Time to look into gold?

[touchring]

Not a gold bug, but with stock market overvalued and gold looks cheap in comparison. What do you guys think?

Some articles claim that gold supply has peaked last year. Is this for real or just marketing by gold bugs.

I've researched on the gold production of a couple of top gold producers such as abx, nem and gg, it is not clear with production is peaking but it is certainly not rising significantly.

This article claims that China is exhausting gold reserves at 23.5% per year. Does this means China's 500 ton a year supply will only last for another 4 years!

http://www.mining.com/chinas-exhaust...s-global-rate/

[Mega]

Re: Time to look into gold?

Hi T
I selling out my stocks.......everything!
I am guessing that we been a VERY long time since a major "correction".
Am going to cash & some more Gold.

As the $ is high i think you might be right to add some.

Cheers
Mike

[thriftyandboringinohio]

Re: Time to look into gold?

Not a gold bug, but with stock market overvalued and gold looks cheap in comparison. What do you guys think?

Some articles claim that gold supply has peaked last year. Is this for real or just marketing by gold bugs.

I've researched on the gold production of a couple of top gold producers such as abx, nem and gg, it is not clear with production is peaking but it is certainly not rising significantly.

This article claims that China is exhausting gold reserves at 23.5% per year. Does this means China's 500 ton a year supply will only last for another 4 years!

http://www.mining.com/chinas-exhaust...s-global-rate/

Back around the year 2000 at iTulip there was rampant interest in gold. That's when I bought most of mine. I still have it.
At the time I made my decisions based on two things I though were true:

1. Gold prices were down near the real cost of production, only the biggest and most expertly managed mines sitting on the highest grade ore could make a profit.
2. Inflation had been at historically low levels for many years, and I could expect it to revert to the mean giving us higher inflation

So I decided gold was as cheap as it would ever be in real inflation-adjusted terms, and I could expect it to protect my investment as inflation surged. We never really got that inflation, but the price did go up from around $300/oz back then to $1300 (over the past few year one might call it $1200). Depending on what you think the inflation rate was, the price of gold has doubled or tripled in real terms since 2000. I cooked up a strategy to hold that gold until the big ka-POOM event when I would sell the gold during a mania and use the money to buy stocks at bargain prices. I'm still waiting. I'm happy to keep my physical as a kind of insurance policy and long-shot wager, though every year it looks more likely that it will be my children that can make the gold-for-Dow home run play.

As I recall, one important bit of evidence was the hedge book of large gold mining operators. Miners like Barrik raised a ton of cash hedging while prices drifted downwards, and then suffered a crushing burden when they had to deliver that cheap gold when prices were rising. A quick google just now shows me that hedging remains vilified among miners, but something called "streaming" is doing essentially the same sort of thing now.

My point (and I do have one) is that the large gold miners think deeply about the price outlook for gold, and their hedge and stream positions can show you what they really think might happen to the price of gold. The true opinion of the big gold miners on the future gold price is probably worth understanding.

Perhaps some of our members can tell us more about "streaming" and how it differs from hedging.

[touchring]

Re: Time to look into gold?

I'm still waiting. I'm happy to keep my physical as a kind of insurance policy and long-shot wager, though every year it looks more likely that it will be my children that can make the gold-for-Dow home run play.

Although it is subjective whether gold will rise or fall in the short term, I'm confident that in the long term, gold will continue to rise especially with the rise of India consumer market over the next 20 years.

Indians are crazy over gold, not so much for the Chinese as they buy gold only on special ocassions such as for wedding dowry.

My point (and I do have one) is that the large gold miners think deeply about the price outlook for gold, and their hedge and stream positions can show you what they really think might happen to the price of gold. The true opinion of the big gold miners on the future gold price is probably worth understanding.

Yes, but didn't Barrick make a wrong call on the direction of gold price?

[touchring]

Re: Time to look into gold?

Interesting chart.

[thriftyandboringinohio]

Re: Time to look into gold?

...Yes, but didn't Barrick make a wrong call on the direction of gold price?

Not at all.
They were right about their price outlook and implemented a plan that paid profits today at the cost of pain tomorrow. As gold declined for years they hedged like crazy, building up a huge book. When the upturn came, they had to make good on the contracts, and it cost a pretty penny.

