Where is GOLD headed?

Want to hear as to what group members think about where GOLD is headed. I
have been hearing and reading interesting numbers, the best one being $3,000
an ounce (no timeline available). While I am not sure what could be a
timeline for it go from around $560 to $3000, I am considering buying some
of the metal in the form of 1 oz. gold bars. I already have a fund that is
concentrated in the Gold and Precious metals sector. Please advise if this
is a wise move.

Thanks,
A Good Analyst
www.goodanalyst.com

Re: Where is GOLD headed?

Good Analyst wrote:
> Want to hear as to what group members think about where GOLD is headed. I
> have been hearing and reading interesting numbers, the best one being $3,000
> an ounce (no timeline available). While I am not sure what could be a
> timeline for it go from around $560 to $3000, I am considering buying some
> of the metal in the form of 1 oz. gold bars. I already have a fund that is
> concentrated in the Gold and Precious metals sector. Please advise if this
> is a wise move.

It's probably best to think of what gold is to capitalism as a pitman
arm is to worn gearbox spline, as two friends, too, behind a steering
wheel given to lots of play imaginatively might make mention while
careening through the avenues of global markets at a fairly good clip.
I can assure you, I certaintly shouldn't think to be too distracted by
mention of $3000 of a troy ounce, unless you're driving, of course.

Re: Where is GOLD headed?

Howdy,

Well, I follow this market very closely and have heard numbers ranging
from $1000 - ~15000. And, if the truth be known, I really don't know
if it matters how high. What matters is that we've been in a bull
market for gold and precious metals since 2001 and it's still
enormously strong both Fundamentally and Technically from a long term
perspective. I say this because there are some that see some immediate
short term weakness in some of their indicators but are only thinking
about a 6-8% correction to the 520-525 area. Frankly, while this could
happen, I don't see that much, and I DON'T CARE. I'm riding this
trend and looking to add more.

Ok. How do you invest in precious metals. Well, I would stick with
precious metals rather than just gold because silver and platinum are
also kicking ass. Indeed, the profit potential in silver is huge
relative to that of gold. In 80, gold topped out ~850 which was 2+
times while silver topped out ~50 which was TEN TIMES.

So, you can buy precious metals funds that are mostly invested in
mining stocks. You can also buy the Gold ETF's, but they're pure play.
CEF is Central Fund of Canada and it's split ~60/40 gold/silver
bullion. You can buy individual mining stocks.

Or you can buy bullion products. These are available in gold, silver
and platinum (and even palladium if you look). There are rounds and
ingots of various sizes. These rounds and ingots have the least mark
up. There are also official gold, silver and platinum coins from all
over. Stateside, we have the American Eagle series. Gold and Platinum
come in 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz while silver only comes in 1
oz.

I personally prefer these for bullion in the uncirculated state even
though they have a premium over regular bullion or some other country
coins. That's because the premium also exists at sale and they're
fungible (any coin store will give you a decent price). Realize that
with any purchase of anything there is retail and wholesale separated
by the vigorish and this is normally as much as 20%. That's life.

As for buying any bullion rounds or ingots or official precious metal
coins, you can window shop at your local coin dealer to see the choices
and benchmark prices. The best prices I've found are in Coin World or
Numismatic News which are two weekly newspapers about coin collecting.
Make sure you do NOT buy PROOF coins - only uncirculated. Proofs are
for collectors and have a substantial premium.

Prices I'm looking at right now are '06 silver eagles 20 for $220 -
mapleleafs $218, '06 gold eagles 1 for $598; '06 platinum eagles 1
for $1118 and 10 for $11170.

Note that with all of these, there are volume discounts to a degree.
Also, storage is NOT an issue unless you're buying huge amounts. A
plastic tube of 10 gold eagles (~$6K) is the size of a quarter and
stands maybe 2" tall. A plastic tube of 20 silver eagles is the size
of a silver dollar and stands 3" tall. This means you could stash a
LOT of $ in a shoe box.

just some thoughts,

rono

Re: Where is GOLD headed?

"rono" <> wrote in message
news:
> Howdy,
>
> Well, I follow this market very closely and have heard numbers ranging
> from $1000 - ~15000. And, if the truth be known, I really don't know
> if it matters how high. What matters is that we've been in a bull
> market for gold and precious metals since 2001 and it's still
> enormously strong both Fundamentally and Technically from a long term
> perspective. I say this because there are some that see some immediate
> short term weakness in some of their indicators but are only thinking
> about a 6-8% correction to the 520-525 area. Frankly, while this could
> happen, I don't see that much, and I DON'T CARE. I'm riding this
> trend and looking to add more.

[snip]

Hey rono:

Quick question. The last I knew, which was years ago, the prospects for
gold appreciation were limited by the fact that central banks (most notably
England and Russia) were sitting on vast hordes of bullion that were no
longer needed for currency purposes. Is this still the case?

-herb

PS: Wasn't the incredible appreciation in silver that you cited the result
of Herbert and Nelson Bunker Hunt ruining theirs and their sisters' fortunes
in an unsuccessful attempt to corner the market? Once their banks pulled
the rug out from under them, silver plunged to a more believable market
value. No?

Re: Where is GOLD headed?

If I had to guess, I would think that it is near a peak here. This is
just because it's been going up so much lately. However, we do seem to
be in a rising interest rate environment, and gold tends to go up as
interest rates go up. So if interest rates continue to go up, maybe
gold will too.

Bottom line, I dunno, and I don't think anyone else does either. Sorry
I can't be more sure, but hey, no one can predict the future. Stocks
are generally headed up, that is historically accurate. I guess
commodities are headed up too (inflation), but short term, who knows?

Re: Where is GOLD headed?

"Sanjay" <> wrote in message
news:6jcDf.52595$
> Herb <> wrote:
> > Hey rono:
> > Quick question. The last I knew, which was years ago, the prospects for
> > gold appreciation were limited by the fact that central banks (most
notably
> > England and Russia) were sitting on vast hordes of bullion that were no
> > longer needed for currency purposes. Is this still the case?
>
> Actually, Russia is expanding her gold reserves.
>
> One of the key reasons why Gold will continue to rise is the psychology
> behind it. As geo-political tensions rise, other countries will invest
> more in gold as will individual investors.
>
> Gold ETFs are being launched globally.
>
> In the interim I see gold as heavily over extended. Arguably even
parabolic
> and gold investors need to remember that when stocks pull back, so does
> gold. How low it will drop it's hard to say right now. Perhaps even to
> the 400's.
>
> So I think there will be some consolidation and a correction in gold
valudation
> but that'll be a buying oppurtunity IMO.
>
> One of the most interesting charts I've ever seen is the relationship
between
> gold & the Dow. During the major bear market of the 1800's an ounce of
gold
> equaled the price of 1 DJIA. After the Great Depression, 1 oz of gold
eventually
> equaled 1 share of DJIA. In the early 80's the same happened.
>
> Each time it happened stocks were trapped in a bear market & when the
price
> equivalency occured a secular bull market in stocks began.
>
> I used to just think it was a coincidence but the more I've learned about
TA
> the more I'm convinced that in a few years gold will very well be valued
in
> the thousands.
>
> -Sanjay

Sanjay:

Why is Russia increasing its gold reserves? I would think they would be all
over a selling opportunity like now.

As I think we have already covered, some of us, at least, believe that
comparisons to past gold markets, particularly to times when most countries
were on the gold standard, are dicey at best.

