What is th edeal with GOLD???

[davidstvz]

Re: What is th edeal with GOLD???

Well, production cost at around 1200 is encouraging. I'm planning to hold, it just sucks to watch it go down and up and down and down and up and down and down...

Also, I don't suppose this could be the Ka before a Poom (if not *the* Poom)?

[ProdigyofZen]

Re: What is th edeal with GOLD???

Well, production cost at around 1200 is encouraging. I'm planning to hold, it just sucks to watch it go down and up and down and down and up and down and down...

Also, I don't suppose this could be the Ka before a Poom (if not *the* Poom)?

Long game david, long game.

No this is not the Ka.

[rogermexico]

Re: What is th edeal with GOLD???

People are selling thinking just like this.

I bet gold has been falling the last week from 1350 to 1200 because one of the large hedge funds had to liquidate their position because of 1) fund outflows or 2) being down 8 to 10% + on their Fixed Income positions.

I am not really a chartist, but the chart is the kind that feeds conspiracy theories from gold bugs. It's as if it is a bear market compressed by a factor of 10 on the time scale. It's been bizarrely easy to hang on to my shorts for the past $200. There is no snapback to even shake you out. Just down legs with pauses in between.

At some point you have to balance how stupid you might feel years in the future for not buying right now with the fear that you feel. But waiting for the slide to at least look like it might stop seems like the course for now....

[vinoveri]

Re: What is th edeal with GOLD???

I am not really a chartist, but the chart is the kind that feeds conspiracy theories from gold bugs. It's as if it is a bear market compressed by a factor of 10 on the time scale. It's been bizarrely easy to hang on to my shorts for the past $200. There is no snapback to even shake you out. Just down legs with pauses in between.

At some point you have to balance how stupid you might feel years in the future for not buying right now with the fear that you feel. But waiting for the slide to at least look like it might stop seems like the course for now....

decided to roll the dice and close out my silver shorts today as I think silver may be within a few % of bottoming .... (likely to plunge 10% tomorrow now that I'm out of course). Gold is due for a rebound but think it's got another 10% downside likely at least, but who knows.

[FrankL]

Re: What is th edeal with GOLD???

People are selling thinking just like this.

I bet gold has been falling the last week from 1350 to 1200 because one of the large hedge funds had to liquidate their position because of 1) fund outflows or 2) being down 8 to 10% + on their Fixed Income positions.

So can I conclude that these big swings in gold (also on the way up) imply that there's a lot of speculative capital in the gold market?

Also, when the big declines started, EJ mentioned that this might be a sign of something big coming. That was not too long before China's central bank hit the liquidity brakes. Would this imply that there was a lot of speculative capital in China locked up in gold?

I also wonder how the declines affect paper vs. physical gold markets... is there a real disconnect happening yet? or is this just the usual goldbug talk?

[LargoWinch]

Re: What is th edeal with GOLD???

One must keep in mind that with gold's recent performance in Q1 and Q2 that some funds have an incentive to sell their positions ahead of H1 reporting season, which further feed the downward spiral.

[charliebrown]

Re: What is th edeal with GOLD???

I just saw this very nice gold report at zero-hedge. The size limits of itulip do not allow me to upload it. It is available as a pdf. Here is the link.
This report was produced by Incrementum AG June 27th 2013.

http://www.zerohedge.com/news/2013-0...obia-valuation


This report agrees with a lot of this site's core beliefs.
Has a 12 month target for gold at $1400.
Has long term target at $2300.
Current production costs of around $1200.
View miner's as underpriced due to more transparency in miner financials, and plateauing cost structure
Discusses some reasons for gold's recent tumble. CB smaller balance sheet, rising rates, calmness in euro-area.

$2300 is dervided from a probabalistic calculation using various scenarios. The dollar will require some variable degree of gold backing
and different projected sizes of the fed's balance sheet.

[Forrest]

Re: What is th edeal with GOLD???

I've just written off all my gold. Like... what if it all just melted and seeped into the dirt and vanished? I'd live.

That's the only way I can stay sane right now. 30% down from the beginning of the year? This is just nuts. I keep not selling because I don't want to be that idiot that sold on the way down when it's going to go back up later and I don't need to liquidate to get the cash right now or anything. But man it's hard to just watch it fall and not do anything. How low can it go?

To stay sane in gold, you have to not look at it as if it were money at all...you need to look, not at an average world wide gold price, but what gold buys. In this case, since no one in the world want's to return to the stone age, you need to look at what is scarce, and getting scarcer...like high value nutritional foodstuffs/medical care relative to gold, and the price of oil/electricity/alternative energy relative to gold.

Gold is a finite resource...so are high quality lives. And despite the idea that gold is cheap or expensive according to the money printers, on any one day, I know that my fiat income will not not stretch to cover higher fiat prices in the above necessities of life when the SHTF.

