Gold price to go steady, dips imminent?

IronWolf

Oh I wouldn't want to guess what the price of gold will do, as I have no idea, which is the main reason I don't want to speculate in it. The price is mainly driven by fear at the moment, and I've no idea when people will calm down, but the risk is they do and then the price comes down.

To me it looks like if you aren't in gold at the moment, then theres a big risk you've already missed the boat. I don't get what more can happen to make people more afraid than they already are.

DiggerUK

dqnet wrote: »

but wouldn't now be a good time to sell, before the price starts to dip again...???

If you have a use for the cash, then yes, this time period is an opportune moment to consider selling. If not, what's the point.

Geoff23 wrote: »

A lot of people keep talking about gold dipping again. Most of those people are would-be buyers, hoping it will......

Yea, like here at Digger Mansions 1. With DM1 on the market, and the prospect of a goodly sum to spend, we gotta hope we nab a bargain. But if no dip when time comes, still planning to buy. Then it is semi retirement, then permanent retirement. (Filling our boots before retiring, was not considered optional)

Still see no Black Swan, but firmly believe that this price run is down to printy printy debasement of money, rotting the paper some more. But lets check again manana. As for my dip prediction, well.....the pie is in the cool box and will be defrosted by the time I get to DM2. Will text Mrs.D. to put oven on for when I arrive.

Off to do some more work on DM2 this weekend, talk nice to each other.
..._

Geoff23

IronWolf wrote: »

Oh I wouldn't want to guess what the price of gold will do, as I have no idea, which is the main reason I don't want to speculate in it. The price is mainly driven by fear at the moment, and I've no idea when people will calm down, but the risk is they do and then the price comes down.

So you see the most important risk, when thinking about gold, is that all the problems I mentioned in my last post are going to go away and people will calm down?

That leaves a pretty simply choice then. It depends which risk people think is greater - the risks I outlined in my last post or the risk that these risks will go away in the forseeable future.

I certainly agree that if they were to go away then the price of gold would fall. I'm just having trouble figuring out how they can go away. The politicians seem to be having the same problem.

To me it looks like if you aren't in gold at the moment, then theres a big risk you've already missed the boat.

I can understand exactly how it could look like that. I can imagine somebody having bought a load of gold sovereigns in 2005 for fifty quid each and now they are seeing them on sale for six times that price. It is natural to be apprehensive about having missed the boat if you think about it like that, but it all rather depends on how far that boat is going to travel in the future. It may turn out that in 2005 gold was seriously undervalued and that it is yet to reach a fair price.

I don't get what more can happen to make people more afraid than they already are.

Lots of things could happen which would make people much more afraid.

An announcement of QE3 from the Fed would be one example from the near future, but even that is small bananas compared some other things that could happen.

There could be a run on the European banks, followed by a breakup of the eurozone because the Germans can't come to an agreement with the rest of the zone on how to recapitalise those banks.

There could be a TARP-like European project (effectively massive money-printing by the ECB), which would have a similar effect to an announcement of QE3.

There could be a cascade-effect failure in the credit default swap market.

There could be a mass-panic caused by people demanding delivery of physical gold and silver from organisations/funds which have pledged to back up "paper bullion" with many multiples of the actual amount of physical bullion they hold, leading to a rapid divergence between the value of paper bullion and the price you actually have to pay for physical metal.

The most important facts are that gold is freely (and instantly) tradable all over the world, and that the overwhelming majority of both private investors and professional money-managers hold very little gold, and almost no actual physical metal. If this remains the case, a lot of those people face a very real prospect of being totally wiped out and the only insurance policy against this happening is to convert fiat currency and assets denominated in fiat currency into physical assets of one sort or another, the most attractive of which are land (especially farmland) and precious metals.

dqnet

DiggerUK wrote: »

If you have a use for the cash, then yes, this time period is an opportune moment to consider selling. If not, what's the point.


Yea, like here at Digger Mansions 1. With DM1 on the market, and the prospect of a goodly sum to spend, we gotta hope we nab a bargain. But if no dip when time comes, still planning to buy. Then it is semi retirement, then permanent retirement. (Filling our boots before retiring, was not considered optional)

Still see no Black Swan, but firmly believe that this price run is down to printy printy debasement of money, rotting the paper some more. But lets check again manana. As for my dip prediction, well.....the pie is in the cool box and will be defrosted by the time I get to DM2. Will text Mrs.D. to put oven on for when I arrive.

Off to do some more work on DM2 this weekend, talk nice to each other.
..._

I have no real reason to sell it but it was just one of those things.. Why not bank the cash, wait till the price drops again and buy it and do the same thing over??

Geoff23

dqnet wrote: »

I have no real reason to sell it but it was just one of those things.. Why not bank the cash, wait till the price drops again and buy it and do the same thing over??

If you think the price is going to drop again (enough to cover the losses incurred during the transactions) then indeed why not.

I hope it does, but I don't think it is going to.

Ark_Welder

Geoff23 wrote: »

What circumstances can you imagine where the price of gold passes a top and starts a long path downwards?