-herb

Re: Where is GOLD headed?

Herb <> wrote:
> Hey rono:
> Quick question. The last I knew, which was years ago, the prospects for
> gold appreciation were limited by the fact that central banks (most notably
> England and Russia) were sitting on vast hordes of bullion that were no
> longer needed for currency purposes. Is this still the case?

Actually, Russia is expanding her gold reserves.

One of the key reasons why Gold will continue to rise is the psychology
behind it. As geo-political tensions rise, other countries will invest
more in gold as will individual investors.

Gold ETFs are being launched globally.

In the interim I see gold as heavily over extended. Arguably even parabolic
and gold investors need to remember that when stocks pull back, so does
gold. How low it will drop it's hard to say right now. Perhaps even to
the 400's.

So I think there will be some consolidation and a correction in gold valudation
but that'll be a buying oppurtunity IMO.

One of the most interesting charts I've ever seen is the relationship between
gold & the Dow. During the major bear market of the 1800's an ounce of gold
equaled the price of 1 DJIA. After the Great Depression, 1 oz of gold eventually
equaled 1 share of DJIA. In the early 80's the same happened.

Each time it happened stocks were trapped in a bear market & when the price
equivalency occured a secular bull market in stocks began.

I used to just think it was a coincidence but the more I've learned about TA
the more I'm convinced that in a few years gold will very well be valued in
the thousands.

-Sanjay

Re: Where is GOLD headed?

Good Analyst wrote:

> Want to hear as to what group members think about where GOLD is headed. I
> have been hearing and reading interesting numbers, the best one being $3,000
> an ounce (no timeline available). While I am not sure what could be a
> timeline for it go from around $560 to $3000, I am considering buying some
> of the metal in the form of 1 oz. gold bars. I already have a fund that is
> concentrated in the Gold and Precious metals sector. Please advise if this
> is a wise move.

Gold has risen so much in the last couple of years that a stiff
correction is overdue. But only a temporary one.

After that, what happens is entirely up to the Fed. Gold is a reliable
early-warning indicator of inflation. Greenspan knew this, which is why
he reacted to the gold bull market of 1993 by hiking short-term interest
rates in 1994. That boosted the value of the dollar and killed the gold
bull market--as well as heading off incipient inflation.

What the new guy, Bernanke, will do is anyone's guess. If he turns out
to be more dovish on inflation than Greenspan was, than gold could
easily soar past $1,000 per ounce. Let's see if Bernanke keeps hiking
short-term interest rates.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: Where is GOLD headed?

Hi Herb,

Ah, the CB's. They sold all their hoards years back and have been
trading paper since. Ergo, there's no supply stash there. Also, it's
even worse and has reversed because there are a bunch of CB's that have
actually started to buy gold as reserves. The G7 CB's think this is
positively dastardly, but russia, china, south africa, some oil
nations, to name a few are buyers. Add that Mexico is talking about
going back on the silver standard.

As for gold/silver. Sure, the Hunt Bros attempt to corner the market
likely had a large impact on the relative gains in silver. However,
for most of known history (er, 1000's of years anyway) the silver/gold
ratio has been between 15-1 and 20-1. Right now it's 60-1. In early
'80 at the peak it was 16-1.

So, rono's overweight silver relative to gold in this current trending
pm market. However, I own a lot of both with funds and miners and a
little bullion. But I've got a palladium play on with PAL and copper
with BHP and iron with RIO and lithium with SQM. I'm real heavy into
metals and ores and all the extractive sectors, but particularly with
precious metals.

And that's the point for someone wanting to play - get a diversified
fund that invests in all the pm's. One of the best is Vanguard VGPMX.
I also like Tocqueville TGLDX, Rydex RYPMX and US Global UNWPX.

peace,

rono

Re: Where is GOLD headed?

Hi Herb,

Yeah, there are several major central banks that are buying and that's
contributing to demand. However, there is huge demand coming out of
china (only legalized ownership 2 years ago), japan (alternative
investment), india (cultural social security and dowry) and the middle
east petro $ as an alternative to US$. None of this even considers
gold as an inflation hedge purchase which is what all the talking heads
keep saying - no inflation and gold's an inflation hedge - what's
happening. Inflation has an impact, but so far it's minor relative to
the other demand centers.

Sanjay, you're correct that it may be toppy at this particular time.
Many TA signals are flashing. However, I follow a lot of TA goldbugs
over at gold-eagle and this run has them searching for answers too - as
every resistance level and timing picture has just been shattered by
this market. I'd love to be able to short the swings as some real
money could be made with even a 5% correction. Alas, I don't have the
skill, nor the trading vehicle.

And the long term pattern is enormously strong and bullish - so l'll
just ride this sucker until I see some serious breakdown. If it cracks
540, I'll start to lighten up around the edges. If it cracks 500, I'll
mostly lighten up with toehold positions held. If it get's down to the
lower 400's, I'll back up the truck and load up.

best,

rono

Re: Where is GOLD headed?

Herb wrote:

> "Sanjay" <> wrote in message
> news:6jcDf.52595$
>
>>Herb <> wrote:
>>
>>>Hey rono:
>>>Quick question. The last I knew, which was years ago, the prospects for
>>>gold appreciation were limited by the fact that central banks (most
>
> notably
>
>>>England and Russia) were sitting on vast hordes of bullion that were no
>>>longer needed for currency purposes. Is this still the case?
>>
>>Actually, Russia is expanding her gold reserves.
>>
>>One of the key reasons why Gold will continue to rise is the psychology
>>behind it. As geo-political tensions rise, other countries will invest
>>more in gold as will individual investors.
>>
>>Gold ETFs are being launched globally.
>>
>>In the interim I see gold as heavily over extended. Arguably even
>
> parabolic
>
>>and gold investors need to remember that when stocks pull back, so does
>>gold. How low it will drop it's hard to say right now. Perhaps even to
>>the 400's.
>>
>>So I think there will be some consolidation and a correction in gold
>
> valudation
>
>>but that'll be a buying oppurtunity IMO.
>>
>>One of the most interesting charts I've ever seen is the relationship
>
> between
>
>>gold & the Dow. During the major bear market of the 1800's an ounce of
>
> gold
>
>>equaled the price of 1 DJIA. After the Great Depression, 1 oz of gold
>
> eventually
>
>>equaled 1 share of DJIA. In the early 80's the same happened.
>>
>>Each time it happened stocks were trapped in a bear market & when the
>
> price
>
>>equivalency occured a secular bull market in stocks began.
>>
>>I used to just think it was a coincidence but the more I've learned about
>
> TA
>
>>the more I'm convinced that in a few years gold will very well be valued
>
> in
>
>>the thousands.
>>
>>-Sanjay
>
>
> Sanjay:
>
> Why is Russia increasing its gold reserves? I would think they would be all
> over a selling opportunity like now.
>
> As I think we have already covered, some of us, at least, believe that
> comparisons to past gold markets, particularly to times when most countries
> were on the gold standard, are dicey at best.

But you're assuming that the dollar will remain the world's currency,
the alternative to gold. And that's not necessarily the case. A sharp
pickup in inflation would cause other nations to dump dollars. A
falling dollar due to rising inflation will boost the price of gold as
denominated in dollars substantially.