Gold is stored energy, paid for by the man-hours it requires to buy it. I do not look at what the price is now, except as opportunities to accumulate gold more quickly, as you can right now. I look at what it will buy me when fiat money world wide is exhausted. But since I need fiat money to exist right now, I only think a 30% share of a portfolio is wise, and that only if it is in my hot little hands, carefully buried under the 3rd rose bush past the barbeque. But I also have a few months supply of food and water on hand, also under the same rosebush, of course. It is a little crowded down there, but I will happily add to both stashes while the world sorts itself out, and continue to build my greenhouses, plant my veggies, start that hen house, and enjoy the time that the illusion of a stable world continues.

And despite the fact that my stores of gold and goods are far away from my rose garden, and even further than my barbeque, I feel a lot more comfortable knowing that the turmoil in the world does not affect my tranquility. Sooner or later (whether it is next week or twenty years from now), the world will be forced to look at reality. I would like that time to never come, and simply leave my gold to another generation, and give away my food stash, but the reality of how things actually are in this world is most likely to be fully understood in my lifetime.

Owning gold is very similar to having a house to live in, because you do need one when the weather gets nasty, for privacy and a place for your stuff. When it's cold and dark, you want to go home, and be safe and comfy. That is the only reason to own gold...except for Xmas presents for your wife and daughters! Put your gold safely away someplace, and, except for buying a bit now and then to balance your portfolio, don't bother thinking about it. Worry about maximizing the other 70% of your portfolio.

[EJ]

Re: What is th edeal with GOLD???

That's the problem, every reason that all market participants "thought" why gold went up since 2008 are now no longer extant in their view. That is "money printing," "negative real rates," "US public debt increasing" "US GDP not growing" "dollar falling" etc.

All the wrong reasons that people bought gold are now all the wrong reasons they are selling.

All of the guys who bought gold for all the wrong reasons 2008 - 2011 are getting out. They only every got in because the price kept going up every year while stocks were volatile. They thought gold was a safe alternative to stocks.

Now they think stocks are a safe alternative to gold.

Looks like we'll be wrapping up six months of work in the AM, barring additional technical difficulties. We will introduce a new concept, the US Dollar "Good as Gold for Oil" of GAGFO that explains the gold and oil price correlation the last time the USD was not GAGFO, the subsequent brief period when it was, the 2001 - 2011 period when it was not, and the past two years when a series of events made it appear to be but for reasons we think are transitory.

Until tomorrow:

[goadam1]

Re: What is th edeal with GOLD???

. I sense some snark which feels unwarranted.

I am super excited about the article. But we can pretend gold didn't drop $700 or not. We can pretend the s&p doubled under all the fed money rain or not.


I am truly rivited by your observations. But to bag on those of us who bought gold in the last 5 years as being jerky for finding it a middling investment? You called it expensive insurance. That's cool. But facts are facts.

[EJ]

Re: What is th edeal with GOLD???

. I sense some snark which feels unwarranted.

I am super excited about the article. But we can pretend gold didn't drop $700 or not. We can pretend the s&p doubled under all the fed money rain or not.


I am truly rivited by your observations. But to bag on those of us who bought gold in the last 5 years as being jerky for finding it a middling investment? You called it expensive insurance. That's cool. But facts are facts.

But in our unique and odd little world where we got out of stocks at the real peak in 2000 and into gold at the real bottom in 2001 a 50% decline in stocks or gold is irrelevant. It's happened over and over and will happen over and over. What matters is how it all turns out. That's the long game. The long game is in bonds and currencies. We play the long game. We have to put emotion aside. Watch events with fascination and wonder not fear. Relax. You are in control of events if you can control your emotions.

[BadJuju]

Re: What is th edeal with GOLD???

Watch events with fascination and wonder not fear. Relax. You are in control of events if you can control your emotions.

True enough, good sir! Although I would add that us peons are controlled by money or the lack thereof. First you have the money, then you get the stoicism.

[rdc2008]

Re: What is th edeal with GOLD???

EJ, I say this with the utmost respect for you and your work:

Those who found iTulip in only the last few years could have used a little heads up on this piece of advice:

But in our unique and odd little world where we got out of stocks at the real peak in 2000 and into gold at the real bottom in 2001 a 50% decline in stocks or gold is irrelevant.

Maybe I missed it. There's a lot of information on this forum so it's quite likely that I did, despite trying to be diligent in reading the archives instead of asking the same basic questions over and over. I tried, I really did. After finding iTulip and digging in as much as I could understand I put 25% of my net worth into BullionVault in 2011. I too thought the concept of 'expensive insurance' was reasonable and I still do.

That said, it's been a gut-wrenching few months to watch this and EJ, as much as I respect your viewpoints and tireless research, I feel like you're basically saying that if you found the itulip thesis in the last few years and made some decisions in line with it, then that's a real shame.

No one has a crystal ball, but for those of us who may have lost a big chunk of net worth in the last few months "I guess you were too late, relax" isn't particularly helpful I don't think. Just my two cents.

As goadam1 said, we can pretend this doesn't suck, but for a lot of people who did it for the right "expensive insurance" reasons (not the BS reasons), we're hurting. Obviously no one expects you to know the future, but at least acknowledging what's happened would be kind.

