Time to buy some more gold and silver?

[MorganMan]

"World Bank President Robert Zoellick said the United States should not take the dollar's status as the world's key reserve currency for granted because other options are emerging."

 

Do statements like this bother you, and what are you doing to hedge against the dollar going to pot.....

 

MM

[thehumantorch]

Buy gold. I feel a lot more comfortable with a small portion of my investments in gold or gold stock.

[World Colonial]

"World Bank President Robert Zoellick said the United States should not take the dollar's status as the world's key reserve currency for granted because other options are emerging."

 

Do statements like this bother you, and what are you doing to hedge against the dollar going to pot.....

 

MM

 

No, because they are either irrelevant or carry the OPPOSITE implications that most people believe that they do. Its simply another example of the lopsided negative bearish sentiment (97% of futures traders are bearish now based upon the last report I saw).

 

I agree with the majority that the long term prospects for the USD are negative. And there will also be a time to get as much of your money out of USD but that time is likely not now. The simple reason for this is that the majority is almost always wrong which is why they not only do not make big money or any money, they almost always LOSE money.

 

Most people expect the USD to crash against other currencies along with their concurrent expectations for higher inflation. Well, it has already crashed since the 2000 top.

 

In the near fututre, I expect the USD to soar against foreign currencies as credit contracts, just as it did in the second half of 2008. The crash that most people expect now should come later.

 

Buying gold or silver is another issue entirely. Even though I still believe they both will fall in USD terms in the near future, I believe everyone should own as much as they can reasonably afford. But I also expect silver to fall below the October 2008 level of $8.39 before the bull market resumes.

[World Colonial]

If by gold stock, you are referring to mining shares, most people have the wrong idea about the safety they provide. They look to the performance of gold shares in the Great Depression or the 1970's.

 

In the Great Depression, the USD was tied to the price of gold and the government guaranteed to pay a fixed amount of $35 per ounce. That does not exist today and in a similar situation, gold could or would fall at least somewhat and since mining shares are a leveraged play on gold, they would almost certainly lose a lot more.

 

I also do not expect gold shares to perform well because of inflation since I am probably the only one or about the only one on this board who expects deflation. But if I am wrong on this, its true that the right mining shares would almost certainly do well.

 

The last thing I would add (again) is that if someone wants to own gold, they need to own gold. Mining shares are not gold. They are stocks and in a stock bear market, they can and have lost value.

 

Ultimately, they are simply another type of PAPER CLAIM to gold which is subject to default or confiscation. In an extended bear market, the additional risk of nationalization and foreign conquest will also exist and be greater than it has been in most of our lifetimes, which is something that most do not consider now.

[bsshog40]

There have also been proposals to go with a european currency and to take the usd completely out of the picture. This would be the favorable way if Obama has his way.

[World Colonial]

There have also been proposals to go with a european currency and to take the usd completely out of the picture. This would be the favorable way if Obama has his way.

 

Except for the person who probably believes that Obama is a closet globalist and wants to give up US sovereignity, that position does not make sense. And except in that scenario, I do not see how any American politician including Obama would favor replacement of the USD as the reserve currency.

 

The reason for this is that it would ultimately end the US role as the sole superpower because it would make the US poorer by reducing the financial capacity of the country. And if that happened, it would no longer be able to project power and influence as it does today and has since WWII.. The US is practically broke now with all these bailouts and huge budget deficits and this would only make things worse for the US financial position by increasing the cost of funding US debt.

 

I do not know any politician who wants to have less influence. I am definitely one of his critics (as I was of George Bush the younger) and I would expect that most of his other critics would probably agree with this statement.

[thehumantorch]

If by gold stock, you are referring to mining shares, most people have the wrong idea about the safety they provide. They look to the performance of gold shares in the Great Depression or the 1970's.

 

In the Great Depression, the USD was tied to the price of gold and the government guaranteed to pay a fixed amount of $35 per ounce. That does not exist today and in a similar situation, gold could or would fall at least somewhat and since mining shares are a leveraged play on gold, they would almost certainly lose a lot more.

