gold equity investors: tossed in the towel yet?

[we_are_toast]

Re: gold equity investors: tossed in the towel yet?

Hope you don't mind someone new jumping in on this.

I'm with Lukester on this one.

I've been adding to my PM positions all the way down.

To Peak Oil you can add about a dozen Peak (name your strategic mineral), Peak Ocean fisheries, Peak grain crops, even Peak water in some places.

Until people start to realize we live on an overpopulated planet with decreasing finite resources, I'll keep buying on dips of energy and PM's.

Then there's the U.S. economy and dollar. Another record deficit! The National debt and the deficit are so overwhelming that some day foreign investors are going to realize that the U.S. simply can't pay them back without hyper inflating. There goes the dollar.

Fannie and Freddie will certainly get nationalized, the 90 banks the FDIC are watching is a joke and will grow into the hundreds, more new ARMS about to reset which will mean more foreclosures, the 500B in bank writeoffs will grow to 1.5T, prime loans, commercials, and credit cards are coming up soon, the highly leveraged hedgers are a monster in the closet, and the list goes on and on.

The Fundamentals for PM's are getting stronger! If you're ready to through in the towel, let me know, I'll gladly buy your gold. The sad fact is, I anticipate making a very good profit in PM's, but the world we're going to be in when I cash in, isn't going to be pretty.

[GRG55]

Re: gold equity investors: tossed in the towel yet?

incredible carnage in this market today...I think we are at a bottom. I know my sentiment couldn't get much lower...

Just when you thought it was safe...

[metalman]

Re: gold equity investors: tossed in the towel yet?

incredible carnage in this market today...I think we are at a bottom. I know my sentiment couldn't get much lower...

the big spike in gold happened this time last year when the credit crisis hit. now that the 'all clear' has been sounded, gold is tanking. no big surprise.

don't forget, tho, that we're at the bottom of the 3rd inning.

[sn1p3r]

Re: gold equity investors: tossed in the towel yet?

I agree with the phys PM holdings and as for 28% tax on it, somehow I think when I need it will be for barter and not something on an income tax statement...

[sishya]

Re: gold equity investors: tossed in the towel yet?

Everyone is forgetting something important. Equity shares are taxed at 15%, while physical gold is taxed at 28%.

This may be the official line, but I have used Gold to profit in many ways.
No need to pay any tax for Gold price appreciation.

1) I have bought physical Gold from kitco.com and taken it out of country and converted to Gold Jewels, which I had to buy anyway. So in effect I started buying Gold from $270/oz all the way to 877/oz. I just exchange this 24KT Gold for 22KT Gold Jewelery at a later date and don't pay any taxes. Foreign Jewelllers also give cash for Gold.

2) you can buy gold using cash from most Indian Jewelery stores in USA. They sell it at Market Price + 2% for insurance,conversion etc(or $15 max ). They buy it at market price also and pay cash. No transaction reported. Kitco.com also does not report any purchase to IRS. This is possible because Gold is very liquid. There is no way to track whether it is sold or taken out of country or converted to Jewelery.

[Jim Nickerson]

Re: gold equity investors: tossed in the towel yet?

This may be the official line, but I have used Gold to profit in many ways.
No need to pay any tax for Gold price appreciation.

1) I have bought physical Gold from kitco.com and taken it out of country and converted to Gold Jewels, which I had to buy anyway. So in effect I started buying Gold from $270/oz all the way to 877/oz. I just exchange this 24KT Gold for 22KT Gold Jewelery at a later date and don't pay any taxes. Foreign Jewelllers also give cash for Gold.

2) you can buy gold using cash from most Indian Jewelery stores in USA. They sell it at Market Price + 2% for insurance,conversion etc(or $15 max ). They buy it at market price also and pay cash. No transaction reported. Kitco.com also does not report any purchase to IRS. This is possible because Gold is very liquid. There is no way to track whether it is sold or taken out of country or converted to Jewelery.

I think this was discussed long ago on iTulip, and you may be correct that Kitco, and perhaps all other companies, do not report to the IRS when individuals purchase gold, but that is not to say that when Kitco or others buy your gold that their purchases are not reported.

A few weeks back I sold some gold coins along with some scrap gold to a local coin dealer. I had to fill out a form that was to be sent to the local police department regarding the scrap gold which included my address and car tag number but not my SSN. I don't recollect the dealer collecting any other information on me, but he did write me a check, so he had my name.

One thing about screwing with the IRS is that there is no statute of limitations on failure to declare income. It isn't the same as screwing with questionable deductions which if not challenged become null three years after filing.