The main reason why the dollar became the currency of choice in the
global economy was Greenspan's anti-inflationary policies of the last 25
years, which kept the dollar on a more or less even keel. But he's
leaving the Fed now.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: Where is GOLD headed?

rono <> wrote:

> Yeah, there are several major central banks that are buying and that's
> contributing to demand. However, there is huge demand coming out of
> china (only legalized ownership 2 years ago), japan (alternative
> investment), india (cultural social security and dowry) and the middle
> east petro $ as an alternative to US$. None of this even considers
> gold as an inflation hedge purchase which is what all the talking heads
> keep saying - no inflation and gold's an inflation hedge - what's
> happening. Inflation has an impact, but so far it's minor relative to
> the other demand centers.

Even as a hedge, gold is less important as inflation insurance, at which
it doesn't do that much better than land or other commodities, than as
protection against political turmoil and governmental collapse. In those
circumstances, its high value density, mobility, and universal
acceptance make it the king of assets. Those who may remember the high
inflation of the late 1970s sometimes forget that it was also a time
when it looked like the wheels might be coming off democracy and
capitalism all over the world.

As for the talking heads, they might call a 2.2% core rate "no
inflation" but some of us mere mortals don't. It's well to remember that
just about everybody on television is selling something. Most of the
"experts" who appear on the financial news shows make their money
directly or indirectly from the stock markets. That explains their
dismissive outlook for inflation and bullish outlook for stocks.

In time, the people in Asia who are now bidding up the price may get all
smart and sophisticated, like our talking heads, and sniff at gold as a
barbarous relic. Until then, $600 here we come.

Re: Where is GOLD headed?

"rono" <> wrote in message
news:
> Hi Herb,
>
> Ah, the CB's. They sold all their hoards years back and have been
> trading paper since. Ergo, there's no supply stash there. Also, it's
> even worse and has reversed because there are a bunch of CB's that have
> actually started to buy gold as reserves. The G7 CB's think this is
> positively dastardly, but russia, china, south africa, some oil
> nations, to name a few are buyers. Add that Mexico is talking about
> going back on the silver standard.

[snip]

rono:

Not that I put a lot of stock in Yahoo searches, but a quick one indicates
that there are probably still a billion ounces or so, sitting in CBs.
Granted some are buying while others (encouraged by the US) are selling to
support the dollar.

I don't know. It seems like quite a wild-card to me. It can't be a total
coincidence that lower CB selling last year coincided with a sharply rising
price.

As an economics major I'm sure you understand the rising pressure to sell
that would come with a continued price rise. If nothing else, it will
certainly be fun to watch.

-herb

PS: I agree that almost all commodities will be rising in relative price,
long-term. People love to talk about the oil peak but we may already have
passed the peak in many metals. If there were a Select Recycling fund I
would certainly consider it for the long-term.

Re: Where is GOLD headed?

"Steven L." <> wrote in message
news:CzeDf.7762$

[snip]

> But you're assuming that the dollar will remain the world's currency,
> the alternative to gold. And that's not necessarily the case. A sharp
> pickup in inflation would cause other nations to dump dollars. A
> falling dollar due to rising inflation will boost the price of gold as
> denominated in dollars substantially.
>
> The main reason why the dollar became the currency of choice in the
> global economy was Greenspan's anti-inflationary policies of the last 25
> years, which kept the dollar on a more or less even keel. But he's
> leaving the Fed now.

I'm not sure that I "assume" that the dollar will remain the world's reserve
currency but I certainly don't see anything on the horizon that will replace
it.

The main reason why the dollar become the currency of choice in the global
economy is because our economy is (so far) the locomotive that pulls the
train. Don't forget that we won three world wars (counting the Cold War).

The world has a vested interest in keeping the dollar strong. If the price
of gold, in dollars, rose too much, I think they are more likely to sell
gold to bring the price down again. More realistically, there is a reason
why the world scoops up our debt instruments: to keep the dollar strong.
They are already stuck with a lot of the stuff (denominated in dollars).
Remember when South Korea hinted that it may not buy so much in the future?
The dollar plunged along with the value of the reserves (US debt
instruments) of the Asian central banks. They basically retracted their
statement the next day.

Like it or not, the world has the tiger by the tail and doesn't know how to
let go.

If the dollar had the kind of value that classical economics would indicate,
given the length and size of the twin deficits, it would be China that would
be worried about all the outsourcing going to the United States.

-herb

Re: Where is GOLD headed?

Herb <> wrote:
>
> Sanjay:
> Why is Russia increasing its gold reserves? I would think they would be all
> over a selling opportunity like now.

Because of their oil exports they have a very nice account surplus and
they need to park the money somehwere.

Russia plans on doubling it's gold reserve over the coming years which would
literally sap the world output of gold for 3-5yrs. Of course they plan on
doing this slowly over the coming years.

They're not the only central bank buying up gold either and in all fairness
to the discussion - other central banks are unloading gold.

> As I think we have already covered, some of us, at least, believe that
> comparisons to past gold markets, particularly to times when most countries
> were on the gold standard, are dicey at best.

The last instance of this equivalency between the dow and gold was after we
were off the gold standard in the early 80's. So the gold stanard has
nothing to do with this. I'm saying that it is very possible that a huge
speculative bubble in gold will occur in the coming years.

I'm not a believer in the gold standard & I'm not a gold bug and never invested
in gold until 2002. There's a lot of hype and kooky conspirartorial theories
floating around about gold. Some of the gold bugs almost talk about
gold like it has some mystical properties.

What would drive gold into the thousand+ valuation area is a bubble. Let's
say that based on global demand and inflation gold is fairly valued at $1000
per ounce for the next decade or so. It takes a long time to build out these
new mines and explore for gold so it'll be at this valuation for some time
(India, China, emerging markets etc.. all want more gold).

Now 15yrs from now when we've mined more gold, the fair value will be a lot
less than $1K.

Look at how many more vehicles for owning gold are out there (ETF's in every
major economy), there's a constant buzz in CNBC about gold and as the mainstream
press picks up on it more investors will pour into gold.


-Sanjay

Re: Where is GOLD headed?

rono <> wrote:

> every resistance level and timing picture has just been shattered by
> this market. I'd love to be able to short the swings as some real
> money could be made with even a 5% correction. Alas, I don't have the
> skill, nor the trading vehicle.

It's too risky to short IMO. When gold becomes this over exteneded
it falls for sometime. It happened in 1999.

> And the long term pattern is enormously strong and bullish - so l'll
> just ride this sucker until I see some serious breakdown. If it cracks
> 540, I'll start to lighten up around the edges. If it cracks 500, I'll
> mostly lighten up with toehold positions held. If it get's down to the
> lower 400's, I'll back up the truck and load up.

This is my approach also. I'm not timing entry and exit points into
gold.

Jim Rogers says that other commodities always outperform gold in these
markets so I'm also looking at other metals (Silver, Platinum) and
other plays like Uranium & nuclear energy.

-Sanjay

Re: Where is GOLD headed?

Herb <> wrote:
> Like it or not, the world has the tiger by the tail and doesn't know how to
> let go.
> If the dollar had the kind of value that classical economics would indicate,
> given the length and size of the twin deficits, it would be China that would
> be worried about all the outsourcing going to the United States.

A lot of good points here. It's hard to call a top in the dollar. Obviously
it can't go on forever and both sides have a vested interest in expanding our
trade deficit.

That said, I can't find any instances of a trade deficit this size not creating
a deep recession & not eventually being brought into equilibrium.