 

I also do not expect gold shares to perform well because of inflation since I am probably the only one or about the only one on this board who expects deflation. But if I am wrong on this, its true that the right mining shares would almost certainly do well.

 

The last thing I would add (again) is that if someone wants to own gold, they need to own gold. Mining shares are not gold. They are stocks and in a stock bear market, they can and have lost value.

 

Ultimately, they are simply another type of PAPER CLAIM to gold which is subject to default or confiscation. In an extended bear market, the additional risk of nationalization and foreign conquest will also exist and be greater than it has been in most of our lifetimes, which is something that most do not consider now.

 

I purchased gold stock about 5 years ago and it has been very kind to me. The only mistake I've made is selling some to rebalance my portfolio. I think the US is bankrupt and I expect tough times and deflation. I don't own any physical gold but if the price drops a bit I would like to add some. What form of physical gold has the smallest cost premium and is easy to sell?

[bsshog40]

There have also been proposals to go with a european currency and to take the usd completely out of the picture. This would be the favorable way if Obama has his way.

 

Except for the person who probably believes that Obama is a closet globalist and wants to give up US sovereignity, that position does not make sense. And except in that scenario, I do not see how any American politician including Obama would favor replacement of the USD as the reserve currency.

 

The reason for this is that it would ultimately end the US role as the sole superpower because it would make the US poorer by reducing the financial capacity of the country. And if that happened, it would no longer be able to project power and influence as it does today and has since WWII.. The US is practically broke now with all these bailouts and huge budget deficits and this would only make things worse for the US financial position by increasing the cost of funding US debt.

 

I do not know any politician who wants to have less influence. I am definitely one of his critics (as I was of George Bush the younger) and I would expect that most of his other critics would probably agree with this statement.

Well then you did not hear his speech at the UN did you? He is abolishing one world power and superpower nations and wanting all countries to be equal. Also thinking of proposing a World Currency!!!

[MorganMan]

The last thing I would add (again) is that if someone wants to own gold, they need to own gold. Mining shares are not gold. They are stocks and in a stock bear market, they can and have lost value.

 

I was referring to actually holding the metal. I personally would not own gold and silver stocks for just the reasons you elaborated on.....

 

MM

[michael]

"World Bank President Robert Zoellick said the United States should not take the dollar's status as the world's key reserve currency for granted because other options are emerging."

 

Do statements like this bother you, and what are you doing to hedge against the dollar going to pot.....

 

MM

 

does not bother me in the least, laughable at best and talk is cheap

 

 

us dollars are still heads and tails in demand above the euro, yuan and ruble

[World Colonial]

For small amounts, I would buy AGE, Maple Leafs or Krugerands. For someone with really big money, 400oz bars. For small amounts, I would store it at home. For amounts of $50,000 USD or more, I would consider the Perth Mint and for amount of $100,000 or more, the Safewealth Safestore program which are both outside the United States.

 

I agree that the US is bankrupt but unlike most, I still expect deflation. But in deflation, the stock market will crash and gold stocks are likely to fall with it. The best explanation for the rise in stocks (including gold stocks) and gold during the period you stated is the credit bubble. This enabled "liquidity" through increased debt to flow into practically every asset. Well, if the opinion I share with a few others is correct, the asset, debt and credit MANIA is over and credit will contract. It has been for most private forms of credit in the last year. Only the government has been able to expand its debt but that capacity is not infinite. When this "recovery" ends, I am looking for deflation and depression.

 

As for the "mitake" you made, I would never say that taking a gain on a paper asset is a mistake. To me, the actual mistake that most people have made is following a "buy and hold" approach to the stock market during the mania and the beginning of this bear market. If you have avoided that, then at least to me you've made the right decision.

[World Colonial]

I did not hear the speech that you are referring to but I do not need to because I am familiar with the interpretation you seem to be alluding to, though I do not know if this one is yours or not.