Perhaps Brooks Gracie can comment.

[Sellnrun]

Re: gold equity investors: tossed in the towel yet?

I have tossed in the towel only to the extent my equity short have squeezed me from my gold longs...I fail to see this parabolic rise in the dollar lasting. It has come too far too fast...but I'm nervous...

[tsikRNA]

Re: gold equity investors: tossed in the towel yet?

My analysis has been that gold will go down 30 to 50 percent. I compared gold prices during all the recessions. In every one, gold goes down heavily. During a recession banks are trying to restock their base money. They aren't lending. Gold doesn't go back up until after the recession when the effects of inflation, well after the banks started mass lending again, are more apparent in the economy because price inflation is a lagging indicator. If gold is a hedge on inflation and a store of value, this would make sense. People are going for stability in a recession. They will go for something like government bonds. All the money going into balance sheets right now isn't going back out into the general economy. Plus, India is not buying gold at all. The whole G7 is going into recession. There will be a ton of mass inflation later, but right now, it's not happening. My intent is to sell off most of my holdings right now, even at a loss, and buy some more at the bottom or the exit of the recession. If the recession is an L-shaped one, it could be a long while before gold goes back up again.

The only bullish factor is geopolitical conflict. If the Iran situation goes pear shaped, gold and oil will spike over night. That will bring a hefty profit, but it's a gamble. No one knows what the powers that be are planning. It could be plan A is to try to bankrupt Iran like the US did to the USSR, and install a coup with inside revolutionaries( the Shah part 2). That could play out for a long while. Plan B could be attack or a false flag attack by Israel on a coalition partner in order to bring people into a mass conflict on Iran, or Syria, or Hamas... Who knows. My gut feeling is that I would have to hold onto gold for a good 2 or 3 years before it starts moving up in a trend again. That's what it did before. I, unfortunately, don't have a wide enough margin on what I bought to let it ride out longer and chance it. I think I'll go with Swiss currency for a little while and a small gold hedge to make up for my losses if we get a spike.

Would love to hear more input on where things are going. That's the best I have come up with.

[santafe2]

Re: gold equity investors: tossed in the towel yet?

My analysis has been that gold will go down 30 to 50 percent. I compared gold prices during all the recessions. In every one, gold goes down heavily.

Welcome to iTulip. Your analysis is incorrect. In the 73-75 recession, a time somewhat similar to today, gold moved up about 200%. I doubt we're in a phase where gold will move down too much more from here. The rest of your arguments appear to rely on this point so you may want to rethink them.

[tsikRNA]

Re: gold equity investors: tossed in the towel yet?

Welcome to iTulip. Your analysis is incorrect. In the 73-75 recession, a time somewhat similar to today, gold moved up about 200%. I doubt we're in a phase where gold will move down too much more from here. The rest of your arguments appear to rely on this point so you may want to rethink them.

That was also the end of Brenton Woods. That caused almost instantaneous inflation due to de-pegging to gold. There was also a shortage of gold due to the convertibility factor of the dollar and US monetary inflation(supply and demand). Also, in 75 it dropped significantly until rebounded to pre-drop level in mid 78. I don't see how that relates to now. Gold pegging is done and gone. There isn't monetary inflation right now. It's deflation of assets and tight money(low credit). Whatever is going to the banks is not going back out as loans. If anything, I see it closer to the S&L crisis/80's than the 70's. A lot closer to our 80's & 90's Japan in actuality. The only thing close to the 70's would be the war situation in my view. The oil situation is not the same.

If I'm wrong, list specifically why. Facts.

[tsikRNA]

Re: gold equity investors: tossed in the towel yet?

I think this was discussed long ago on iTulip, and you may be correct that Kitco, and perhaps all other companies, do not report to the IRS when individuals purchase gold, but that is not to say that when Kitco or others buy your gold that their purchases are not reported.

Go read through FinCEN's website. You'll see that any gold dealer is treated like a bank and also falls under "know your customer laws". The only ones that escape are pawn brokers; but only up to a certain monetary amount. I can also attest that if you sell over, I think it's 15k in gold eagles or maples, the dealer has to fill out a form. Plus if you did a bank wire to pay or wrote a check, it's definately easily traceable. IRS tax court is also a court where you are guilty until proven innocent. It doesn't take jack for the IRS to levy your checking account either. One day it's there. The next you got a big wad of cash missing for back taxes.

[Shakespear]

Re: gold equity investors: tossed in the towel yet?

