Commodities (including Gold BUGS)

Mach 3 · 14-08-2018 8:43pm #1

Not a sign or sinner of a Gold Bug on this forum for years-all broke and depleted. Seen a few surface out of the woodwork now and again, same result - they are bust!
Even the oil-heads are quite, despite the outperformance this last couple of years.
The slide in Commodities, is due to what?

Mach 3 · 09-08-2019 8:00pm

So a year later, we now have Gold outperforming Oil! Who'd have thought?

This time next year where will Commodities be?
Working on the answer.

Voltex · 09-08-2019 8:13pm

Mach 3 wrote: »

So a year later, we now have Gold outperforming Oil! Who'd have thought?

This time next year where will Commodities be?
Working on the answer.

Ive only ever looked at gold as a hedge against inflation...nothing else. Fixed income for safety.

Mach 3 · 09-08-2019 8:36pm

[/quote]

"Ive only ever looked at gold as a hedge against inflation...nothing else. Fixed income for safety."[/quote]

I here what you are saying (and for the record I did cover FI last year), but I'm not looking for safety for my money; I'm looking to make money.

pearcider · 09-08-2019 8:41pm

Mach 3 wrote: »

"Ive only ever looked at gold as a hedge against inflation...nothing else. Fixed income for safety."[/quote]

I here what you are saying (and for the record I did cover FI last year), but I'm not looking for safety for my money; I'm looking to make money.[/quote]

Gold will shine in the next crisis just like it did in the last one. The only difference being the next crisis will bust the central banks as they are over levered. So yeah now is definitely the time to be in gold. Or the miners if you want to speculate.

Gold needs to be over 10k USD if the FED were forced to backstop the money supply with US treasury when the confidence is lost.

Mach 3 · 09-08-2019 9:48pm

Ha, Never a borrower or lender be.
No thanks, ("gold miners") I don't speculate per se.

10k? What timeframe are we talking about here?

Supercell · 10-08-2019 3:47pm

Its going to $5000 don't you know? , I'm not even bothering to read it. I'm sure the chap makes a perfectly valid argument why its going to $5000 as did countless others in the last few years, pick your own get-rich-quick amount. The headline is enough, goldbugs are a bit like Bitcoin enthusiasts in my eye, its always going to infinity and beyond.
Maybe i'm just jaded.

pearcider · 10-08-2019 5:55pm

Supercell wrote: »

Its going to $5000 don't you know? , I'm not even bothering to read it. I'm sure the chap makes a perfectly valid argument why its going to $5000 as did countless others in the last few years, pick your own get-rich-quick amount. The headline is enough, goldbugs are a bit like Bitcoin enthusiasts in my eye, its always going to infinity and beyond.
Maybe i'm just jaded.

Gold is money. Why do you think the US has 8000 tonnes of it?

Jim2007 · 10-08-2019 8:24pm

pearcider wrote: »

Gold is money. Why do you think the US has 8000 tonnes of it?

Gold is not money, it is commodity and like is subject to the exact same market forces as any other commodity. If anyone tries to dump a large block of gold onto the market, the price will go done just like another commodity and consequently your purchasing power.

Voltex · 10-08-2019 10:17pm

Jim2007 wrote: »

Gold is not money, it is commodity and like is subject to the exact same market forces as any other commodity. If anyone tries to dump a large block of gold onto the market, the price will go done just like another commodity and consequently your purchasing power.

The problem with gold is that it doesn't generate an income...its uses are limited. Its value derives from the fact its a precious metal, with finite supply. Its scarcity justifies its price, nothing else.

pearcider · 11-08-2019 2:26am

If gold isn’t money then why does the US army guard 8000 tones of it in Fort Knox and West Point. Any student of history knows that gold back stops the money supply.

Supercell · 11-08-2019 11:54am

I see Degiro offer "XTRACKERS PHYSICAL GOLD EUR HEDGED ETC" which is a gold tracker, anyone know how this is treated from a tax perspective - gains as income like ETF's or as regular shares - CGT ?
Have to admit I wouldn't mind putting something into gold as a hedge against volatility in currency with Brexit and financial apocalypse around the corner. Apparently.