 

Many or most people who hear a speech like that and believe that Obma (or others) has that view believe in some form of one world government movement. Though there are some or many influential people who are or appear to be in favor of that, I'm not particularly worried about it because I expect the upcoming global depression to shatter the international co-operation which appears to exist now. I expect this issue to become a problem later.

 

(David Rockefeller, one of the leaders of this movement, has apparently "come clean" according to a web article I read recently after denying his support for decades. I guess now that he is old or dead it does not matter that everyone knows.)

[RareSov]

Put everything you can into something OTHER than US dollars.

 

However you do it, be it funds, silver or gold, converting PayPal balances, anything you can do to avoid holding USD will help you.

 

Glad to be an Aussie, our economy is doing well

[thehumantorch]

For small amounts, I would buy AGE, Maple Leafs or Krugerands. For someone with really big money, 400oz bars. For small amounts, I would store it at home. For amounts of $50,000 USD or more, I would consider the Perth Mint and for amount of $100,000 or more, the Safewealth Safestore program which are both outside the United States.

 

I agree that the US is bankrupt but unlike most, I still expect deflation. But in deflation, the stock market will crash and gold stocks are likely to fall with it. The best explanation for the rise in stocks (including gold stocks) and gold during the period you stated is the credit bubble. This enabled "liquidity" through increased debt to flow into practically every asset. Well, if the opinion I share with a few others is correct, the asset, debt and credit MANIA is over and credit will contract. It has been for most private forms of credit in the last year. Only the government has been able to expand its debt but that capacity is not infinite. When this "recovery" ends, I am looking for deflation and depression.

 

As for the "mitake" you made, I would never say that taking a gain on a paper asset is a mistake. To me, the actual mistake that most people have made is following a "buy and hold" approach to the stock market during the mania and the beginning of this bear market. If you have avoided that, then at least to me you've made the right decision.

 

Thanks for the info.

[MorganMan]

When this "recovery" ends, I am looking for deflation and depression.

 

 

I agree with you on this, to me that is all the more reason to hold actual gold. Even if the price of gold in US dollars goes down due to deflation, the "value" of gold will still be there.

 

It goes back to the saying that an ounce of gold will always buy a man a nice suit.

 

I am thinking silver would be an even better bet, since it has not really gone up and stayed like gold has,however, there is a school of thinking out there that if there is depression, the industrial need for silver would drop, making silver values go down.

 

MM

[MorganMan]

Put everything you can into something OTHER than US dollars.

 

However you do it, be it funds, silver or gold, converting PayPal balances, anything you can do to avoid holding USD will help you.

 

Glad to be an Aussie, our economy is doing well

 

That statement makes me curious RareSov. I am wondering how the common folks in the land down under view the current USA status. I know what the B/S is from all the politicians, but what are the folks on the streets of Australia thinking?

 

Oh, and how tough is your immigration policies?

 

MM

[James_OldeTowne]

Getting back to the O.P., I personally think silver and gold are a decent investment going forward. I think they will both continue to rise over the next year, then level off.

 

I'm not basing this on any clever thinking or insider information - just my observations from the numismatic perspective.

[BillJones]

Buy gold only if the premiums above melt are not too high. I think the spread will norrow in the coming months.

 

As for the value of the dollar, we have an administration that doesn't care about it. They are more interested in increasing the size and scope of government, and setting themselves up in position where they will be able to end democracy as we have known it. I'm sorry to write that, but that's my take.

[World Colonial]

When this "recovery" ends, I am looking for deflation and depression.

 

 

I agree with you on this, to me that is all the more reason to hold actual gold. Even if the price of gold in US dollars goes down due to deflation, the "value" of gold will still be there.

 

It goes back to the saying that an ounce of gold will always buy a man a nice suit.

 

I am thinking silver would be an even better bet, since it has not really gone up and stayed like gold has,however, there is a school of thinking out there that if there is depression, the industrial need for silver would drop, making silver values go down.