So it'll happen. When it happens is beyond me.

-Sanjay

Re: Where is GOLD headed?

Herb <> wrote:

> As an economics major I'm sure you understand the rising pressure to sell
> that would come with a continued price rise. If nothing else, it will
> certainly be fun to watch.

Agreed. Just look at the chart for gold in previous bull markets. It's
very volatile dropping >30% at a time.

Not for the feint of heart :)

-Sanjay

Re: Where is GOLD headed?

Hi Sanjay,

"Jim Rogers says that other commodities always outperform gold in these

markets so I'm also looking at other metals (Silver, Platinum) and
other plays like Uranium & nuclear energy.
-Sanjay "

EXACTLY! As I mentioned about the late 70's bull run. Gold doubled,
while silver went up 10 fold. Granted the Hunts were trying to corner
the silver market, but it took that much to get back to their historic
ratio. For 99% of known history, gold and silver have traded at
between 15-1 and 20-1. Right now it's at 58-1. In 1980 it was 16-1.
Accordingly, I've always been overweight silver relative to gold. And
this is why I always suggest a good precious metals fund rather than a
pure play gold fund.

Besides TGLDX (taxable), I own UNWPX for funds. Ah, but my miners.
Now there's the rub. I own for gold, GG, GFI, AUY and NXG. For silver
CDE, MRB, WTX and PAAS. For palladium I own PAL (up 9% today). For
lithium SQM, iron ore RIO. and everything else known to man, I own BHP.
In the natural resources, I own PRNEX, RSNRX, PSPFX. I also own some
PRPFX which is a hedge against the dollar and has gold and silver
bullion and foreing currencies and stuff.

BTW, it's curious today that they were anticipating a drop in gold as
the dollar strengthened and it didn't happen. Gold's up 6.30 to 564,
silver is up .17 to 9.74, platinum up 4 to 1064 and palladium up 4 to
277. XAU is up .91 to 147.70. This continues the disengagement of the
traditional reverse relationship between the dollar and gold. This
started in the fall and continues. Unlike historically, when gold
rises, gold is supposed to fall and vice versa. What we've been seeing
is dollar rise and gold rise - dollar fall and gold rise. Geez, I
cannot emphasize enough how bullish this is for gold and the pm's.

And yeah, I know the pm technicians are talking about a corrective
pause, but geez, they've been talking this for years now and it never
goes as deep or lasts as long as they predict.

best,

rono

Re: Where is GOLD headed?

rono <> wrote:

> EXACTLY! As I mentioned about the late 70's bull run. Gold doubled,
> while silver went up 10 fold. Granted the Hunts were trying to corner

Yeah, I own Vanguard's fund which gives me some exposure to silver
but I need more.

> started in the fall and continues. Unlike historically, when gold
> rises, gold is supposed to fall and vice versa. What we've been seeing
> is dollar rise and gold rise - dollar fall and gold rise. Geez, I
> cannot emphasize enough how bullish this is for gold and the pm's.

What we saw last year was due to the Homestead Act. It was a one
time tax write off to incourage business to re-inves their money
back in the US and this pushed up the dollar.

Also, no matter what some of the kookier gold bugs like to say,
M1 & M2 were very conservative and because Greenspan was so tight
on it he increased the value of the dollar last year.

That's why the dollar rallied last year.

> And yeah, I know the pm technicians are talking about a corrective
> pause, but geez, they've been talking this for years now and it never
> goes as deep or lasts as long as they predict.

You have to know which ones to follow and listen to. Timer's Digest
does a pretty good job of tracking/auditing these people and pointing
out the people who have a good record of making it.

Gold in it's bull markets is very volatile. I've found it helps to
understand some TA to get a feel for where it's going.

-Sanjay

Re: Where is GOLD headed?

"Sanjay" <> wrote in message
news:jvqDf.52689$
> Herb <> wrote:
> >
> > Sanjay:
> > Why is Russia increasing its gold reserves? I would think they would be
all
> > over a selling opportunity like now.
>
> Because of their oil exports they have a very nice account surplus and
> they need to park the money somehwere.
>
> Russia plans on doubling it's gold reserve over the coming years which
would
> literally sap the world output of gold for 3-5yrs. Of course they plan on
> doing this slowly over the coming years.
>
> They're not the only central bank buying up gold either and in all
fairness
> to the discussion - other central banks are unloading gold.
>
> > As I think we have already covered, some of us, at least, believe that
> > comparisons to past gold markets, particularly to times when most
countries
> > were on the gold standard, are dicey at best.
>
> The last instance of this equivalency between the dow and gold was after
we
> were off the gold standard in the early 80's. So the gold stanard has
> nothing to do with this. I'm saying that it is very possible that a huge
> speculative bubble in gold will occur in the coming years.
>
> I'm not a believer in the gold standard & I'm not a gold bug and never
invested
> in gold until 2002. There's a lot of hype and kooky conspirartorial
theories
> floating around about gold. Some of the gold bugs almost talk about
> gold like it has some mystical properties.
>
> What would drive gold into the thousand+ valuation area is a bubble.
Let's
> say that based on global demand and inflation gold is fairly valued at
$1000
> per ounce for the next decade or so. It takes a long time to build out
these
> new mines and explore for gold so it'll be at this valuation for some time
> (India, China, emerging markets etc.. all want more gold).
>
> Now 15yrs from now when we've mined more gold, the fair value will be a
lot
> less than $1K.
>
> Look at how many more vehicles for owning gold are out there (ETF's in
every
> major economy), there's a constant buzz in CNBC about gold and as the
mainstream
> press picks up on it more investors will pour into gold.
>
>
> -Sanjay

Sanjay:

I am surprised that Russia has extra money to be socking away in bullion.

Actually, I believe it is the proportion of gold in their reserves that is
increasing. If the price keeps rising, they can accomplish this without
actual purchases. Also, isn't Russia one of the world's leaders in gold
production?

I agree that gold is very "hot" right now as is often the case with
something that has already appreciated substantially in the near-term past.
I just hope the bubble doesn't burst sooner than you expect.

-herb

Re: Where is GOLD headed?

"Sanjay" <> wrote in message
news:UCqDf.52691$
> Herb <> wrote:
> > Like it or not, the world has the tiger by the tail and doesn't know how
to
> > let go.
> > If the dollar had the kind of value that classical economics would
indicate,
> > given the length and size of the twin deficits, it would be China that
would
> > be worried about all the outsourcing going to the United States.
>
> A lot of good points here. It's hard to call a top in the dollar.
Obviously
> it can't go on forever and both sides have a vested interest in expanding
our
> trade deficit.
>
> That said, I can't find any instances of a trade deficit this size not
creating
> a deep recession & not eventually being brought into equilibrium.
>
> So it'll happen. When it happens is beyond me.

It's beyond me, as well. I believe the British government ran deficits for
centuries. As long as the world continues to fill up with dollars that
foreigners feel the need to hold, it is hard to see how interest rates can
go up much (regardless of what the Fed does, short-term).

One of the few useful things foreigners can do with their dollars (after
they have purchased all of the American made goods and services they need)
is to repatriate them to purchase stocks in the multi-national corporations
that seem to be swallowing up the world economy. I think this is very
bullish for blue chips, long-term.

-herb

Re: Where is GOLD headed?

