gold equity investors: tossed in the towel yet?

[BrianL]

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

So where does the 'gold is what to hold during a recession' talk come from? Is gold only worth holding to preserve value during hyperinflation?

Does anyone have numbers on the value of gold through the Venezuelan crash? That seems to be a common link on the topic.

[tsikRNA]

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

Chart with recession bars here: http://mises.org/content/nofed/chart.aspx?series=TMS

I used Kitco charts. I can't embed them here. But if you search the Kitco charts for the years of the recession bars in the Mises charts( or the FEDS), and overlay them, from what I saw, gold dropped in every recession. It wasn't until AFTER the recession ended(in most cases), by whoever defined it, did gold regain it's loss and then move upward again in a noticeable trend.

Although the FED is now inflating again. See: http://research.stlouisfed.org/fred2/fredgraph?&chart_type=line&graph_id=0&category_id=&recession_bars=On&width=800&height=480&bgcolor=%23B3CDE7&txtcolor=%23000000&preserve_ratio=true&&s_1=1&s[1][id]=AMBNS&s[1][transformation]=lin&s[1][scale]=Left&s[1][range]=Custom&s[1][cosd]=2008-02-01&s[1][coed]=2008-07-01&s[1][line_color]=%230000FF

Revised by BOG: http://research.stlouisfed.org/fred2...GAMBNS?cid=124

I'm not sayin' the USA fundementals have improved at all. And I'm not sayin' the FED isn't going inflate like hell either. I'm just looking at the charts for historic trends.

----------
1969 to early 1972; Gold didn't do much of anything. But this was also the depegging period.

Late 73 to mid 1975: Gold does gain a decent amount. But drops significantly in late 1975 all through 1976.

++ I don't think you can count the early 70's because gold was now not tied to currency. This is a new situation. Gold was becoming a traded commodity now. There is no comparable situation today to predict movement. Also, in 1974 the public could own gold again.+++

1980 to late 1980: Huge spike in the beginning for about a month. A big drop. Then sideays. Then a big drop for a few months. Then back to previous level.

1981 to late 1982: 690 range down to 300 range. Then up somewhat jaggedly for about a year. Then a big slope down again:

1990 to 1991: 420's down to 340"s mid year. Back up to 410 later in 1990: Then heavily turbulent slope down to 330 range from 1991 to 93. Around a 20% loss. Maybe not heavy by todays standards. But gold was also not swinging like it has over the last few years. A big spike to previous level mid 93, then floating 370 to 390 for a year.

2000 - 2001: Gold dipped a little in the beginning. 275 to 255. A spike mid year and late year roughly the same 20 dollar amount. Gold is relatively stable this recession. But it was also said that this recession was hardly felt.

So, the 80's were a big drop. The rest were mostly down with a few short but noticeable spikes thrown in that mostly fell back down. Maybe I mispoke by saying HUGE drop. But acording to the charts, it was mostly down until after the recession in most cases.

Maybe our charts are different. But that's what I'm seeing looking at them.

As I write this gold is up in the overnight Asian market (as usual). We will see what it's like when NY opens and I wake up later.

[phirang]

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

Chart with recession bars here: http://mises.org/content/nofed/chart.aspx?series=TMS

I used Kitco charts. I can't embed them here. But if you search the Kitco charts for the years of the recession bars in the Mises charts( or the FEDS), and overlay them, from what I saw, gold dropped in every recession. It wasn't until AFTER the recession ended(in most cases), by whoever defined it, did gold regain it's loss and then move upward again in a noticeable trend.

Although the FED is now inflating again. See: http://research.stlouisfed.org/fred2/fredgraph?&chart_type=line&graph_id=0&category_id=&recession_bars=On&width=800&height=480&bgcolor=%23B3CDE7&txtcolor=%23000000&preserve_ratio=true&&s_1=1&s[1][id]=AMBNS&s[1][transformation]=lin&s[1][scale]=Left&s[1][range]=Custom&s[1][cosd]=2008-02-01&s[1][coed]=2008-07-01&s[1][line_color]=%230000FF

Revised by BOG: http://research.stlouisfed.org/fred2...GAMBNS?cid=124

I'm not sayin' the USA fundementals have improved at all. And I'm not sayin' the FED isn't going inflate like hell either. I'm just looking at the charts for historic trends.

