Gold price to go steady, dips imminent?

George_Michael

mr_fishbulb wrote: »

Exactly. You can't have something which protects wealth, but at the same time can generate wealth.

I don't know about that.
Depending on how it's used, a sawn off shotgun should fulfill both of those requirements.

sabretoothtigger

Shotguns are used as investments also, a winner all round

Geoff23

pop_gun wrote: »

It's probably investors taking profit. there's no way it because the financial markets have stabilized. now that's just clown talk.

This sell off started in Asia because of margin hikes on gold forcing traders to liquidate their positions. It continued because nobody knows what Ben Bernanke is going to say (or not say) about QE3 in a speech at Jackson Hole tomorrow. The short-term traders are staying out of the market right now. They have cash waiting.

Geoff23

robmatic wrote: »

I keep on reading that speculative demand isn't a possibility in the market for gold. Isn't everybody buying it viewing it as money or the only true store of value (or whatever else the goldbugs bang on about)?

There are effectively two markets. The paper market is where the speculators operate. They don't take delivery of any physical gold (so they don't actually care if it even exists) and will get out if they think there is a short-term dip coming. The physical market is for people with a long-term strategy who see gold as the only reliable sort of money right now, and that isn't going to change any time soon. The price is generally determined by the paper/electronic market. Only the "London Fix", twice a day, is directly linked to trading in physical metal.

At least that is how I understand it.

Geoff23

kabayiri wrote: »

Curiously, they were punting Gold mining outfits at the weekend as being value. I'm not sure about that for me.

Me neither. The profits of an individual miner depends on the eventual quality/quantity of the the lode they are sitting on, and the truth is that nobody knows that for sure until they actually dig up the ground and find out what is there. The profits of gold mining operations also depend on the price of oil, because it tends to be an energy-intensive business. I also don't know how to tell whether a mining stock is already "overbought."

Geoff23

Generali wrote: »

It gives the lie to gold being the ultimate store of value. An efficient store of value wouldn't go flying up and down in price like this.

If you want a hedge against catastrophe, farmland is better and it pays an income.

Farmland is much more difficult to buy and sell than gold is. You have to hire lawyers and stuff. You have to pay large fees. It can't be done piecemeal either.

Gold is behaving in a volatile manner because everything else (foreign exchange, stock markets, commodities, global politics) is extremely volatile at the moment. When somebody says gold is an efficient store of value, they mean that over the grand sweep of history gold has retained its value. They mean that gold's value survives through any sort of economic or monetary calamity you can throw at it, and the same cannot be said for any sort of fiat money or paper/electronic asset. All of those things can go to zero, and have done so in the past.

Geoff23

globalds wrote: »

25 tonnes of Gold haven't kept the mobs from Gaddafis front door.

Gaddafi's money enabled him to buy an army of African mercenaries which have protected him for several months and made this into a lengthy revolution rather than a fast one. In the end though, he needed more than money to survive.

Geoff23

bendix wrote: »

Meanwhile, back in the real world, the price has slumped $170 or 9% in the last 3-4 days.

I am very much living in the real world. I don't believe these margin hikes and subsequent drop in the price of gold have come as a surprise to anybody who has been paying attention during this year. Exactly the same hatchet job was done on silver in May.

Geoff23

mr_fishbulb wrote: »

Exactly. You can't have something which protects wealth, but at the same time can generate wealth.

Not in normal situations you can't. This is not a normal situation. Monetary systems don't collapse every year. They tend to last a few decades.

jon3001

Generali wrote: »

If you want a hedge against catastrophe, farmland is better and it pays an income.

Tell that to white farmers in Zimbabwe driven out by Mugabe.

Farmland isn't easily transportable when the catastrophe occurs.