Herb <> wrote:
> Sanjay:
> I am surprised that Russia has extra money to be socking away in bullion.
> Actually, I believe it is the proportion of gold in their reserves that is
> increasing. If the price keeps rising, they can accomplish this without
> actual purchases. Also, isn't Russia one of the world's leaders in gold
> production?

Russia's balance sheet has improved dramatically the last few years. Their
stock market even went up 80% last year.

> I agree that gold is very "hot" right now as is often the case with
> something that has already appreciated substantially in the near-term past.
> I just hope the bubble doesn't burst sooner than you expect.

I'm hoping for one ;) More oppurtunity to buy.

Re: Where is GOLD headed?

Herb wrote:

> I am surprised that Russia has extra money to be socking away in bullion.

Oil, natural gas, precious and other metals are selling like hot cakes.

Re: Where is GOLD headed?

"Evojeesus" <> wrote in message
news:
> Herb wrote:
>
> > I am surprised that Russia has extra money to be socking away in
bullion.
>
> Oil, natural gas, precious and other metals are selling like hot cakes.

Yes, and they are selling those things, not buying them?

I have no doubt that Russia is benefiting from high commodity prices but I'm
pretty sure people there are still very poor. I'm guessing whatever they
are trying to do involves supporting the currency. Bear in mind, these are
the people who tried Stalinism.

-herb

Re: Where is GOLD headed?

"Good Analyst" <> wrote in message
news:VKUCf.161$
> Want to hear as to what group members think about where GOLD is headed. I
> have been hearing and reading interesting numbers, the best one being
> $3,000
> an ounce (no timeline available). While I am not sure what could be a
> timeline for it go from around $560 to $3000, I am considering buying some
> of the metal in the form of 1 oz. gold bars. I already have a fund that is
> concentrated in the Gold and Precious metals sector. Please advise if this
> is a wise move.
>
> Thanks,
> A Good Analyst
> www.goodanalyst.com
>

My 2¢:

I got back into gold mining stock funds in late 2001/early 2002 and one fund
has doubled in that timeframe...but I think the easy money has gone.

I recall at that time an analysis where it cost a company $250 to mine and
ounce of gold, and they were selling it for $275 an ounce, or around a 10%
margin; when the price of gold jumped to $300 an ounce, their profits
doubled more or less...that is no longer the case.

I believe the dollar will weaken over the next 3 years by at least 5% per
year, so the spot price of gold should increase by at least that much each
year, more if demand in Asia stays strong.

I wouldn't put all my money into gold mining stocks, but 5-15% seems
warranted.

D

Re: Where is GOLD headed?

The best gold fund out there is only available to canadians. goto
www.sprott.com
The best oil and gas fund is there as well.
I have bought gold and silver since '93 because it just seems like this
financial shell game of deficits and paper chases can't go on forever.
How do you know its overdone???? When silver spikes beyond all reason,
because, poor people are always the last investors to get caught up in
hype.

Re: Where is GOLD headed?

<> wrote in message
news:
> The best gold fund out there is only available to canadians. goto

You're a proud lot. So what makes this "the best gold fund out there"?
It certainly isn't the returns. 17.66% annualized for 3 years wouldn't even
be on my list of funds to consider.
What ever makes you happy. Fidelity Select Gold beat that with returns of
18.76% and it's in the bottom third of its category.


> www.sprott.com

Re: Where is GOLD headed?

wrote:
> The best gold fund out there is only available to canadians. goto
> www.sprott.com
> The best oil and gas fund is there as well.

Commonwealth spin or something?

Lipper Ranks 3 U.S. Global Investors' Funds as #1 in Their Categories
Wednesday January 25, 10:39 am ET

....The Global Resources Fund (PSPFX) ranked #1 in the Natural Resource
Fund Category, and the World Precious Minerals Fund (UNWPX) ranked #1
in the Gold Oriented Funds Category for the 3- and 5-year time periods.


I like GAGEX but am doing ICENX for the time - Portfolio Manager, Mr.
Waller joined ICON in 2000, previously employed by the U.S. Army from
1993 to 2000 as a Chinese-Mandarin linguist.

Re: Where is GOLD headed?

Howdy folks,

I was watching CNBC this morning and they had an interesting guest
talking about the gold market. He said that so far, all we've seen is
fundamental demand and not speculative demand. And historically, the
speculators hit silver first, before gold and this hasn't happened. He
said that when speculative demand hits gold, we'll see $30-40-50 moves
in a single day.

He traced this fundamental demand not to asian jewelry, but to central
bank and institutional buying of gold as a currency alternative to
dollars, euros, yen and francs. He stated that russia, china, many
emerging mkt nations, oil nations and even the Bank of England were
buying gold to build up their reserves. (he also noted that the BoE
sold at $280 - talk about whipsaw city!). He also said that the nature
of this fundamental demand driven market would ignore resistance levels
and called for corrections . . . and just keep steadily rising
regardless of what went on around it.

He see gold going to $1000 within 24-36 months. I think MUCH sooner as
this is the age of the internet and the speculators will arrive on the
scene sooner than in the past.

curious,

rono

Re: Where is GOLD headed?

rono wrote:

> Howdy folks,
>
> I was watching CNBC this morning and they had an interesting guest
> talking about the gold market. He said that so far, all we've seen is
> fundamental demand and not speculative demand. And historically, the
> speculators hit silver first, before gold and this hasn't happened. He
> said that when speculative demand hits gold, we'll see $30-40-50 moves
> in a single day.
>
> He traced this fundamental demand not to asian jewelry, but to central
> bank and institutional buying of gold as a currency alternative to
> dollars, euros, yen and francs. He stated that russia, china, many
> emerging mkt nations, oil nations and even the Bank of England were
> buying gold to build up their reserves. (he also noted that the BoE
> sold at $280 - talk about whipsaw city!). He also said that the nature
> of this fundamental demand driven market would ignore resistance levels
> and called for corrections . . . and just keep steadily rising
> regardless of what went on around it.
>
> He see gold going to $1000 within 24-36 months. I think MUCH sooner as
> this is the age of the internet and the speculators will arrive on the
> scene sooner than in the past.

I'll stick with what I said: Gold is a fairly neutral measure of value.
Thus the price of gold as denominated in dollars can go to $1000/ounce
only if the dollar does not strengthen majorly.

And what happens to the dollar is largely unpredictable because it
depends on various U.S. government actions: raising short-term interest
rates, new negotiations and agreements among the G-7 nations, etc. But
the Fed just hiked short-term rates again, so they've clearly been
trying to strengthen the dollar. If all those rate hikes push the U.S.
into a recession, gold won't rise anymore.

When the price of gold denominated in dollars started soaring in 1993,
Greenspan short-circuited it in 1994. Bernanke can do exactly the same
thing today--if he wishes.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: Where is GOLD headed?