That's as they were designed. During the years of price decline they sold their production forward, capturing higher prices for many years and getting better certainty about their cash flows as prices declined. But there is no free lunch, so when prices turned up they paid quite a bit of money to settle the hedge contracts. Billions. Some observers put that cost at about 4% of Barrick's total annual production for a couple of years. That is, when the price turned up they still sold 96% of their output into the spot market at the higher rising prices, but they may as well have mailed 4% of their output to their hedge partners free of charge to settle the old contracts. Ouch.
Today they have gross sales over $8 billion, it's not reasonable to say they failed badly at anything.

But if you and I had followed Barrick's hedging activity to predict price trends in gold, we would have gotten an accurate picture for decades. As Barrick approached the gold price bottom they pulled back on new hedge positions, and when the bottom came they closed the hedge book as fast as they could, showing us they felt prices would rise for years to come. I haven't looked this stuff in a few years, but the hedging activity of major gold miners might still give us well-informed opinion about the future trends in gold prices.

[jk]

Re: Time to look into gold?

i've had a significant position in gold since it was $380-400, before i found itulip. [whenever i've tried to trade around my core position i've lost money] my analysis at that time was that there was no way for the u.s. to pay its off-balance sheet liabilities [mostly medicare and social security] except in very devalued dollars. that analysis still holds, in addition to which we now have rising deficits even with exceptionally low unemployment, and we also have rising rates so higher debt service bills. this can't end well for the dollar, long term.

also, it is the only non-currency asset held by central banks - there's a reason for that.

of course i wish i'd taken some profits at 1900, but i currently have about 22% of my investments in gold. since most of my money is in ira accounts, i hold it as phys, which is audited annually. [i would never trust gld because of its large short positions - in a pinch it will settle in cash at a mark to fantasy value, since not enough metal is there.]

[touchring]

Re: Time to look into gold?

i've had a significant position in gold since it was $380-400, before i found itulip. [whenever i've tried to trade around my core position i've lost money] my analysis at that time was that there was no way for the u.s. to pay its off-balance sheet liabilities [mostly medicare and social security] except in very devalued dollars. that analysis still holds, in addition to which we now have rising deficits even with exceptionally low unemployment, and we also have rising rates so higher debt service bills. this can't end well for the dollar, long term.

also, it is the only non-currency asset held by central banks - there's a reason for that.

of course i wish i'd taken some profits at 1900, but i currently have about 22% of my investments in gold. since most of my money is in ira accounts, i hold it as phys, which is audited annually. [i would never trust gld because of its large short positions - in a pinch it will settle in cash at a mark to fantasy value, since not enough metal is there.]

Thanks for sharing. I just found out that gold price was $35 in 1970. 1 pound of gold only costs $560, which is ridiculously cheap by today's standard. Why was this possible?

[jk]

Re: Time to look into gold?

Thanks for sharing. I just found out that gold price was $35 in 1970. 1 pound of gold only costs $560, which is ridiculously cheap by today's standard. Why was this possible?

the price of gold was fixed for many years and americans were not allowed to own gold.

[touchring]

Re: Time to look into gold?

the price of gold was fixed for many years and americans were not allowed to own gold.

But Europeans can own gold am I right?

Anyway, this sounds like what will happen to crypto currencies, they will become regulated.

One thing about gold and silver that crytos can never achieve - that is real scarcity.

Anyone can come up with a crypto, there will be Paypalcoin, FBcoin, GoogleCoin, hack, there's already a Doggycoin, if I don't recall wrongly.

There will literally be tens of thousands of cryptos. It will be chaos.

[lakedaemonian]

Re: Time to look into gold?

But Europeans can own gold am I right?

Anyway, this sounds like what will happen to crypto currencies, they will become regulated.

One thing about gold and silver that crytos can never achieve - that is real scarcity.

Anyone can come up with a crypto, there will be Paypalcoin, FBcoin, GoogleCoin, hack, there's already a Doggycoin, if I don't recall wrongly.

There will literally be tens of thousands of cryptos. It will be chaos.

