Thinking of buying gold bars !!

Geoff23

experience08 wrote: »

Ha ha, so a couple of hundred MSE investors (speculators!) are going to drive UP the International Gold price?

Doesn't sound very likely to me. Somehow I think Hugo Chavez asking for delivery of two hundred tonnes of physical gold is likely to attract more attention.

lvader

Geoff23 wrote: »

It seems to have stabilised there (for now). This is just above the base of the August 15th dip. I'm hoping it is going to go down further tomorrow.

The market was closed. It opened again 12 minutes ago and has started dropping again.

Ark_Welder

Geoff23 wrote: »

That is true, but if you look at current events in the context of the whole of 20th century monetary system then there can be no sensible comparison between 1980 and today. The massive difference is that in 1980, the central banks were net sellers of gold, and destined to be so for many years to come, and today the central banks want to own as much gold as they can get their mittens on. There were no serious doubts in 1980 about the long-term stability of "Bretton Woods II".

Do you have figures for any central bank sales in 1980?

Geoff23

marms wrote: »

The price of gold in GBP is down about 7.5% in the last two days, i think a lot of the posters are just trying to encourage others to invest to try to up the price.

I don't want the price to go up. I think it is inevitable that it will go up in the long term, but it was going up faster than I thought it would (faster than almost anybody thought it would for that matter.) I want the price to go down further before it starts going up again. Another 5% would be nice.

Geoff23

Ark_Welder wrote: »

Do you have figures for any central bank sales in 1980?

No.

http://www.commodityonline.com/news/What-the-end-of-Central-Bank-gold-sales-signify-14782-3-1.html

Keep in mind, though, that the unwinding of the Dollar Standard – by which the US gets to pay its debts in its own currency, thereby printing away its obligations as it sees fit – is not going to be a rapid affair. Too many people have too much to lose from a rapid Dollar depreciation. So we'd expect gold's move to be driven by gradual investor capitulation on common stocks and government bonds. And THAT will be driven by market returns and inflation concerns...both of which should mount as the year progresses.

A key date to watch for is 26th September, 2009. That's when the current European Central Bank Gold Agreement (CBGA) expires. The first CBGA was first signed in 1999, and depending on whom you ask, had a rather ambiguous goal. European central banks agreed to limit and publish their announced gold sales.

The reason, we suspect, was that European Central Banks own gold as a reserve asset. Indeed, the signatories of the first CBGA controlled 43.6% of the world's official gold reserves, according to the World Gold Council. The second CBGA was then signed in 2004 and limited sales to a maximum of 500 tonnes per year over five years (2,500 tonnes over the length of the agreement). And with the expansion of the European Union since then, CBGA signatories now control 46.1% of world-government gold reserves.

So why cap official central bank gold sales? As much as they prefer their own product –paper money – central banks own gold as a crucial reserve asset in their vaults. But ten years ago, in 1999, the Gold Price languished at just $252 an ounce. And for the central banks, this meant the value of a major reserve asset was falling.

With the Gold Market then wary that further central bank gold sales could flood the market with excess supply at a time of lethargic demand, something had to be done to put a floor under the price. So to assure the market that central bank gold sales would not be used to suppress/depress the Gold Price (at least, not publicly), the CBGA was signed.

Right up until the turn of the last century, the central banks still held gold left over from the pre-1971 monetary system. They had agreements in place to limit central bank sales of gold in order to make sure the price didn't drop too low. The precise level of central bank gold sales in 1981 doesn't matter - I'm talking about the whole context of 20th century monetary history, and for nearly all of the last three decades of that century the central banks were net sellers of gold. That has all changed now.

Geoff23

lvader wrote: »

The market was closed. It opened again 12 minutes ago and has started dropping again.

Good. Hopefully it will be below £1000 tomorrow lunchtime.

lvader

In the last 2 years how much gold has the Chinese government bought compared to US and European debt? It seems to me that like the late 70's most of gold is being bought by private/comercial buyers.

masonic

Geoff23 wrote: »

That is true, but if you look at current events in the context of the whole of 20th century monetary system then there can be no sensible comparison between 1980 and today. The massive difference is that in 1980, the central banks were net sellers of gold, and destined to be so for many years to come, and today the central banks want to own as much gold as they can get their mittens on. There were no serious doubts in 1980 about the long-term stability of "Bretton Woods II".

I'm not suggesting any sort of comparison between now and the 1980s. I'm merely correcting the person who said that over the long term the gold price only moves upward. However, supposing the current debt crises eventually get brought under control, we might see a similar decline in the future.

experience08

Geoff23 wrote: »

OK...I don't pretend to understand why Japan has not until now come under the sort of pressure that other indebted nations have.

Thinking back to my economics lessons a couple of years ago...basically the Japanese population were savers. No matter what the central bank of Japan did, long before the US or UK central banks, reducing interest rates to near zero, the Japanese consumers just didn't spend. Instead they saved and saved. This money was channeled to central government similar to NS&I savings and other bank savings which allowed commercial banks to buy government debt. Essentially they bought their own debt, instead of selling it to the Chinese or the Arabs.

Ark_Welder

Geoff23 wrote: »

Right up until the turn of the last century, the central banks still held gold left over from the pre-1971 monetary system. They had agreements in place to limit central bank sales of gold in order to make sure the price didn't drop too low. The precise level of central bank gold sales in 1981 doesn't matter - I'm talking about the whole context of 20th century monetary history, and for nearly all of the last three decades of that century the central banks were net sellers of gold. That has all changed now.

Central bank selling was mainly from the mid to late 1990's. Before then their holdings were relatively stable. The first CBGA to limit sales did not come into force until 1999. Recent purchases are more from the developing world than western countries and have coincided with the latter having largely completed their gold sales.

As some wags have said, central bank selling in the late 1990's ,early 2000's was a good buy signal. Perhaps current central bank buying is the equivalent sell signal.

http://www.spdrgoldshares.com/media/GLD/file/WOR5821_The_Evolution_Document.pdf

http://www.businessweek.com/news/2010-09-27/central-bank-gold-sales-drop-40-in-accord-wgc-says.html

http://articles.economictimes.indiatimes.com/2011-08-02/news/29842847_1_gold-market-central-banks-gold-council