebound hard.
 
[quote author="PANDA" date=1221090187]Optimus,



I said fundamentals is not making sense, not that i don't have any knowledge in investing in precious metals.</blockquote>


Here are the pieces of the puzzle...you figure it out ...since you just said you have some knowledge.



Oil

US Dollar

Interest Rates

Mortgage Rates

Global Market

CPI

Speculation



Understand those pieces and you will understand why Gold along w/commodities are going down down down.
 
[quote author="PANDA" date=1221090187]Optimus,



I said fundamentals is not making sense, not that i don't have any knowledge in investing in precious metals. Gold and Silver are at or very close to the bottom and it will rebound hard.</blockquote>
What's your basis for stating that Gold and Silver will rebound? Just because it's gone down about $250 from the peak? Well, oil is off $45 from the peak but it's not rebounding. Not only do the charts look UGLY, but they are going into a headwind...inflation coming down, US dollar going up, and bond rates coming down. Gold is heading into the $600s from looking at the charts.
 
[quote author="PANDA" date=1221090187]Optimus,



I said fundamentals is not making sense, not that i don't have any knowledge in investing in precious metals. <strong>Gold and Silver are at or very close to the bottom and it will rebound hard</strong>.</blockquote>


Here's your chance to put up or shut up.



I offered you the S&P bet last week....and you refused.



I bet you that gold will not hit $850 AGAIN for 2008.



If it goes $851...you win...if not..I win...wager is $50.



You down for it?
 
Optimus,



I told you that i don't gamble in the short-run. Most of my precious metal holdings are in my IRA accounts, money i can't touch for another 25 - 30 years. Whatever that is happening now is what i consider noise. Long term i am against the dollar and for precious metals.



Did i ever tell you how Freakin annoying you are? You are like a pimple on my butt that i want to pop with a needle.
 
[quote author="PANDA" date=1221097775]Optimus,



I told you that i don't gamble in the short-run. Most of my precious metal holdings are in my IRA accounts, money i can't touch for another 25 - 30 years. Whatever that is happening now is what i consider noise. Long term i am against the dollar and for precious metals.



Did i ever tell you how Freakin annoying you are?</blockquote>


Annoying because I basically disprove of whatever your stance is?



Annoying because I know you KNOW NOTHING in which you are investing in?



I got 3 for you...pick one



DEFLATION, DISINFLATION or STAGFLATION?



<span style="font-size: 11px;">*annoying PANDA since 2008*</span>
 
<blockquote>Did i ever tell you how Freakin annoying you are? You are like a pimple on my butt that i want to pop with a needle. </blockquote>
OK - that was funny :lol:
 
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