Steven L. wrote:

> rono wrote:
>
>> Howdy folks,
>>
>> I was watching CNBC this morning and they had an interesting guest
>> talking about the gold market. He said that so far, all we've seen is
>> fundamental demand and not speculative demand. And historically, the
>> speculators hit silver first, before gold and this hasn't happened. He
>> said that when speculative demand hits gold, we'll see $30-40-50 moves
>> in a single day.
>>
>> He traced this fundamental demand not to asian jewelry, but to central
>> bank and institutional buying of gold as a currency alternative to
>> dollars, euros, yen and francs. He stated that russia, china, many
>> emerging mkt nations, oil nations and even the Bank of England were
>> buying gold to build up their reserves. (he also noted that the BoE
>> sold at $280 - talk about whipsaw city!). He also said that the nature
>> of this fundamental demand driven market would ignore resistance levels
>> and called for corrections . . . and just keep steadily rising
>> regardless of what went on around it.
>>
>> He see gold going to $1000 within 24-36 months. I think MUCH sooner as
>> this is the age of the internet and the speculators will arrive on the
>> scene sooner than in the past.
>
>
> I'll stick with what I said: Gold is a fairly neutral measure of value.
> Thus the price of gold as denominated in dollars can go to $1000/ounce
> only if the dollar does not strengthen majorly.
>
> And what happens to the dollar is largely unpredictable because it
> depends on various U.S. government actions: raising short-term interest
> rates, new negotiations and agreements among the G-7 nations, etc. But
> the Fed just hiked short-term rates again, so they've clearly been
> trying to strengthen the dollar. If all those rate hikes push the U.S.
> into a recession, gold won't rise anymore.
>
> When the price of gold denominated in dollars started soaring in 1993,
> Greenspan short-circuited it in 1994. Bernanke can do exactly the same
> thing today--if he wishes.

One more thing I forgot to mention: While in the long term, gold acts
as a neutral measure of value, in the short term, one of the
"fundamentals" unique to gold is as a store of value in geopolitically
troubled times. Right now, there is a definite "geopolitical premium"
built into the price of gold--folks are worried about Middle East
instability, the threat of terrorism, and the continuing oil issue.
Just the election of Hamas in Palestine is probably good for tacking on
a few more dollars to the price of gold.

If peace finally came to the Middle East--no more terrorism in Iraq or
Israel-Palestine--and if Osama were finally captured, the price of gold
would fall immediately by at least 15% and probably more.

But at this time, I don't see any signs of that.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: Where is GOLD headed?

Steven L. wrote:

> When the price of gold denominated in dollars started soaring in 1993,
> Greenspan short-circuited it in 1994. Bernanke can do exactly the same
> thing today--if he wishes.

How? By selling massive amounts of gold I suppose. According to the
official reserve numbers the US is holding approximately 8000 tons,
which does not sound that much, especially if other central banks are
willing to increase their reserves at the same time.

Re: Where is GOLD headed?

rono <> wrote:
> buying gold to build up their reserves. (he also noted that the BoE
> sold at $280 - talk about whipsaw city!). He also said that the nature
> of this fundamental demand driven market would ignore resistance levels
> and called for corrections . . . and just keep steadily rising
> regardless of what went on around it.

Isn't the surest sign of a correction that all the "experts" say it
won't ever happen.

GOOG anyone?

Re: Where is GOLD headed?

Hi Sanjay/all,

Isn't the surest sign of a correction that all the "experts" say it
won't ever happen.

Ah, but that's the beauty - all the experts are calling for a
correction based upon TA. And that's great. Very few are saying
forget it. Even long term bulls are making minor short plays based
upon this coming correction.

works for rono

Re: Where is GOLD headed?

Hi Steven,

Well, I guess we just disagree. However, for every buy, there must be
a sell and that's what makes a market.

Just so I'm on record, I see gold passing 600 and silver passing 10
within a few months and gold hitting 1000 in under 24 months.

And, for sure, I may be wrong. But I can only bet my cash on what I
believe.

best,

rono

Re: Where is GOLD headed?

rono <> wrote:
> Hi Sanjay/all,
> Isn't the surest sign of a correction that all the "experts" say it
> won't ever happen.
> Ah, but that's the beauty - all the experts are calling for a
> correction based upon TA. And that's great. Very few are saying
> forget it. Even long term bulls are making minor short plays based
> upon this coming correction.
> works for rono

You could be right. I have some extra money I want to park in gold
and I'm waiting for the dip. I could be waiting a long time.

If it doesn't come by end of February I'm buying up some more anyway.

Re: Where is GOLD headed?

"Steven L." <> wrote in message
news:Se7Ef.4446$
> rono wrote:
>
> > Howdy folks,
> >
> > I was watching CNBC this morning and they had an interesting guest
> > talking about the gold market. He said that so far, all we've seen is
> > fundamental demand and not speculative demand. And historically, the
> > speculators hit silver first, before gold and this hasn't happened. He
> > said that when speculative demand hits gold, we'll see $30-40-50 moves
> > in a single day.
> >
> > He traced this fundamental demand not to asian jewelry, but to central
> > bank and institutional buying of gold as a currency alternative to
> > dollars, euros, yen and francs. He stated that russia, china, many
> > emerging mkt nations, oil nations and even the Bank of England were
> > buying gold to build up their reserves. (he also noted that the BoE
> > sold at $280 - talk about whipsaw city!). He also said that the nature
> > of this fundamental demand driven market would ignore resistance levels
> > and called for corrections . . . and just keep steadily rising
> > regardless of what went on around it.
> >
> > He see gold going to $1000 within 24-36 months. I think MUCH sooner as
> > this is the age of the internet and the speculators will arrive on the
> > scene sooner than in the past.
>
> I'll stick with what I said: Gold is a fairly neutral measure of value.
> Thus the price of gold as denominated in dollars can go to $1000/ounce
> only if the dollar does not strengthen majorly.
>
> And what happens to the dollar is largely unpredictable because it
> depends on various U.S. government actions: raising short-term interest
> rates, new negotiations and agreements among the G-7 nations, etc. But
> the Fed just hiked short-term rates again, so they've clearly been
> trying to strengthen the dollar. If all those rate hikes push the U.S.
> into a recession, gold won't rise anymore.
>
> When the price of gold denominated in dollars started soaring in 1993,
> Greenspan short-circuited it in 1994. Bernanke can do exactly the same
> thing today--if he wishes.

Not to mention the 8000+ tons of gold the US has in deep storage doing
nothing since we don't use it for currency purposes anymore.

Re: Where is GOLD headed?

Evojeesus wrote:

> Steven L. wrote:
>
>
>>When the price of gold denominated in dollars started soaring in 1993,
>>Greenspan short-circuited it in 1994. Bernanke can do exactly the same
>>thing today--if he wishes.
>
>
> How?

The same way as in 1994--by raising interest rates sharply to boost the
value of the dollar and ward off inflation.

The rise in the price of gold is a harbinger of inflation--it always is.
Once the inflation threat subsides, the price of gold will fall.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: Where is GOLD headed?

Steven L. wrote:
> Evojeesus wrote:
> > Steven L. wrote:

> >>When the price of gold denominated in dollars started soaring in 1993,
> >>Greenspan short-circuited it in 1994. Bernanke can do exactly the same
> >>thing today--if he wishes.

> > How?

> The same way as in 1994--by raising interest rates sharply to boost the
> value of the dollar and ward off inflation.

Is that still possible? What would happen to the economy or the XXX
trillion in foreign debt? Wasn't the depreciation of the dollar one of
the few ways of mitigating that debt?

> The rise in the price of gold is a harbinger of inflation--it always is.
> Once the inflation threat subsides, the price of gold will fall.

Can the threat subside while the money supply is growing fast?

Re: Where is GOLD headed?

Herb wrote,

Not to mention the 8000+ tons of gold the US has in deep storage doing
nothing since we don't use it for currency purposes anymore.

I don't know of anyone in the industry that believes this gold actually
exists in physical form. If it's on the books, it's in the form of
paper IOU's.