The trend seen in this graph is tied to geology

http://wolf.readinglitho.co.uk/chart...iscavproj.html

No one on Wall Street can change it and no technology on the horizon so FAR appears ready to revers it. So energy from HCarb. looks to continue to rise UNLESS demand is drastically reduced. However in that case driving back and forth between the subs will be done on something other than a Yucon or a Super RAM charger.

[phirang]

Re: gold equity investors: tossed in the towel yet?

That was also the end of Brenton Woods. That caused almost instantaneous inflation due to de-pegging to gold. There was also a shortage of gold due to the convertibility factor of the dollar and US monetary inflation(supply and demand). Also, in 75 it dropped significantly until rebounded to pre-drop level in mid 78. I don't see how that relates to now. Gold pegging is done and gone. There isn't monetary inflation right now. It's deflation of assets and tight money(low credit). Whatever is going to the banks is not going back out as loans. If anything, I see it closer to the S&L crisis/80's than the 70's. A lot closer to our 80's & 90's Japan in actuality. The only thing close to the 70's would be the war situation in my view. The oil situation is not the same.

If I'm wrong, list specifically why. Facts.

1) the fed cutting rates again when the US real economy enters the gutter
2) record federal deficit spending during a recession
3) record defaults in agnecy MBS', corporate debt, and consumber debt, wreaking havoc on the bond market(yes, extremely deflationary in principle, but see 4) )
4) massive bailouts of banks by FDIC, bank closures, etc
5) huge flight to quality, but then
6) federal gov becomes the National Bank, and we become like japan/china/korea

[jk]

Re: gold equity investors: tossed in the towel yet?

in 1985 the dollar peaked, and it took the plaza accord to turn it down. doesn't seem like the problem we have today.

in the '80s commodities were early in a 20 year bear market. doesn't seem like the problem we have today.

in the 80's, interest rates were coming down from historic highs. doesn't seem like the problem we have today.

the '80's were a disinflationary boom time.

[santafe2]

Re: gold equity investors: tossed in the towel yet?

That was also the end of Brenton Woods. That caused almost instantaneous inflation due to de-pegging to gold. There was also a shortage of gold due to the convertibility factor of the dollar and US monetary inflation(supply and demand). Also, in 75 it dropped significantly until rebounded to pre-drop level in mid 78. I don't see how that relates to now. Gold pegging is done and gone. There isn't monetary inflation right now. It's deflation of assets and tight money(low credit). Whatever is going to the banks is not going back out as loans. If anything, I see it closer to the S&L crisis/80's than the 70's. A lot closer to our 80's & 90's Japan in actuality. The only thing close to the 70's would be the war situation in my view. The oil situation is not the same.

If I'm wrong, list specifically why. Facts.

Let's backtrack for a moment before I start this post. In my last post I was correcting your statement that gold goes down in recessions. See your statement below:

I compared gold prices during all the recessions. In every one, gold goes down heavily.

Instead of simply agreeing you were wrong, we get an excuse for the most obvious incorrect period and a follow-on contention regarding how gold dropped in price after the recession ended. That's nice to know but it has nothing to do with your argument.

For reference, I'm using the following for recession start and end points:
http://www.nber.org/cycles.html
You'll notice that each period contains an extra month. This is because the first month is the peak from the last cycle, so we'll ignore the peak month and start with the first down cycle month. As an example, the 1980 recession would start on February 1. As a point of interest, the last peak month can be used as a start date, but the outcome is even less compelling.

The next recession after 73-75 is in 1980 and lasted 6 months from January-July. During that time gold moved from ~$670-~$620. Gold did move down in the recession cycle but this price movement for gold is not statistically meaningful. I doubt anyone on the board familiar with gold movement would characterize this as "heavily" down.

During the next recession, July81-Nov82, the price of gold moved from ~$425-~$445. Up, but again, not meaningful. What we do see is that gold moved down between recessions as the economy was expanding, not contracting. This makes much more sense to me. That after a recession ends, money will move out of gold and into other areas.

During the next recession, July90-March91, the price of gold moved from ~$370-~$358. Again, nothing worth reporting unless one were interested in trading during this recession as gold spent most of this time much higher than its $370 starting price.

Finally, Mar01-Nov01. Gold moved from ~$258-~$274. Same story, gold made no significant move during the recession.

You say your "analysis" is that gold will go down 30-50%. I assume that's your conclusion based on your analysis of gold's action during recessions. Since that is apparently incorrect, you may want to take corrective action if you're investing based on this point of view.