China buys shares of SPDR Gold Trust

[Jay]

Re: China buys shares of SPDR Gold Trust

The article and its conclusions are very compelling. However, I think it will spell the end of the paper gold market as we know it, and the spike in physical will only last as long as the deleveraging of the paper market. Yes, the equilibrium price after it's over will be much higher than it is now, but I would expect the crisis event to be the time to exit physical.

-Jimmy

Whatcha gonna buy with all that money jimmy? Treasuries? Corporate debt? Equities? Just wondering if you have gotten that far, I haven't...

Maybe real estate.

[ThePythonicCow]

Re: China buys shares of SPDR Gold Trust

The article and its conclusions are very compelling. However, I think it will spell the end of the paper gold market as we know it, and the spike in physical will only last as long as the deleveraging of the paper market. Yes, the equilibrium price after it's over will be much higher than it is now, but I would expect the crisis event to be the time to exit physical.

-Jimmy

If I could get a Super Stallion helicopter to fit in my time machine and go back to the North Atlantic to sell life boats, the best time to which to go back would be just as the Titanic was sinking. A few hours later, there would be little or no market for lifeboats. Anyone in a position (er, eh, alive) to purchase one would already have a seat in one.

However there will like be some complications and confusions.

• We may not know when the peak panic occurs, as this might be a more complex, multi-stage collapse.
• We will not know at the time whether subsequent circumstances will make gold even more valuable (perhaps the world will revert to a gold based currency after the dust settles from the collapse of paper gold.)
• We might not know at the time where else to place our wealth if not in gold, for we might not know what will be of greater value thereafter.
• Finally, there might not be a market sufficiently liquid to allow our conversion from gold to some other asset at the optimum time.

If this investing thing were easy, we'd all be filthy rich.

[Chris]

Re: China buys shares of SPDR Gold Trust

Very similar to predictions contained in the December 6, 2009 issue of The Shape of Things to Come at HalfPastHuman.

And the 2008 issue, and the 2007 issue. Willie is a gripping read sometimes but most of his EOTW predictions are shockingly false.

[Chris]

Re: China buys shares of SPDR Gold Trust

Whatcha gonna buy with all that money jimmy? Treasuries? Corporate debt? Equities? Just wondering if you have gotten that far, I haven't...

Maybe real estate.

Isn't this the Fed's master plan to prop up the housing market? Crash the economy so that all those in gold get to sell out with huge gains which they'll transfer into real estate as the only viable asset around?

It's genius!

[ThePythonicCow]

Re: China buys shares of SPDR Gold Trust

And the 2008 issue, and the 2007 issue. Willie is a gripping read sometimes but most of his EOTW predictions are shockingly false.

EJ is the long range sniper, patiently setting up for a few, long range, high probability hits. Jim Willie is the AK-47 on meth, making sure anything in close range is hit (along with lots of scattered misses.) Both have their uses.

[jtabeb]

Re: China buys shares of SPDR Gold Trust

If I could get a Super Stallion helicopter to fit in my time machine and go back to the North Atlantic to sell life boats, the best time to which to go back would be just as the Titanic was sinking. A few hours later, there would be little or no market for lifeboats. Anyone in a position (er, eh, alive) to purchase one would already have a seat in one.

However there will like be some complications and confusions.

• We may not know when the peak panic occurs, as this might be a more complex, multi-stage collapse.
• We will not know at the time whether subsequent circumstances will make gold even more valuable (perhaps the world will revert to a gold based currency after the dust settles from the collapse of paper gold.)
• We might not know at the time where else to place our wealth if not in gold, for we might not know what will be of greater value thereafter.
• Finally, there might not be a market sufficiently liquid to allow our conversion from gold to some other asset at the optimum time.

If this investing thing were easy, we'd all be filthy rich.

Give us time, Cow. Give us time... ;)

[jtabeb]

Re: China buys shares of SPDR Gold Trust

The article and its conclusions are very compelling. However, I think it will spell the end of the paper gold market as we know it, and the spike in physical will only last as long as the deleveraging of the paper market. Yes, the equilibrium price after it's over will be much higher than it is now, but I would expect the crisis event to be the time to exit physical.

-Jimmy

Au Contrair, Mon Frair

[jimmygu3]

Re: China buys shares of SPDR Gold Trust

Whatcha gonna buy with all that money jimmy? Treasuries? Corporate debt? Equities? Just wondering if you have gotten that far, I haven't...

Maybe real estate.

No, Jay. I have no idea at this point. It depends on the conditions at the time. If RE cap rates look good, then that is a good way to go. If rates are in line with expected inflation, then bonds would be good. If p/e ratios are back to earth, then stocks, with a concentration on major oil cos. In the end, oil is the place to be, but I wouldn't buy XOM at today's prices. If none of the above, maybe keep a portion of the gold position and put the rest in t-bills, keeping my powder dry for the next trade.

It seems quite possible to me that gold could run up 3x or 4x, and once the deleveraging demand subsides and prices begin to slip, investors will want to unload the useless little yellow coins before it falls through the bottom. So maybe, if everything still looks expensive and risky, it's just a matter of trading in and out of gold, with t-bills in the meantime.

But, as ASH has said of himself, I'm just a random guy on the internet.

-Jimmy