Gold Investors Exit Amid Price Collapse

[Dusty]

Could this be a sure sign of economic recovery?

http://abcnews.go.com/blogs/business/2013/04/gold-investors-exit-amid-price-collapse/

The biggest story on global financial markets today is the collapse of gold and silver prices. Gold is down more than $90 an ounce since Friday – a fall of about 7 percent. The price drop comes on top of last week’s 4.7 percent tumble. Silver prices tumbled 8 percent, or $24 an ounce. Copper is also falling. The reasons for the plunge are linked to the recent rise in the stock market, the slow, steady improvement of the US economy and the recent strength of the dollar. Crude oil futures have tumbled on global markets, down to less than $89 for West Texas crude, the lowest price since December, 2012. For years gold bugs have predicted economic apocalypse with hyper-inflation and a collapse of stock prices. That simply hasn’t happened, and many investors have given up on gold, shifting funds out of precious metals. Last week Goldman Sachs issued a report, predicting gold prices would tumble. More volatility is expected in the days to come.

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[Flagg]

Could this be a sure sign of economic recovery?



I seriously, seriously doubt it.

Oil has been falling a bit as well....albeit not as much as gold.

Gold has had a pretty good relationship with oil since about 98-99, I don't see that changing anytime soon.

Neither can be digitally reproduced.

We die without oil(or at least a lot of people would), and central banks would die without their gold(if not now, then sometime over the remainder of this decade).

The people I feel bad for are Cypriots......it looks like Cyprus is under enormous pressure to liquidate it's gold AFTER a price haircut of 20%.

But at least it's not as bad as the UK, where Exchequer and PM Gordon Brown liquidated all of the UK's gold at the rock bottom price of about $270-290, then played a major role in why the price of gold has since exploded.

Just my anecdotal and biased(I like gold because it's the least bad option) opinion.

[The Reaper]

It will be back up in the near future.

The Treasury's printing presses will make it happen.

TR

[Roguish Lawyer]

It will be back up in the near future.

The Treasury's printing presses will make it happen.

TR

Agreed. If I sell any of my holdings, it will be to pay the higher taxes now being imposed on me. :mad:

[GratefulCitizen]

There are people who make a living buying and selling things.
They have to be good at it or they're no longer making a living at it.

A decade ago, some of these people were willing to pay good money to advertise that they would like to buy your gold from you (jewelry and whatnot).
They got in on the bottom, so it seems like the money spent on advertising wasn't a waste.

In recent years, some of these people have been willing to pay good money to advertise that they would like to sell you some of their gold.
Seems like an unwise investment to pay for advertising to sell something that will be worth more later.

My inclination would be to buy when they're paying money to advertise that they want to buy, and sell when they're paying money to advertise that they want to sell.

[GratefulCitizen]

Interesting chart concerning gold prices.
Gold is just another commodity.

Source: http://scottgrannis.blogspot.com/

[Paslode]

That might depend on the type of investor(s) and why they are selling.

Rumor has it that Paper Gold holdings (EFT's I believe they are called) have been issued exceeds the amount of physical gold available in the neighborhood of 4 to 1. Paper Gold is no different that printing Fiat US Currency....you are creating a supply out of thin air.

With that much differential people and firms play the long and short game with EFT's which could (they do) manipulate the price of physical gold +/-. In addition if you are in the long/short game as with playing with margin...if you don't hit your number you may have to liquidate to make up the difference.

There is also gold leasing where in the big banks lease gold to each other which appears to be little more than a shell game.....Germany recently demanded return all of the 374 tons of gold from the US, and for what ever reason that will take 7 years to accomplish.

Gov. Perry and some in the Texas legislature want to bring the roughly $1 billion worth gold held by the state university system’s investment fund onto Texas soil, rather than in its current resting pace in a vault in New York.

If the Big Players can manipulate the price down they can buy and sell at the price point of their choosing.