When The Herd determine that better returns are in prospect elsewhere.

Geoff23 wrote: »

(a) Fear
(b)
(c) Fear
(d) Fear
(e) Fear
(f) Fear

Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.

Warren Buffett

Geoff23

Ark_Welder wrote: »

When The Herd determine that better returns are in prospect elsewhere.

But The Herd, most of them at least, don't actually own any gold.

The big "mania" for gold hasn't happened yet. You are suggesting that the conditions for the gold price falling will occur shortly after The Herd all suddenly start buying gold. And I agree with you...when almost everybody is converting their cash into gold then there will probably be an almighty bubble and that would be a good time to get out of gold and start buying things like property instead. But we are nowhere near that point right now. The bubble in question hasn't even started inflating yet, because the total amount of most people's assets which are stored in the form of gold is miniscule.

Lokolo

Geoff23 wrote: »

But The Herd, most of them at least, don't actually own any gold.

The big "mania" for gold hasn't happened yet. You are suggesting that the conditions for the gold price falling will occur shortly after The Herd all suddenly start buying gold. And I agree with you...when almost everybody is converting their cash into gold then there will probably be an almighty bubble and that would be a good time to get out of gold and start buying things like property instead. But we are nowhere near that point right now. The bubble in question hasn't even started inflating yet, because the total amount of most people's assets which are stored in the form of gold is miniscule.

Hmmm not sure about your "hasn't happened yet". With the number of gold threads, the amount of talk on gold, the fact they have vending machines in gold and in the news it talks about gold being at new high, it will be soon when this occurs.

Obviously it's all a matter of opinion and no-one apart from the Doc knows, I feel as though it's going to happen sooner rather than later.

And remember, only takes a few news articles for the bubble to burst....

Geoff23

Lokolo wrote: »

Hmmm not sure about your "hasn't happened yet". With the number of gold threads, the amount of talk on gold, the fact they have vending machines in gold and in the news it talks about gold being at new high, it will be soon when this occurs.

There is a lot of talk amongst certain groups of the public and the media which take an interest in such things, yes. But how many people do you know who actually own any gold compared to the amount who have money sitting in savings accounts and stocks? As far as I know, none of my friends do. How many people have actually used those vending machines?

And remember, only takes a few news articles for the bubble to burst....

True, if it were actually a bubble.

That's the stock market. We aren't talking about the stock market. There's an assumed premise in what you're saying that the only/main reason that the price of gold has gone to the level it is right now is that lots of people have decided to jump on a bandwagon they think is going to make them a quick buck. This doesn't bear any resemblance to the reality that is actually occuring on the ground. I think a lot of people are wishing they'd bought gold a few years ago but now look at the price and are thinking "that's too expensive for me", simply because it is so much more expensive than it was ten years ago. Some of them are nevertheless sufficiently concerned about what they see going on in the world right now that they are choosing to buy some anyway - as an insurance policy against further devaluation of the fiat currencies. What I am trying to say is that the price of gold is being driven ever-higher by the fundamentals rather than by some sort of speculative fever. It has nothing to do with what anybody else is telling them to do - all they have to do is follow the news headlines.

Indeed, for most members of the public the message they most often hear about gold is this one: "We Buy Gold! Sell us your gold today! Best Prices Paid!!!" And in droves they have been answering the call. I'm amazed there is any "junk gold" still left out there.

Lokolo

Geoff23 wrote: »

There is a lot of talk amongst certain groups of the public and the media which take an interest in such things, yes. But how many people do you know who actually own any gold compared to the amount who have money sitting in savings accounts and stocks? As far as I know, none of my friends do. How many people have actually used those vending machines?

It doesn't matter if people use it or not, it's the fact that things like this are happening. It's in the news, it's everywhere, people see "gold this gold that", and will buy, at some point. The fact these "We buy any gold" places are popping up really show that the public is interested.

Geoff23 wrote: »

True, if it were actually a bubble.

That is a matter of opinion.

Geoff23 wrote: »

That's the stock market. We aren't talking about the stock market. There's an assumed premise in what you're saying that the only/main reason that the price of gold has gone to the level it is right now is that lots of people have decided to jump on a bandwagon they think is going to make them a quick buck. This doesn't bear any resemblance to the reality that is actually occuring on the ground. I think a lot of people are wishing they'd bought gold a few years ago but now look at the price and are thinking "that's too expensive for me", simply because it is so much more expensive than it was ten years ago. Some of them are nevertheless sufficiently concerned about what they see going on in the world right now that they are choosing to buy some anyway - as an insurance policy against further devaluation of the fiat currencies. What I am trying to say is that the price of gold is being driven ever-higher by the fundamentals rather than by some sort of speculative fever. It has nothing to do with what anybody else is telling them to do - all they have to do is follow the news headlines.

If there were no demand, the price would not rise. Simple business studies. If people didn't want gold, the price wouldn't rise would it??

Be it commodities or Domino's Pizza shares, if people do not want the item, the price will fall, and vice versa.

It's the same when the bubble bursts, the price continues to fall because people are selling selling selling.