----------
1969 to early 1972; Gold didn't do much of anything. But this was also the depegging period.

Late 73 to mid 1975: Gold does gain a decent amount. But drops significantly in late 1975 all through 1976.

++ I don't think you can count the early 70's because gold was now not tied to currency. This is a new situation. Gold was becoming a traded commodity now. There is no comparable situation today to predict movement. Also, in 1974 the public could own gold again.+++

1980 to late 1980: Huge spike in the beginning for about a month. A big drop. Then sideays. Then a big drop for a few months. Then back to previous level.

1981 to late 1982: 690 range down to 300 range. Then up somewhat jaggedly for about a year. Then a big slope down again:

1990 to 1991: 420's down to 340"s mid year. Back up to 410 later in 1990: Then heavily turbulent slope down to 330 range from 1991 to 93. Around a 20% loss. Maybe not heavy by todays standards. But gold was also not swinging like it has over the last few years. A big spike to previous level mid 93, then floating 370 to 390 for a year.

2000 - 2001: Gold dipped a little in the beginning. 275 to 255. A spike mid year and late year roughly the same 20 dollar amount. Gold is relatively stable this recession. But it was also said that this recession was hardly felt.

So, the 80's were a big drop. The rest were mostly down with a few short but noticeable spikes thrown in that mostly fell back down. Maybe I mispoke by saying HUGE drop. But acording to the charts, it was mostly down until after the recession in most cases.

Maybe our charts are different. But that's what I'm seeing looking at them.

As I write this gold is up in the overnight Asian market (as usual). We will see what it's like when NY opens and I wake up later.

You realize that the US gov will have to backstop probably $1-2T worth of mortgages in this country(I assume a bit over 10% of mortgages)? If the US DOES NOT, the Empire will literally collapse overnight.

Ironically, because we are a net-debtor nation, the collapse of our collateral will devalue our dollar as there's a flight to quality, and that flight won't be to US cash!!!

If the US does backstop mortgages for $1-2T, that's a 10%+ increase in the debt ceiling and hence a dilution.

In conclusion, we get to choose between hyper-inflation and graduated inflation.

[grapejelly]

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

Past recessionary periods in the 1970s and 1980s were different from today because the debt levels today are at historic highs. They weren't then.

It is difficult to see any way out of the debt other than currency depreciation today. And that is bullish for gold.

[tsikRNA]

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

Past recessionary periods in the 1970s and 1980s were different from today because the debt levels today are at historic highs. They weren't then.

It is difficult to see any way out of the debt other than currency depreciation today. And that is bullish for gold.

Bullish long term, yes. I'm talking recession only. I'm talking only what is going to happen over the next 2 or 3 years. People buy gold for holding value. To hedge or evade currency debasement. Gold is not useful for anything else. One oz. of gold will always be 1 oz. of gold. Gold does not change value. The US dollar does.

We have had high debt levels since Bretton Woods died. Without the gold peg there was nothing holding back any nation from inflating the currency as they please. That was the start of the credit boom, nationally and globally.

[grapejelly]

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

another horrendous day with the HUI and XAU. Bullion down US$32. Feels like a panic bottom to me...an extraordinary sequence of daily down moves similar to the one a year ago and the one a year before that

[Guest]

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

another horrendous day with the HUI and XAU. Bullion down US$32. Feels like a panic bottom to me...an extraordinary sequence of daily down moves similar to the one a year ago and the one a year before that

Grapejelly - there are also reasons to be cautious about this particular downturn. May be deeper than the others. My sense is we'd best steel ourselves for more pain to come here, although the proximity to the fall seasonals should help to put a floor under this in another few weeks.

[grapejelly]

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

Grapejelly - there are also reasons to be cautious about this particular downturn. May be deeper than the others. My sense is we'd best steel ourselves for more pain to come here, although the proximity to the fall seasonals should help to put a floor under this in another few weeks.

yeah, well, I don't see it that way.

I see it as just a routine panic that happens in this market about once every year.

I remember when the huge upswing in bullion in 2007 started just this way, with a panicked crash in prices...not dissimilar to today at all.

All I see is inflation as far as the eye can see. $15 silver? You freakin' kiddin' me? Snap it up. I would snap up as much as I could...