Mach 3 · 13-08-2019 8:17am

Argentina going to wall, Emerging markets struggling with the strong USD, Latin America in particular is vulnerable. US bonds the choice of safety.
Where does this leave Commodities ?

pearcider · 13-08-2019 9:07am

Mach 3 wrote: »

Argentina going to wall, Emerging markets struggling with the strong USD, Latin America in particular is vulnerable. US bonds the choice of safety.
Where does this leave Commodities ?

Long gold and silver. Short commodities and the Dow. Hold onto your hats.

Jim2007 · 13-08-2019 1:45pm

pearcider wrote: »

Any student of history knows that gold back stops the money supply.

That does not even make sense.

Jim2007 · 13-08-2019 1:52pm

Voltex wrote: »

The problem with gold is that it doesn't generate an income...its uses are limited. Its value derives from the fact its a precious metal, with finite supply. Its scarcity justifies its price, nothing else.

Well is not finite at least not at present... and it's value is derived from a couple of things:
- Demand as a production material
- Availability
- Fear
- Greed

Jim2007 · 13-08-2019 1:55pm

pearcider wrote: »

If gold isn’t money then why does the US army guard 8000 tones of it in Fort Knox and West Point.

Holding gold as a national reserve and being able to use it as money are two very different things. You can walk into any bank on the Bahnhofstarsse in Zurich and buy gold over the counter no problem. But come back the following day and try to sell it back to them and it is very unlikely anyone will accept it from you.

pearcider · 13-08-2019 2:19pm

Jim2007 wrote: »

Holding gold as a national reserve and being able to use it as money are two very different things. You can walk into any bank on the Bahnhofstarsse in Zurich and buy gold over the counter no problem. But come back the following day and try to sell it back to them and it is very unlikely anyone will accept it from you.

This makes no sense. Gold is easy to sell, especially in this market. It’s up 25% this year. In fact gold has proven to be the most liquid asset in the natural world for many thousands of years.

But you’ve completely dodged the question about the absolutely huge gold reserves of the major economies. What is the reason they hold gold if it is not to ultimately back stop their currency in the event of a crisis of confidence. Look at the US budget deficit and consider we are at the end of the business cycle. Look at the zombie banks. The crisis is upon us.

Gold will thrive in this environment - negative real rates everywhere. The phony war between deflation and inflation is nearing its end. Gold will rise in real terms no matter who wins.

pearcider · 13-08-2019 2:50pm

Jim2007 wrote: »

Well is not finite at least not at present... and it's value is derived from a couple of things:
- Demand as a production material
- Availability
- Fear
- Greed

It’s not really used as a production material at all (which is why it is not a commodity) unless you count jewelry which is basically another form of money. Availability is capped. Fear and greed are ubiquitous.

Just to correct my previous post, it’s actually up 30% this year.

gtv2002g · 13-08-2019 3:02pm

At least 320 tons of gold are used annually in the electronics industry of which approx only 10% is recovered by recycling so every year almost 290 tons is used

Voltex · 13-08-2019 9:15pm

pearcider wrote: »

This makes no sense. Gold is easy to sell, especially in this market. It’s up 25% this year. In fact gold has proven to be the most liquid asset in the natural world for many thousands of years.

But you’ve completely dodged the question about the absolutely huge gold reserves of the major economies. What is the reason they hold gold if it is not to ultimately back stop their currency in the event of a crisis of confidence. Look at the US budget deficit and consider we are at the end of the business cycle. Look at the zombie banks. The crisis is upon us.

Gold will thrive in this environment - negative real rates everywhere. The phony war between deflation and inflation is nearing its end. Gold will rise in real terms no matter who wins.

Gold holding is a mode of shoring up a nations foreign exchange reserves. The concept of a a gold standard as a guarantee of the value of bank notes issued by a central bank has been mostly abandoned since the 50's and completely by the US since the 70's having been replaced by FIAT currencies.