In addition, they actually ran out of silver a year or so back and had
to start buying on the open market just to fill their minting needs for
their silver eagles and proof silver coins.

The general consensus in the industry is that many of the major CB's,
list gold reserves and that most of these are paper and not physical
metal. This means you can't sell them. Geez, they were all selling
like crazy several years ago and even established a time table schedule
to reducing their gold reserves so as not to upset the market.

And this also seems to reflect the fundamental strength of this bull
run - institutional buying by major players AND some central banks.
It's almost as if gold is becoming the 5th currency. You see, the
whole world is awash with greenbacks and even euros and yen. There's a
global glut in cash money, particularly of $ with our trading partners.
Well, ask yourself, how many warehouses and barns and tents full of
dollars do you want or need, before your utility curve for dollars
flattens and you start looking around for something with a greater
utility. And what are your choices? Euros? Yen? Francs? Real
Estate? . . . . or gold.

Nopers, this rascal is the real deal and the train HAS left the
station. However, you're all welcome to join me in the club car for a
cold one.

best,

rono

Re: Where is GOLD headed?

Evojeesus wrote,

> The rise in the price of gold is a harbinger of inflation--it always is.
> Once the inflation threat subsides, the price of gold will fall.


"Can the threat subside while the money supply is growing fast?"

Indeed. Huge misconception that is harped upon every night by Kudlow
and the other talking heads. Gold = Inflation.

A couple of points. Many people, here and abroad, feel the CPI is
understating inflation by anywhere from 3-5 % points. Are you paying
less for health care? A house? Gas? Heating? I concur with this,
but don't see it as a conspiracy or anthing, just quirks in their
accounting. They use rental housing rates to make up the 20% of the
CPI which is housing instead of real owner occupied housing prices.
Well, rentals have been flat for 10 years while the housing market has
been appreciating what, 8-9-10% per year? In addition, 50% of the CPI
basket is subject to what are known as Hedonic adjustments. This is
where the product/service is new and improved, therefore the additional
cost is justified and not counting towards inflation. This is all well
and good when you as the consumer still have the ability to buy the old
unimproved version, but when you have no choice AND don't particularly
care for the improvements . . .
And the folks that have gone on record that the CPI is significantly
under-reporting inflation is legion.

Money supply. Well, it's common knowledge that the Fed have been
dropping $ from helicopters and it's gotten sooo bad, they're going to
stop reporting M3 numbers. Most of your other currencies are also in
an oversupply. When all this currency is floating around the world, at
some point folks get tired of having sooooo many $ and start looking
around for althernatives. Well, lo and behold, here's gold. And this
purchasing demand is the major force driving this current bull market -
gold as a 5th currency. Indeed, there are even central banks including
china, russia and england that are building up their gold reserves.

Lastly, there is also enormous demand coming from asia - japan, china
(it's now been legal for 2 years to own gold), and india.

Nopers, as mentioned, this train has left the station.

best,

rono

Re: Where is GOLD headed?

"rono" <> wrote in message
news:
> Herb wrote,
>
> Not to mention the 8000+ tons of gold the US has in deep storage doing
> nothing since we don't use it for currency purposes anymore.
>
> I don't know of anyone in the industry that believes this gold actually
> exists in physical form. If it's on the books, it's in the form of
> paper IOU's.

I don't know what to believe. My sources refer to it as being in "deep
storage" which I take to be Fort Knox.

>
> In addition, they actually ran out of silver a year or so back and had
> to start buying on the open market just to fill their minting needs for
> their silver eagles and proof silver coins.

I think silver is different from gold in that it has more industrial uses as
well as monetary uses.

>
> The general consensus in the industry is that many of the major CB's,
> list gold reserves and that most of these are paper and not physical
> metal. This means you can't sell them. Geez, they were all selling
> like crazy several years ago and even established a time table schedule
> to reducing their gold reserves so as not to upset the market.

Apparently they weren't "all selling." A bloc, encouraged if not led by the
US was selling to support the dollar. Others were buying, still others
holding.

>
> And this also seems to reflect the fundamental strength of this bull
> run - institutional buying by major players AND some central banks.
> It's almost as if gold is becoming the 5th currency. You see, the
> whole world is awash with greenbacks and even euros and yen. There's a
> global glut in cash money, particularly of $ with our trading partners.
> Well, ask yourself, how many warehouses and barns and tents full of
> dollars do you want or need, before your utility curve for dollars
> flattens and you start looking around for something with a greater
> utility. And what are your choices? Euros? Yen? Francs? Real
> Estate? . . . . or gold.

If my barn is already stacked to the haylofts with dollars, I may do
whatever it takes to protect the dollar's value: sell gold, buy Treasuries.

>
> Nopers, this rascal is the real deal and the train HAS left the
> station. However, you're all welcome to join me in the club car for a
> cold one.

Well, since I AM on the train, I'll be happy to accept your kind offer.

-herb

Re: Where is GOLD headed?

rono wrote:
> A couple of points. Many people, here and abroad, feel the CPI is
> understating inflation by anywhere from 3-5 % points. Are you paying
> less for health care? A house? Gas? Heating?

Okay, first of all, the increases in gas and heating are reflected in
the CPI. The energy component is up 17 percent in the last 12 months
according to BLS.

The issue with health care is complicated because employers pay zero to
100 percent of such expenses. I won't go into that here.

> I concur with this,
> but don't see it as a conspiracy or anthing, just quirks in their
> accounting. They use rental housing rates to make up the 20% of the
> CPI which is housing instead of real owner occupied housing prices.
> Well, rentals have been flat for 10 years while the housing market has
> been appreciating what, 8-9-10% per year?

1. The government wants to measure changes in the cost of shelter, but
not changes in the investment value of housing. (A housing bubble is
not inflation. It's an increase in the speculative value of homes.
Aside: I'm not saying we just had a bubble--it's just a convenient
example.)

2. It is difficult, if not impossible, for a government agency to
accurately extract the change in the shelter value of a house from the
total change. (This should follow from #1.)

3. In the long run, changes in the cost of rentals must track changes
in the cost of home ownership. (Otherwise, due to compounding, you'd
see units selling for a gazillion dollars that could be rented for
$1000 a month.)

4. When you rent, you don't own (obviously), so there's no speculation
involved.

Thus, tracking rents only is a reasonable way to go. It's not perfect,
of course. For one thing, while rents track house-shelter prices in
the long run, they probably don't always do so in the short run. For
another, many neighborhoods simply don't have many rental units.

> In addition, 50% of the CPI
> basket is subject to what are known as Hedonic adjustments. This is
> where the product/service is new and improved, therefore the additional
> cost is justified and not counting towards inflation. This is all well
> and good when you as the consumer still have the ability to buy the old
> unimproved version, but when you have no choice AND don't particularly
> care for the improvements . . .

This is another complicated issue, and I'm not tackling it.

> And the folks that have gone on record that the CPI is significantly
> under-reporting inflation is legion.

Sure, although so is the group of critics who've claimed the CPI has
over-reported it.

I'm not really debating your main thesis. I'm only trying to clarify
certain points.

Darin

Re: Where is GOLD headed?

Loose On the Lead wrote:
> rono wrote:
>
>>A couple of points. Many people, here and abroad, feel the CPI is
>>understating inflation by anywhere from 3-5 % points. Are you paying
>>less for health care? A house? Gas? Heating?
>
>
> Okay, first of all, the increases in gas and heating are reflected in
> the CPI.