 

MM

 

Yes, because physical gold and silver are not someone else's liability which is subject to default.

 

If you are more interested in protecting yourself on the downside, then buy gold. If the position I hold turns out to be correct, then silver is going to fall a lot more just as it rose a lot more on the way up. Silver is first an industrial metal and second an "investment". Though industrial demand may go up longer term for silver, in a depression, it will collapse just as will occur for many other commodities.

 

Ultimately, I believe the best option is to buy whatever you can afford to keep. By most people's standards, I am a definite pessimist. I prefer to call myself realistic. But in any event, I would rather take more caution and make less money than do what most people do. They seem to assume that little or nothing will go wrong and then when it does, they have no backup plan.

 

What I expect to see with many gold and silver bulls is that they will be forced to sell their holding in a falling market. They will do so because they have lost their job, have inadequate liquidity or both. To get the most benefit from owning it, the buyer MUST have the financial capacity to hold it in both good times and bad. Most people do not.

[World Colonial]

Put everything you can into something OTHER than US dollars.

 

However you do it, be it funds, silver or gold, converting PayPal balances, anything you can do to avoid holding USD will help you.

 

Glad to be an Aussie, our economy is doing well

 

I wish I had bought the Australian Dollar when it fell to 60 cents, but I would not be a buyer now. But I did not have the guts to do it. (The same opinion applies to a few other currencies.)

 

I still expect the USD to surpass its recent 89 high on the USD Index, though there is no way to know how exactly this will be reflected in individual exchange rates even if this does occur.

[SJS-migration]

I'm curious, do most of you think gold is a good buy in todays record market? I have been buying silver for the past year, since about the time of GW's AIG bailout actually.. but I've been weary of gold as i wonder if it's not a bit inflated in value now ... the silver to gold ratio is on the high side and unlike silver, the industrial demand for gold is flat.

 

 

[$ilverHawk]

I've been buying Gold and Silver for the past several years. I time my buys with price drops. There are always ups and downs. All commodities reach relative highs then drop to a support price.

 

Both metals are currently on a price upswing. It's important to note that the upswing is not supported by market fundamentals. Expect a downward price correction for both.

 

I'm going to wait for another downward correction then buy. Most of the market commentaries I have read are looking for a price correction to $850.00 to $900.00.

 

BTW there is literally no commercial use for Gold when compared to Silver. That's why there is a larger potential percentage upswing for Silver.

 

Also check out the charts and commentary availible online. I use the info at www.kitco.com as well as other sites.

 

Don't fall for the hype found in some articles, alot have a vested interest in selling you gold and silver---just glean the facts and decide when it's a good time to buy.

 

Hope this helps---I'm new here too!

[World Colonial]

I'm curious, do most of you think gold is a good buy in todays record market? I have been buying silver for the past year, since about the time of GW's AIG bailout actually.. but I've been weary of gold as i wonder if it's not a bit inflated in value now ... the silver to gold ratio is on the high side and unlike silver, the industrial demand for gold is flat.

 

 

It depends upon what opinion you hold. Since I expect deflation and depression, I do not consider the gold/silver ratio elevated. Its been higher in the last 10-15 years than it was before, such as prior to the main part of the credit mania, but in deflation, it is likely to go even higher as both will almost certainly fall with silver falling more.

 

The reason for this is that the industrial demand for gold may be flat (and by this I presume you mean primarily jewelry) but gold is not primarily an industrial metal. Because if it was, its value would be much lower. Gold is a form of money first and an industrial metal second. Silver is an industrial metal first and a monetary metal second.

 

I'm not familiar with the recent industrial demand for silver but I can tell you that in depression or even a severe "double dip" recession which I consider an almost certainty, prices should crash unless someone like the Chinese or speculators hoard it. I would not bet on that outcome as the basis of my decision.

 

Some people might consider the current ratio elevated based upon the "historical" relationship which was about 16/1 during the gold standard era. In my opinion, that ratio is irrelevant because the prices of both are not fixed. (This is aside from any debates about price fixing. I am not getting into any of those debates. Anyone else is free to do so.)