Dusty, one question to ask yourself is what happens if or when people start cashing in those EFT's for delivery of physical gold.....simple supply and demand says alot of people are going to get screwed MF Global Style on a far grander scale.


With each and every QE Bernanke Bucks is becoming little more than toilet paper, if I had physical gold and/or silver I would hold hard.

[The Reaper]

Go out and try and buy gold or silver for near spot these days.

See what the street price is on an American Eagle.

No one I have seen is selling at these prices.

TR

[koz]

Look at Texas Precious Metals. They're pretty close - Gold Eagle is $1285. Maple Leaf is $1275.

[Destrier]

Go out and try and buy gold or silver for near spot these days.

See what the street price is on an American Eagle.

No one I have seen is selling at these prices.

TR

I was out trying to pick up 40 ounces of so of silver a couple months ago, I called my local coin shop that I have used in the past, he wanted, spot value plus 6 dollars for one ounce bullion coins. A few years ago it was a 2 dollars over spot from same guy. His reasoning was because many people in Rochester want one ounce bullion coins. Of course he would only buy my bullion at 2 dollars under spot.

[Paslode]

Two links from Zero Hedge on Gold.....

JP Morgan Vault Gold Drops To New Record Low; Brinks Gold Plunges By 24% In One Day

http://www.zerohedge.com/news/2013-07-06/jp-morgan-vault-gold-drops-new-record-low-brinks-gold-plunges-24-one-day




3. CHINA'S GOLD RESERVES



"China increases its gold reserves in order to kill two birds with one stone"



"The China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao)(04/28): "According to China's National Foreign Exchanges Administration China's gold reserves have recently increased. Currently, the majority of its gold reserves have been located in the U.S. and European countries. The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold's function as an international reserve currency. They don't want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar's role as the international reserve currency. China's increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB."


http://www.zerohedge.com/news/2013-07-06/china-radio-us-and-europe-have-always-suppressed-rising-price-gold

[Surf n Turf]

Could this be a sure sign of economic recovery?


Dusty,
The folks exiting from gold (probably “paper gold”, ETF gold) are looking at gold the wrong way. You could fill a library with books written (both pro or con) to owning Gold / Silver, but keep the following in mind: *

Gold isn't an investment. Gold doesn't pay interest or a dividend. It doesn't have profit margins. You can't price it based on earnings per ounce. Gold is a storehouse of wealth, a proven method of passing savings to the next generation, or as a shield against tyranny. The purpose of gold is not to provide growth, but rather, to protect one’s purchasing power. Historically, gold’s ability to offer this protection is unrivaled.

Gold is money. It's a real, hold-in-your-hand form of wealth. Gold has been used for money for thousands of years because you can conceal it, it's easily divisible, it's easily transportable, it has intrinsic value, it's durable, and its form is consistent around the world. it's a good form of money because governments can't print it up on a whim, like paper currency, nor can they tax it, if they don’t know about it.:D

The common criticism levied at gold -- that it just sits there and returns nothing -- is certainly true, but that’s also its greatest advantage. An ounce of gold today will be an ounce of gold in five years, 10 years, or 100 years from now. The same can't be said for the value of a dollar, the stock of a company, or the value of a piece of real estate. While gold doesn’t produce anything, it doesn’t carry the risks of other investments. Its price can be volatile over short periods of time, but over the very long haul, it holds its value better than any other asset.

Paper money efficiently facilitate commerce by acting as a medium of exchange that is far preferable to bartering — just like silver and gold do — but their value is based purely on faith. Of course, the biggest downside to government currencies is that they can be created out of thin air with impunity, as the Federal Reserve has been doing to the US dollar lately with alarming frequency. :eek:

Over time, excessive money printing greatly diminishes the value of the currency and the resulting effects can be seen via price inflation. If things get too out of hand, then faith in the currency begins to wane and hyperinflation rears its ugly head, which may lead to the death of the currency and a painful economic collapse.

That’s my story, and I’m stickin’ to it
SnT

*quotes from various articles