And from that chaos could come a few crypto currencies that possess stability, velocity, liquidity, and utility.

I would trust a peer reviewed algorithm more than a bunch of self serving politicians.

Things change.

The Internet was just a passing fad...until it wasn’t.

Warren Buffett didn’t invest in tech...until he did.

Crypto is bad....until it isn’t.

Facebook, Amazon, Apple, Google, Alibaba, Wechat......they’ve all got massive user bases and capital reserves.

The future for the companies above will be more than just the usual GE evolving from manufacturer to retail/commercial banker.

Why not leapfrog to algorithmic central banker?

[touchring]

Re: Time to look into gold?

And from that chaos could come a few crypto currencies that possess stability, velocity, liquidity, and utility.

I would trust a peer reviewed algorithm more than a bunch of self serving politicians.

Things change.

The Internet was just a passing fad...until it wasn’t.

Warren Buffett didn’t invest in tech...until he did.

Crypto is bad....until it isn’t.

Facebook, Amazon, Apple, Google, Alibaba, Wechat......they’ve all got massive user bases and capital reserves.

The future for the companies above will be more than just the usual GE evolving from manufacturer to retail/commercial banker.

Why not leapfrog to algorithmic central banker?

Crypto is nothing new, unless you say that currency is a new invention. The problem is currency is issued by countries. Once every company in the world can issue their own digital currency (crypto), there's no need to guess what's the outcome.

Actually this happened before in China before WWII. All the warlords were issuing their own currencies. There were thousands of warlords China. No guesses as to why the communist party banned cryptos.

In the meantime, China and Russia are accumulating gold like never before. Why don't they accumulate bitcoin instead.

China's move to ban bitcoin is very shrewd. By doing so, Chinese consumers will be buying gold instead and from my sources, they are buying huge amounts of gold. I don't mean the communist government but ordinary citizens. Middle class Chinese families are converting tens of thousands of dollars worth of their savings into gold.

In time to come, China will have accumulated enough gold to issue a gold backed currency.

[Adeptus]

Re: Time to look into gold?

Anyway, this sounds like what will happen to crypto currencies, they will become regulated.

Once this happens, a lot of scams will disappear, it will further legitimize the good cryptos (there's not that many of these) and big money will finally jump in making these sky rocket even further to unimaginable levels.

One thing about gold and silver that crytos can never achieve - that is real scarcity.

There already is scarcity in cryptos. There's only so many credible projects. What makes a crypto currency valuable are:

1. Caliber of main team doing the core development. There are less than a few hundred extremely skilled blockchain developers at this time. Further, the right team can pivot quickly and effectively when issues arise.
2. Its properties: security/decentralization, programmability, unique potential real world use cases, scalability
3. Technological niche(s)
4. Marketing
5. The number of active developers ("developers! developers! developers!")
6. Ease of use
5. Scarcity/inflation rate of X token.

If you are just a another copy cat forked by some unknown or unreputable individual/team, you will only fool the fools for a short while, after your pump/dump the shitcoin's price will be in decline.

Anyone can come up with a crypto, there will be Paypalcoin, FBcoin, GoogleCoin, hack, there's already a Doggycoin, if I don't recall wrongly. There will literally be tens of thousands of cryptos. It will be chaos.

Yes there will, there will also be a national crypto currencies but these will very likely mimic existing fiat currencies, that is, they will not be very decentralized at all and issuance will be controlled by the central banks.

Note, already in 2017 the trend moved away from creating your own copy/cat crypto currency to simply issuing tokens on top of existing large blockchains. 90% of these tokens were issued on top of the Ethereum blockchain. Tokens were issued via ICOs. The technical barrier to issuing tokens is much lower than launching and maintaining your own blockchain. All you have to do is come up with a website, copy another successful ICO's whitepaper and make some minor modifications, execute the fund raising part, then distribute worthless tokens to all the suckers. Then never actually launch any product. Rinse and repeat. The SEC is supposedly after these guys, but there's so many they will not catch even 1/10th of them, but likely make an example out of a few of them.

The main chaos is having to read dozens of white papers per week to separate the wheat from the chaff... after a few weeks I actually gave up and just went back to looking for solid foundational blockchains upon which, tokens could eventually be issued on the platform.

