Comments on: Paying More Than 3 Times as Much for Gold

By: Lachlan

Lachlan — Mon, 01 Jun 2009 09:54:40 +0000

Political instability equals high gold prices. The power of an empire is waning. This will cause instability on a great scale and over a long period. In my opinion the price of gold has to go much higher and stay high for a long time.

By: David Colquitt

David Colquitt — Sat, 30 May 2009 04:10:36 +0000

With all those assets/wealth out there, created by Central Bank's fiat money out of thin air, how could gold be used as a monetary standard? It would have to be $1M per ounce!

By: Lachlan

Lachlan — Fri, 29 May 2009 13:07:43 +0000

I did read in a recent paper clipping that B.Obama wants to regulate derivatives. In the same article, current OTC derivatives to the value of $680 Trillion were refered to. To get some idea of total derivatives one would have to add ETD's (Exchange Traded Derivatives)approx $350 Trillion in 2005. At least theres $1000 Trillion in derivatives to start with.
In summary, "We're all freakin doomed".
I the meantime....eat,drink, pray and buy gold. And of course for fat fiat profits.... shares in scrumptious juniour gold producers.

By: Biker Pete

Biker Pete — Fri, 29 May 2009 08:04:18 +0000

My father, b. 1922, counselled us that you should 'set a sell when you set a buy'. Apparently the only time that failed him during his lifetime, was when Metals Ex moved so fast one day that his broker was unable to sell at dad's nominated price... and Metals Ex sold much, much higher. Yes, some stocks ended up four or five times higher than dad's 'set price' (his simple exit strategy) but he bought quality and held until his assigned sell price was reached.

By: Ned S

Ned S — Fri, 29 May 2009 07:33:41 +0000

Brian - A good question to which I don't have a good answer I'm afraid. Not to say there isn't one - Only that as a "newbie" I don't know it either. I'll tell you what suspect I understand and see what others have to add: * If you have taken physical possession, the nearest you can get to an exit strategy is watching the price regularly and having some figure in your mind that you will sell at if the price drops below it - Although the bloke you bought it off will roll on the floor laughing if prices are obviously headed down and you ask him to buy at the current price - He'll have some big discount figure in mind. * Be very wary about trading it in an account that uses a different currency to your's; And especially not if they are going to take a few days to send your "winnings" back to you via bank wire/transfer - The stuff is volatile and if the price is bouncing around a lot, the exchange rates probably are too. * It would seem to me that you can set stop losses on gold mining stocks easily enough. But if you've bought into a smaller company and no one is buying, a stop loss won't save you until someone does decide to buy - At whatever price they decide to buy at; Rather than any hoped for stop loss figure you may have set? * Ditto for the exchange traded funds I suspect? My take at the moment is that a lot of trades are probably being triggered by "trailing stop orders"?

By: Lachlan

Lachlan — Fri, 29 May 2009 04:47:14 +0000

$1600 Trillion worth of derivatives sit atop J.Exters liquidity pyramid so probably the source there C.A. Im too computer illiterate to create a link (in the time I have to write this) but its out there in google land. Note 800 Trill is described as "shadow derivatives". I believe the OTC derivatives are hidden away ,maybe behind hedgefund doors.
Go gold!

By: Coffee Addict

Coffee Addict — Fri, 29 May 2009 00:52:45 +0000

Bill says there are about $1.6t of derivatives. Is there a source for this statistic? Is there a definition? My understanding is that derivatives can be defined broadly (for annual report purposes) to include any contract with a financial clause that can be executed on the basis of one or more conditional events. Alternatively derivatives can be defined more narrowly to include a range of financial products (CDO, CDS, CAR etc.)

In any case the deleveraging (in relation to the derivatives as narrowly defined) is continuing and the likely outcome frightens me. My gut feeling is that the 25% mark to market for the financial products will become a 50% mark to market by reporting time 2010.

My other gut feel is that the assumptions which sit under the yield curves and spreads used for valuation by Citi and are based on a relatively short recession (of say 2 years) rather than a long term bear market and slow credit thaw (of 5 years or longer). The assumptions here actually go to the core of whether or not the so called green shots will grow, whither or lay dormant.
I am happy to be corrected on any of this.

By: Greg Atkinson

Greg Atkinson — Thu, 28 May 2009 23:32:20 +0000

Buy gold on dips and sell stocks on rallies...yes Bill this is a slight variation of the old buy stocks when they are low and sell when they are high. Lovely theory but timing my friend is the problem. Why not just sit on something like BHP shares? They have done better than gold over the last 10 years and also pay out a dividend? (I wish I had done that myself!)

If any of us could time the market we would not be reading DR, we would be enjoying one of those drinks with an umbrella in it on our yacht somewhere warm and sunny

By: Pete

Pete — Thu, 28 May 2009 13:30:41 +0000

Good article Bill

By: brian

brian — Thu, 28 May 2009 08:18:39 +0000

Ned, what is a good exit strategy? I am new to this game. Cheers.