But what I've observed is that the raw CPI number is then immediately
discounted by all kinds of Pollyannish economists, both in and out of
government. Instead, they keep falling back on that so-called "core
rate" of inflation, which excludes food and energy prices.

This "core rate" number first got started in the early 1970's, when the
OPEC oil embargoes sent the price of energy fluctuating wildly. So the
Government wanted a number that was less sensitive to those
fluctuations, and came up with the "core rate" that excluded those
fluctuations. But ever since, even after wild fluctuations in energy
prices subsided, they've been citing that "core rate" to suggest that
inflation is less of a threat than it really was. It's one thing to
exclude wild *fluctuations* in energy prices from inflation estimates.
It's another thing to just exclude energy prices and food prices from
your estimates of inflation altogether, whenever *steadily* rising
energy prices prove too much of a political embarrassment to mention.

Unless and until alternative sources of energy become available, in the
long run the price of petroleum *must* rise--as supplies are exhausted
or become harder to obtain from politically unstable parts of the world.
So that "core rate" is a swindle--it's ignoring this long-term trend.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: Where is GOLD headed?

THE MECHANICS OF OUTSOURCING OUT ALL U.S. JOBS TO CHEAP GIANT NATIONS

The cheerleader behind GW's and Benjamin Shalom Bernanke's OUTSOURCING
mania for sending the bulk of U.S. jobs overseas, is N. Gregory Mankiw,
born Feb. 3rd [today!---Happy Birthday little sharkster!], 1958.

Nicholas Gregory Mankiw grew up in North Jersey, the son of a teacher
and an engineer who was active in the local Republican Party. He made
his name in academia by writing about a great range of subjects and won
tenure at Harvard before turning 30. Although his academic reputation
remains excellent, his peers no longer see him as one of the members of
his generation most likely to win a Nobel in economics, probably
because his textbook writing has at times drawn him away from research.
Examples of human denigration in Outsourcing and Offshoring:
For example, 40 million credit card numbers were stolen in June 2005 at
CardSystems Solutions in Tucson, Arizona. (See the full story.). In
December 2005, nearly 50 people were indicted in connection with a
scheme that bilked at least $200,000 from Katrina relief fund at Red
Cross claim center in Bakersfield, Calif., which handled calls from
storm victims.

other examples at these websites:

Re: Where is GOLD headed?

Herb wrote:

> "rono" <> wrote in message
> news:
>
>>Herb wrote,
>>
>>Not to mention the 8000+ tons of gold the US has in deep storage doing
>>nothing since we don't use it for currency purposes anymore.
>>
>>I don't know of anyone in the industry that believes this gold actually
>>exists in physical form. If it's on the books, it's in the form of
>>paper IOU's.
>
>
> I don't know what to believe. My sources refer to it as being in "deep
> storage" which I take to be Fort Knox.
>
>
>>In addition, they actually ran out of silver a year or so back and had
>>to start buying on the open market just to fill their minting needs for
>>their silver eagles and proof silver coins.
>
>
> I think silver is different from gold in that it has more industrial uses as
> well as monetary uses.
>
>
>>The general consensus in the industry is that many of the major CB's,
>>list gold reserves and that most of these are paper and not physical
>>metal. This means you can't sell them. Geez, they were all selling
>>like crazy several years ago and even established a time table schedule
>>to reducing their gold reserves so as not to upset the market.
>
>
> Apparently they weren't "all selling." A bloc, encouraged if not led by the
> US was selling to support the dollar. Others were buying, still others
> holding.
>
>
>>And this also seems to reflect the fundamental strength of this bull
>>run - institutional buying by major players AND some central banks.
>>It's almost as if gold is becoming the 5th currency. You see, the
>>whole world is awash with greenbacks and even euros and yen. There's a
>>global glut in cash money, particularly of $ with our trading partners.
>> Well, ask yourself, how many warehouses and barns and tents full of
>>dollars do you want or need, before your utility curve for dollars
>>flattens and you start looking around for something with a greater
>>utility. And what are your choices? Euros? Yen? Francs? Real
>>Estate? . . . . or gold.
>
>
> If my barn is already stacked to the haylofts with dollars, I may do
> whatever it takes to protect the dollar's value: sell gold, buy Treasuries.

Hypothetically: What would happen if the new Iranian Oil Bourse is
successful, and the Mideast oil states start insisting that they be paid
in euros rather than dollars for their oil? Because that is what Iran
is trying to get started.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: Where is GOLD headed?

"Steven L." <> wrote in message
news:CaSEf.10170$
> Herb wrote:
>
> > "rono" <> wrote in message
> > news:
> >
> >>Herb wrote,
> >>
> >>Not to mention the 8000+ tons of gold the US has in deep storage doing
> >>nothing since we don't use it for currency purposes anymore.
> >>
> >>I don't know of anyone in the industry that believes this gold actually
> >>exists in physical form. If it's on the books, it's in the form of
> >>paper IOU's.
> >
> >
> > I don't know what to believe. My sources refer to it as being in "deep
> > storage" which I take to be Fort Knox.
> >
> >
> >>In addition, they actually ran out of silver a year or so back and had
> >>to start buying on the open market just to fill their minting needs for
> >>their silver eagles and proof silver coins.
> >
> >
> > I think silver is different from gold in that it has more industrial
uses as
> > well as monetary uses.
> >
> >
> >>The general consensus in the industry is that many of the major CB's,
> >>list gold reserves and that most of these are paper and not physical
> >>metal. This means you can't sell them. Geez, they were all selling
> >>like crazy several years ago and even established a time table schedule
> >>to reducing their gold reserves so as not to upset the market.
> >
> >
> > Apparently they weren't "all selling." A bloc, encouraged if not led by
the
> > US was selling to support the dollar. Others were buying, still others
> > holding.
> >
> >
> >>And this also seems to reflect the fundamental strength of this bull
> >>run - institutional buying by major players AND some central banks.
> >>It's almost as if gold is becoming the 5th currency. You see, the
> >>whole world is awash with greenbacks and even euros and yen. There's a
> >>global glut in cash money, particularly of $ with our trading partners.
> >> Well, ask yourself, how many warehouses and barns and tents full of
> >>dollars do you want or need, before your utility curve for dollars
> >>flattens and you start looking around for something with a greater
> >>utility. And what are your choices? Euros? Yen? Francs? Real
> >>Estate? . . . . or gold.
> >
> >
> > If my barn is already stacked to the haylofts with dollars, I may do
> > whatever it takes to protect the dollar's value: sell gold, buy
Treasuries.
>
> Hypothetically: What would happen if the new Iranian Oil Bourse is
> successful, and the Mideast oil states start insisting that they be paid
> in euros rather than dollars for their oil? Because that is what Iran
> is trying to get started.

I don't know what this "Oil Bourse" is but I wouldn't expect much to happen
vis-a-vis the dollar. I suppose it would mean that the oil states would
then have lots more Euros than they have now. Unless this move was
accompanied by a greater propensity to spend and invest in Europe then I
would suppose that they will convert much of that into dollars and do what
they are doing today.

Like metric vs. English measurement, dollars and Euros are readily
convertible. What would you expect to happen if they started pricing oil in
liters? The mullahs ruling Iran are not exactly known for their grip on
reality.

-herb

Re: Where is GOLD headed?

>>This is my approach also. I'm not timing entry and exit points into
>>gold.

If you decide to then look at SPPIX.