[SJS-migration]

Good stuff.. I for one want to buy more gold, but at these prices, I can't help but think it might be a bad time.. at $800, I'm more inclined..

 

 

[Houston Investor]

I can never seem to do a good job estimating this - when I buy it goes down, when I sell it goes up.

 

I would recommend reading the columns by Roger Wiegand on the Kitco Silver Page. He has a lot of good insights.

 

I think its good to have a gold and silver position that realisically fits in your budget. I have substantial money with ShareBuilder in index traded gold and silver funds. I also pick up nice US Gold Type Coins and put them away as budget permits. My favorite book on USGTC is the Handbook of 20th Century US Gold coins 1907 - 1933 by David Akers. I like these coins in AU50 and above.

[RareSov]

Put everything you can into something OTHER than US dollars.

 

However you do it, be it funds, silver or gold, converting PayPal balances, anything you can do to avoid holding USD will help you.

 

Glad to be an Aussie, our economy is doing well

 

That statement makes me curious RareSov. I am wondering how the common folks in the land down under view the current USA status. I know what the B/S is from all the politicians, but what are the folks on the streets of Australia thinking?

 

Oh, and how tough is your immigration policies?

 

MM

 

I don't know about common folk, but the people I know agree the USD is in dire trouble

 

I have watched not only the USD, but Pounds Sterling which were around 2.5 times an Aussie dollar.. as little as 2.0 times recently and now not even that much. At the same time AUD is going up against USD, its going up against another currency. Feels good.. my money buys more stuff.. my Aussie coins (collection) are literally worth more, even my pocket change !

 

Immigration is not that tough, especially if you work in specific areas such as doctors and nurses. Other skilled areas are also in demand

[PerryHall]

I can never seem to do a good job estimating this - when I buy it goes down, when I sell it goes up.

 

I know how you feel. I can control the price of gold and silver. If I want the price to drop, I just buy some and if I want the price to go up, I just sell some.

[RareSov]

As for the price now, I would not be buying at 1050 if I had USD.. I would have bought earlier, but if you are stuck without having bought it NOW then just wait, and buy in the next dip. Long term however, be it 1 year or 5, you need to accumulate gold and silver to protect your wealth. Those who buy on the dips would be doing really well by now..

[Sam17-migration]

The old saying today is just as reasonable as it was the last real scare we had, late 70's early 80's. Where we(US) go so does the rest of the world. Does anyone here know where you can sell 800 billion in US paper, I Dont. and thats just one country. What does concerns me is we have sold out, moved out ,or shut down 90% of our manufacturing capability. Just one man's opinion.

[World Colonial]

If by $800 billion in paper you are referring to currency in circulation, there is no "you" in the equation collectively. Most people will do what they always do which is to do nothing and get stuck with all or most of the losses from whatever trend exists. There is no collective exit from ANY market.

 

The key from the individual standpoint is to ACT before most others do which is a question of TIMING. And make no mistake about it, despite notions of "buy and hold" everyone makes a timing decision. There are simply good, better, worse and awful timing decisions.

 

An example of an awful timing decision would be those who have held a disproportionate share of their assets in stocks since January 2000. Their loss in nominal terms may not seem that large, depending upon what they owned, but it has been a disaster in terms of real money (gold), foreign currencies, domestic purchasing power and if nothing else, the opportunity cost of standing stock still (pun intended) for 10 years while going nowhere. This in itself has been a disaster for millions given their weak financial position.

 

As for US manufacturing, though I cannot tell you exactly what the US productive capcity is now versus say, 30 years ago, a 90% decrease is nowhere remotely correct in AGGREGATE. It would be correct to say that 90% of manufacturing jobs in some industries have disappeared but that is simply because those industries are so much more efficient. An example of that would be the steel industry. Yet at least prior to this recession (depression in my opinion), steel output in the US was greater than it was 30 years ago.