Buying in to Gold

the_ash_and_the_oak

tldr but feeling gold is at £600+ now and was at £250 when this guy made his post imo

DiggerUK

MikeOrange7, started this thread in December 2004.
The London Fix for gold on that day, was an average of 229 sterling between am and pm fix.
I hope you put your 500 pound into gold Mike, as I post it is averaging 605 per ounce.

What should be studied is the debate between then and now. Particularly for those who are considering investing in gold.

The arguments for and against gold haven't changed all that much since 2004. Which do you think are the most persuasive ?

If MikeOrange7 is about would you let us know what you did with your 500 quid.

sabretoothtigger

It'd be 1320 today, some emerging market funds would have returned similar afaik or he could have put it into barclays shares in march :laugh:

Thing is its gone up mostly because of speculation not through loss of value in the currency. 500 pounds is not worth less then half now afaik

The 'store of value' story becomes relevant if paper money is not honoured, and when was the last time that happened in a developed economy?

Happens every year because of inflation afaik. You get back 2% less then you should, etc

But 2% isnt much and easily countered by a savings account or even a more involved invesment. There should be better investments then gold somewhere in the world in some currency.
Indian stock exchange rose 17% today and gold fell again so it has to be a hedge only I think

DiggerUK

Sabretothtigger,
Speculators who are having difficulties turning a quick profit in equities will have had an effect on the upward price of gold. To what extent this has "bubbled" the price of gold is hard to determine. I suspect that if the equities rally continues gold will be sold to go back into the market.

Your claim that it has nothing to do with the devaluation of currencies isn't so sound.
The pound was at 2 dollars a year ago, it is round $1.50 today, a depreciation of 25%.
Don't forget inflation has nothing to do with price fluctuations, it's the real worth of a currency that is the measure of inflation.
To that extent the value of gold in sterling is nothing the bugs should get excited about. The 600 pound an ounce today, still represents 500 pound an ounce before the pounds devaluation in real terms.

My gold was bought to preserve what I've got, as far as I'm concerned it's done just that.

sabretoothtigger

I didnt say nothing to do,

up mostly because of speculation

obviously it has a direct connection to currency value much like any exchange rate
but the rise has far exceeded the fall in the british currency so might the fallback be largely unconnected

We might do better to chart gld against the vix volatility


Depends when you bought at what price but you are probably right to hold right now just not sure about buying exactly

DiggerUK

S.T.T.
"not sure about buying" you got that one right, it's burning a hole in our heads here at the moment.

The market rally don't seem to have had a great downward force on pog, today it had a big drop which could have something to do with money going into the Indian market, maybe not. The Indian jewelry market has been slow with people reluctant to buy for a few months now. Been trying to find out info on what is happening in Indian gold market, no real luck. The Rupee has gained against other currencies which would have stimulated purchasing because of the price drops, but it's all a big mystery at the moment.
The Indian rally could just be a "big" dead cat bounce after the election, which seems to have gone down quite well.

A number of people are talking about drops to 850US, but who in their right mind thinks there is any foundation to this rally, we can't see anything but sand.

Our average price per ounce, all costs included to date, is just shy of 532, buying now would put that up. We are holding out for drops at the moment.

PS what is "vix volatility"

tradetime

PS what is "vix volatility"

Chicago Board of Options Exchange Volatility Index, ticker symbol $VIX (varies depending on the data vendor) also called the "fear index" It measures the implied volatility of the S&P500 index options it uses some sort of mathematical formula (sorry over my head) to calculate volatility as implied by the prices of the front two months put and call prices for S&P500 Index options, the theory is to plot the expected volatility over the next 30 days. The more fear there is in the market, the higher the premium (price) demanded by option writers.

Here's a link probably explains it an awful lot better than me
http://vixandmore.blogspot.com/2008/04/ten-things-everyone-should-know-about.html

DiggerUK

Tradetime,
I prefer your explanation. It's readable.

Now where's my tea leaves gone!!!

sabretoothtigger

I thought the fear element might have shown a pattern to gold but not really, vix and options are weird stuff

GLD roughly rose with vix and GDX seems to mirror it


The rupee being stronger is a reason indians would not need gold so much I reckon.
If it provides security to them, a general increase in prosperity would see less use for them
If they start buying again I'd see this as leading indicator possibly

I dont see the indian market as a bull trap or fakeout exactly. They are a long term buy, they could halve from here and imo that'd continue to be true most likely

http://www.investopedia.com/terms/f/fakeout.asp



Rupees to the pound, recently uk has recovered 5% after a 20% drop since Sept

Summary


Since 2005, GLD has risen 120% and indian markets about 80%

DiggerUK

Just gone under 600 an ounce.
Hold out or buy.
We are into our second bottle of wine.

HELP