[Guest]

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

yeah, well, I don't see it that way. I see it as just a routine panic that happens in this market about once every year. ... All I see is inflation as far as the eye can see. $15 silver? You freakin' kiddin' me? ...

May you, and the redoubtable EJ be everlastingly correct at this juncture! I will gladly play page to you valiant knights, as you sally forth to battle that bad looking darth-vader-like black-metal-jacketed character standing on the narrow bridge blocking our way forward. There seem to be a lot of rotting heads and limbs lying around him on the ground. I've got some "other sources" mumbling about a possible dive in gold down into the mid 600's. Spoke to the Bartos last night and sent him some charts from this other source, but he's being his usual sphinx-like enigmatic self here. I'm thinking, $650 gold, $12.00 silver would all meet down around in there. It ain't the end of the world, but it sure as heck wouldn't be an ordinary correction either in that eventuality.

[Jim Nickerson]

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

Here's an 8-year chart on $GOLD http://stockcharts.com/h-sc/ui?s=$GO...678&a=85010109 with a 325-day moving average. There is nothing I know magical about that average, but since the latter part of 2002 it has served as a "stopping place" for corrections in GOLD. As of the close 8/11/08 the 325 DMA was at 814.13, As I write, spot is at 806.7 and the Dec futures at 811.20. So either there will be a bounce in here or what might turn into the first significant penetration of the 325 DMA. However it turns out, the previous "touches" of the 325 DMA seem to me to have taken some months before the uptrend has continued with much vigor, April 2003 apparently being an exception.

[we_are_toast]

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

The 2006 correction was 23%, this correction is about 20%.
You can argue about the legitimacy of technical analysis. Which moving average should you use? Was it a cup, fan, double top formation? Are we in a major C wave of a D down wave? And I know a fractal analyst who is saying 650, but he also said 890 would be the bottom. Pick your poison.

Why are we having this correction? Investors are realizing other countries are in as bad a shape as we're in. Jumping from one sinking ship to another sinking ship doesn't seem like much of a solution to me.

When the U.S. government announces a plan to stop running deficits and figures out a way to pay off the 10.5 trillion debt without hyper-inflating, and proposes a solution to Americas addiction to fossil fuels, then I'll start selling my gold. What are we seeing today? A record deficit, and the utter stupidity of drilling offshore as a solution to oil imports.

I bought gold yesterday, and I'll continue to average down. I'm in it for the long haul (12-36 months) and I know the yellow metal takes lots of patience.

[Guest]

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

I bought gold yesterday, and I'll continue to average down. I'm in it for the long haul (12-36 months) and I know the yellow metal takes lots of patience.

12-36 months is the long haul? No. 36 months is the short haul. The long haul in a gold bull market is 10-15 years. If you have expectations from owning gold in the 36 month range, better get used to thinking of that as short term, with all the twists, turns and beautiful or ugly surprises that may entail. And 12 months is the ultrashort haul.

[grapejelly]

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

Brian Pretti ran a piece in his private letter that I thought illuminated.

He pointed out the possibility that banks are publicly known as tightening all lending on credit cards and mortgages. Why shouldn't they be doing the same with the hedgies, tightening up their credit to them?

And the big story of institutional and hedge fund investing has been the "perfect portfolio" chock full of energy, precious metals and commodities...so as usual the market makes "everyone" an idiot. Lending drains from the system, and so prices crash. Duh.

[LargoWinch]

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

I'm in it for the long haul (12-36 months) and I know the yellow metal takes lots of patience.

Toast; I would call that short to medium term.

You seem very bullish on PMs like alot of iTulipers and for good reasons. One advice: I would hold my bullion for much longer. Who cares if it goes down 25% today? In the end, we are looking at $2,000+ gold (conservative estimate here).

I think at this stage less than 0.1% of the populace thinks of gold as an investment. Can you imagine if only 5% of the world decide to buy gold as an investment? Or god forbid, Central Banks start buying gold?

I think gold will really shine over the next 5-15 years; once its takes off Oprah will be talking about it.

[c1ue]

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

Just keep in mind if gold does hit $2000+, everything else dollar denominated you own will have been trashed by a proportionate amount.

This is why I am still unconvinced of gold as the best investment - because you don't gain more than the dollar loses.

Unless you put all your net worth into gold, you're still just losing less than your fellow Americans.

That's worth something, but not ideal.