I still think it is not too late to get into crypto currencies and make mad bank. I actually quit my 6 figure job back at the start of this year and retired in my early 40's because of crypto. I also just today just gave my wife the green light to quit her job. She's not even 40 yet.

In 2017 there was more money raised in ICOs than there was in all of Sillicon valley VC funding. We're talking Billions. On average, less than 7% of G20 country residents are invested in crypto. 33% of millenials would rather invest in blockchain than stocks. and the tech is still immature, which means, we've got years left to go.

Look, I fully expect this entire thing to come to a massive crash... like a multi trillion dollar crash. Why? For the very simple reason that it functions like a ponzy scheme, despite the fact that it isn't actually one (tokens have utility).
Itulip people will be able to understand this simple concept that accounts for the mega price rises:

Most crypto currencies have a deflationary supply and an ever increasing demand (more users). As people like me make stupid amounts of money by making just a few lucky investments, my friends and family will look at me and want to get into it too. Then a few of those will also be successful and so on, until we have a multi-trillion dollar market cap on cryptos. For sure the whole thing will blow up simply due to the 'greater fool theory', eventually we will run out of fools; but before that, yes I do expect governments to slam this market sector into oblivion. Why? Because there will come a time (I estimate somewhere between $5 Trillion to $50 Trillion market cap) where it will it will threaten G20 national economies. Why trust your millions to goldman sachs that makes you 10% on a good year, when your nephew who has no clue just made 1000% last year speculating on Doge Coin? Eventually this may start eating away at the stock market, eventually the bankers & old farts in government will get a clue where this is all heading. For now, they can barely understand how facebook works, let alone complex blockchain tech.

Take 2-10% of your networth, plunk it in the top 10 or so cryptos (I'd recommend avoiding Litecoin, XRP and most definitely do not buy "Tron"), if you are risk averse, pull out your initial investment after your investment doubles, then ride the rest to retirement. Give yourselves 5 years... if the party lasts that long.

I think in 3 years, the following cryptos will still be around and worth more than they are today: Bitcoin (or Bitcoin Cash, not sure which - perhaps both), Ethereum, EOS, Cardano, Tezos (Symbol: XTZ - not yet listed ETA this summer), Dash and Monero.

In the end there will still be blockchains, as there are real world use cases, but somewhere along the line I have a feeling that regulation will clue in that defationary economic designs are the real threat and do something about it... if they can.

PS. Disclaimer: I am not a financial advisor. This is not financial advice. Just the personal opinion of some random dude on the Internet :P

[Adeptus]

Re: Time to look into gold?

If none of the charts in this article convince you, then just think about it this way... For the first time in history, main street (mostly just the nerds) are making mega profits before Wall Street. Wall Street is getting pressure from their institutional investors to get exposure to the gains of Cryptos. Once this happens (and it has already started a little bit: CME and CBOE now offer Bitcoin futures trading... Ethereum was announced today on CME), then get ready for another crazy rally... then eventually we still have the pension funds and the retail investors to jump in.

Lastly, this is not a bad time to get in. Crypto markets on average are still is still 55%+ below their recent all time highs. I think we're finding a bottom here, and by the end of this year we may see another crazy bubble.

Enjoy the ride!

12 Graphs That Show Just How Early The Cryptocurrency Market Is

Source: https://medium.com/@mccannatron/12-g...s-653a4b8b2720

I was going to copy/paste this article here, but its too much work to make all the charts show up properly, so just click the link and read it.

[touchring]

Re: Time to look into gold?

I think in 3 years, the following cryptos will still be around and worth more than they are today: Bitcoin (or Bitcoin Cash, not sure which - perhaps both), Ethereum, EOS, Cardano, Tezos (Symbol: XTZ - not yet listed ETA this summer), Dash and Monero.

Unless the West bans cryptos like China does, I've no doubt that cryptos will still be around in 3 years or 10 years.

People have been trading gaming cards for like more than 30 years. Even today, when 99% of games are online, people still play card games and game cards still got value.

Humans all like to gamble, especially East Asians, no surprise that bitcoin took off in China, Korea and Japan (of course China now bans it).