Gold holds a real value..its desirable, precious and valued by society for '000's of years. But within wealth management, all it is is a hedge and virtually always quoted in $USD.

The US dollar is one of the worlds reserve currencies, so any loss in confidence in that would result in problems far bigger than any amount of gold they're holding would solve! If I was a betting man and had to put my money somewhere at this time..it'd be fixed income and mostly into US T-bills to ride out the storm and bonds.

pearcider · 14-08-2019 8:54pm

I understand that. But I believe the gold standard will return in some form and that the last 40 years have been an aberration. Let’s be honest the US abandoned the usd gold convertibility because they were losing their gold hand over fist (they lost 4000 tonnes since ww2) and their fiscal discipline had been ran into the ground by big spending LBJ. Interesting to note that Nixon claimed they were only temporarily suspending the convertibility of dollars into gold...just like zero interest rates were meant to be temporary!! Now they can’t get out. Raise rates and crash the economy. Cut rates and suffocate the banks. The Fed is trapped and they know it.

All that being said the US spending problem has now gotten a lot worse. Now we are in a situation where they are running huge deficits at the end of the longest expansion in history. The game is nearly over and all the quantitive easing in the world won’t save the petrodollar system and by extension the worlds banking system.

I’m not saying the world will end but there will be a new system and Brenton woods will be replaced. Gold will almost certainly play a part in this. Invest accordingly.

BrokenArrows · 15-08-2019 9:40am

pearcider wrote: »

I understand that. But I believe the gold standard will return in some form and that the last 40 years have been an aberration. Let’s be honest the US abandoned the usd gold convertibility because they were losing their gold hand over fist (they lost 4000 tonnes since ww2) and their fiscal discipline had been ran into the ground by big spending LBJ. Interesting to note that Nixon claimed they were only temporarily suspending the convertibility of dollars into gold...just like zero interest rates were meant to be temporary!! Now they can’t get out. Raise rates and crash the economy. Cut rates and suffocate the banks. The Fed is trapped and they know it.

All that being said the US spending problem has now gotten a lot worse. Now we are in a situation where they are running huge deficits at the end of the longest expansion in history. The game is nearly over and all the quantitive easing in the world won’t save the petrodollar system and by extension the worlds banking system.

I’m not saying the world will end but there will be a new system and Brenton woods will be replaced. Gold will almost certainly play a part in this. Invest accordingly.

No it wont.
There is about 1.5 trillion USD in circulation but they only hold about 420 billion in gold. There is no way they will remove that much USD from circulation or increase their holding in gold by that volume.

same to be said for every other currency.

pearcider · 15-08-2019 11:33am

BrokenArrows wrote: »

No it wont.
There is about 1.5 trillion USD in circulation but they only hold about 420 billion in gold. There is no way they will remove that much USD from circulation or increase their holding in gold by that volume.

same to be said for every other currency.

Or gold could be revalued at a higher value such that it backs the money supply...

Voltex · 20-08-2019 9:23pm

BrokenArrows wrote: »

No it wont.
There is about 1.5 trillion USD in circulation but they only hold about 420 billion in gold. There is no way they will remove that much USD from circulation or increase their holding in gold by that volume.

same to be said for every other currency.

....and all before which calculation of the money supply is agreed upon e.g. M1, M2, M3 or M4!

BrokenArrows · 24-08-2019 8:13pm

Gold rose 2% on Friday due to China introducing tarrifs on US products.
After the market closed trump announced further tariffs on Chinese products in response to China. This further escelates the trade war between the two countries.

This, combined with world wide market uncertainty and the fear of a global recession, I'd expect gold to rise another 1.5% on Monday based on this.

pearcider · 24-08-2019 11:56pm

Gold is up 31% in the past year - 300 euros per ounce. It is actually at all time highs in all currencies except the USD. This is significant. Gold is going up because the currencies are being depreciated. The currencies need to be depreciated due to bad governance and over spending and that’s bullish for gold.

The Fed will not rest until they get their inflation and that’s extremely bullish for gold. Gold will become a high yield asset in high inflation negative interest rate environment that we are facing into.