[rogermexico]

Re: What is th edeal with GOLD???

. I sense some snark which feels unwarranted.

I am super excited about the article. But we can pretend gold didn't drop $700 or not. We can pretend the s&p doubled under all the fed money rain or not.


I am truly rivited by your observations. But to bag on those of us who bought gold in the last 5 years as being jerky for finding it a middling investment? You called it expensive insurance. That's cool. But facts are facts.

Speaking as one who valued gold as insurance but also treated it as an asset to invest in and trade in, I'll offer my two cents.

Missing the equities rally is a criticism I somewhat agree with. Marc Faber called that one right, and did so emphatically.

I think the itulip stance was that staying long UST and not shorting them was the primary call we could have confidence in. It only became really clear from the itulip perspective that equities were the explicit target of QE, and they were being targeted effectively, well after the 2008-9 low in stocks. So a case could be made that if one is willing to buy into one artificial market (bonds), why not be willing to buy into another one (equities) ? I wish I had bought some futures at the 2008 low but I did not. I got out of stocks in 2000 but made the exact same mistake at the bottom in 2002, believing equities were still "too high" at the 850 mark on the S and P.

That said, no one is right about everything all the time, nor is it necessary to be. EJ has correctly made calls to short equities two times and held tight with treasuries through the longest lived and most persistent (and artificial) rally in world history. Would perfection have been to also call the market bottoms in 2002 and 2008 and tell us to pile in? I suppose so, but the same rigorous analysis and coherent framework that lent surety to buying and holding UST for so long and made the initial gold call with confidence probably made it hard, if not inconsistent, to make a call to go long stocks.

It would have taken a mentality more fitting to the pits in Chicago than the hard core long play zen master in EJ's brain to make those calls confidently.

As far as gold, EJ has been consistent in identifying gold as insurance, even in the face of arguments from some quarters at times (C130 pilots : )) that the recommended allocation was too low, and in the face of his own observations that gold was going up at a regular pace year after year with little statistical volatility. The 74-76 drawdown on the chart should be known to anyone who bought gold. Just as well known as what happened afterwards culminating in 1980.

Those of us who treated gold as something other than insurance, as I did, should be happy if we did well by choosing to take the risk of treating gold as a speculative investment.

I bought what according to the itulip position was way too much, and sold most of it at much higher prices. I also bought quite a lot of silver and (100% consistent with itulip) sold every bit of it at the top. The result is that I am well ahead of a buy-and-hold strategy over the same time period.

But does this mean that I think I got bad advice about gold? Absolutely not. I took on an additional risk, one that EJ and itulip never advocated, and I got away with. Or I got lucky. Or I was talented, or whatever post-hoc characterization you want to use.

Your observations about gold's collapse might be apt if EJ were some Turd Ferguson style cheerleader telling you to go all in on gold, but he is not.

Gold is an investment vehicle you can trade your dollars for and take your chances on like any other speculative investment.

Gold is a unique asset class that we hold to protect us from something that has not happened yet. Something we would prefer not to happen even if it were to "pay off" in gold appreciation.

Let's not confuse the two.

[akt]

Re: What is th edeal with GOLD???

EJ, I say this with the utmost respect for you and your work:

Those who found iTulip in only the last few years could have used a little heads up on this piece of advice:

Maybe I missed it. There's a lot of information on this forum so it's quite likely that I did, despite trying to be diligent in reading the archives instead of asking the same basic questions over and over. I tried, I really did. After finding iTulip and digging in as much as I could understand I put 25% of my net worth into BullionVault in 2011. I too thought the concept of 'expensive insurance' was reasonable and I still do.

That said, it's been a gut-wrenching few months to watch this and EJ, as much as I respect your viewpoints and tireless research, I feel like you're basically saying that if you found the itulip thesis in the last few years and made some decisions in line with it, then that's a real shame.

No one has a crystal ball, but for those of us who may have lost a big chunk of net worth in the last few months "I guess you were too late, relax" isn't particularly helpful I don't think. Just my two cents.

As goadam1 said, we can pretend this doesn't suck, but for a lot of people who did it for the right "expensive insurance" reasons (not the BS reasons), we're hurting. Obviously no one expects you to know the future, but at least acknowledging what's happened would be kind.

Dear Sir,

With all due respect there was no way anyone could have foreseen the 450 Billion$ US investment that was to go into finding shale oil and the consequent gold price drop. Adequate oil is the only thing that is as good as gold for the international markets.

But this oil deluge is temporary and when it corrects, we will be very happy that we held on. I wish I also had waited to put my networth into gold..........but woulda , shoulda, coulda........does not an investment make.

Trying times but will pass......... and thanks to EJ we will be sane. This is the only site and the only person who has a clear explanation of the gold's rise and drop.......all this for the pittance we pay as subscription fee.

Your comments are most appropriate and measured ....... and the above is just a viewpoint of mine. Thank you for being understanding.

Cheers,
AKT