If you’ve been watching the markets you can see gold decoupled from the commodity index in 2014..in other words it is starting to act like money. They’ve been especially anti correlated in the past few months. Interesting silver is also up 20% this quarter which suggests that it too is beginning to act like money.

Of course the worlds major nations have always known that gold is money and acted like there is a gold standard. That’s why they have such vast reserves. It puts a hard floor on the value of the currency.

BrokenArrows · 26-08-2019 4:49pm

BrokenArrows wrote: »

Gold rose 2% on Friday due to China introducing tarrifs on US products.
After the market closed trump announced further tariffs on Chinese products in response to China. This further escelates the trade war between the two countries.

This, combined with world wide market uncertainty and the fear of a global recession, I'd expect gold to rise another 1.5% on Monday based on this.

When the markets opened it did rise as expected. However it's now withdrawn back to Fridays close levels.

mono627 · 27-08-2019 2:44pm

pearcider wrote: »

Gold is up 31% in the past year - 300 euros per ounce. It is actually at all time highs in all currencies except the USD. This is significant. Gold is going up because the currencies are being depreciated. The currencies need to be depreciated due to bad governance and over spending and that’s bullish for gold.

The Fed will not rest until they get their inflation and that’s extremely bullish for gold. Gold will become a high yield asset in high inflation negative interest rate environment that we are facing into.

If you’ve been watching the markets you can see gold decoupled from the commodity index in 2014..in other words it is starting to act like money. They’ve been especially anti correlated in the past few months. Interesting silver is also up 20% this quarter which suggests that it too is beginning to act like money.

Of course the worlds major nations have always known that gold is money and acted like there is a gold standard. That’s why they have such vast reserves. It puts a hard floor on the value of the currency.

What do you mean we're facing a high inflation environment? By which metric are you looking at? I presume you meant deflationary?

And what does "act like money" mean? Gold and silver have gone up for a variety of reasons although I'm not sure they're for the reasons you've listed.

pearcider · 27-08-2019 4:17pm

mono627 wrote: »

What do you mean we're facing a high inflation environment? By which metric are you looking at? I presume you meant deflationary?

And what does "act like money" mean? Gold and silver have gone up for a variety of reasons although I'm not sure they're for the reasons you've listed.

Official CPI is dubious since they changed the rules in 1980 and 1990. You can find the old rules at shadow stats where the official CPI is more like 6-7 %. The government manipulate the inflation rate in a number of ways using for example hedonic quality adjustments (newer cars are better because they have sat navs even if you don’t use them) and quality substitution (the price of fillet steak has gone up but the consumer can switch to a cheaper cut). They also remove the price of food and energy during volatile periods and they give heavier weight to white goods such as refrigerators and televisions even though consumers don’t regularly purchase these.

Of course the government wants higher inflations as this improves tax returns nominally and also eases the burden of both the welfare state and the gigantic debt it incurs. Unfortunately such a policy is dangerous as once inflation takes off it is very difficult to reign in.

Regarding the devaluation of fiat and the need to devalue the USD in order to avoid economic collapse Mark Carney made a presentation on this at Jackson Hole. Gold and silver will protect your savings in this new order as they will be part of any new global currency basket. They can’t increase the supply of real money by more than a few percent - unlike fiat notes. We have been warned.

https://www.bankofengland.co.uk/-/media/boe/files/speech/2019/the-growing-challenges-for-monetary-policy-speech-by-mark-carney.pdf?la=en&hash=01A18270247C456901D4043F59D4B79F09B6BFBC

pearcider · 27-08-2019 4:25pm

mono627 wrote: »

What do you mean we're facing a high inflation environment? By which metric are you looking at? I presume you meant deflationary?

And what does "act like money" mean? Gold and silver have gone up for a variety of reasons although I'm not sure they're for the reasons you've listed.

I am curious why you think gold and silver has gone up. What use is gold if not as money. Also why do the major powers hold so much gold reserves..?

Commodities (including Gold BUGS)

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