T Nation

Attention Gold Bugs

Precious metals also slumped as crude oil prices fell and the dollar gained, reducing their appeal as an inflation hedge and alternative investment. Gold has tumbled 22 percent from its record $1,032.70 on March 17. Platinum and silver are down 36 percent and 33 percent from their peaks.

http://www.bloomberg.com/apps/news?pid=20601091&sid=ayx5QadWAqvo&refer=india

[quote]Zap Branigan wrote:
Precious metals also slumped as crude oil prices fell and the dollar gained, reducing their appeal as an inflation hedge and alternative investment. Gold has tumbled 22 percent from its record $1,032.70 on March 17. Platinum and silver are down 36 percent and 33 percent from their peaks.

http://www.bloomberg.com/apps/news?pid=20601091&sid=ayx5QadWAqvo&refer=india

[/quote]

Time to buy?

[quote]Zap Branigan wrote:
Precious metals also slumped as crude oil prices fell and the dollar gained, reducing their appeal as an inflation hedge and alternative investment. Gold has tumbled 22 percent from its record $1,032.70 on March 17. Platinum and silver are down 36 percent and 33 percent from their peaks.

http://www.bloomberg.com/apps/news?pid=20601091&sid=ayx5QadWAqvo&refer=india

[/quote]

Yes, commodities also experience bubbles – especially when banks distort the money supply. Do you need to be reminded of the original “price” of gold while it was the standard?

The “slump” gold is currently in would be equivalent to a few pennies for a loaf of bread.

Gold is still a safer bet than paper.

[quote]PRCalDude wrote:
Zap Branigan wrote:
Precious metals also slumped as crude oil prices fell and the dollar gained, reducing their appeal as an inflation hedge and alternative investment. Gold has tumbled 22 percent from its record $1,032.70 on March 17. Platinum and silver are down 36 percent and 33 percent from their peaks.

http://www.bloomberg.com/apps/news?pid=20601091&sid=ayx5QadWAqvo&refer=india

Time to buy?[/quote]

lol

The time to buy was years ago.

[quote]

Time to buy?[/quote]

Gold is generally a bad investment. You really have to know what you are doing.

People often use commodities for a hedge against inflation, so when the dollar drops, gold goes through the roof. Once the dollar slide stops, gold drops.

Knowing this is helpful, but it may be a better strategy to buy gold mining stocks instead. Gold sits there doing nothing until it’s used, while the gold mining stocks make money. If gold goes up, they generally make more money, so it is a good investment if you believe gold is going to climb. And if gold drops, they are still going to be able to make money.

[quote]Zap Branigan wrote:
PRCalDude wrote:
Zap Branigan wrote:
Precious metals also slumped as crude oil prices fell and the dollar gained, reducing their appeal as an inflation hedge and alternative investment. Gold has tumbled 22 percent from its record $1,032.70 on March 17. Platinum and silver are down 36 percent and 33 percent from their peaks.

http://www.bloomberg.com/apps/news?pid=20601091&sid=ayx5QadWAqvo&refer=india

Time to buy?

lol

The time to buy was years ago.[/quote]

Gold fluctuates traditionally at between 10 and 30 times the price of a barrel of oil. Right now, its about 8 times the price of a barrel. This suggests that either oil will come down or gold will skyrocket, if it returns to its historical norms.

Oil will probably come down to about $70/barrel while gold meanders down to the low 700’s. That’s the next buy point.

You should still keep about 5 or 10% of your wealth in gold, particularly mines. At about $720, high-cost producers begin to make money, so you may want to play with the Australian and Canadian mines a bit. Stay away from the South Africans.

[quote]The Mage wrote:

Time to buy?

Gold is generally a bad investment. You really have to know what you are doing.

People often use commodities for a hedge against inflation, so when the dollar drops, gold goes through the roof. Once the dollar slide stops, gold drops.

Knowing this is helpful, but it may be a better strategy to buy gold mining stocks instead. Gold sits there doing nothing until it’s used, while the gold mining stocks make money. If gold goes up, they generally make more money, so it is a good investment if you believe gold is going to climb. And if gold drops, they are still going to be able to make money.[/quote]

Oh please. The dollar will not stop losing value if the Fed keeps allowing money to be printed willy-nilly.

Bet on gold and not central planning.

[quote]LIFTICVSMAXIMVS wrote:

Oh please. The dollar will not stop losing value if the Fed keeps allowing money to be printed willy-nilly.

Bet on gold and not central planning.[/quote]

This is a cyclical issue. Yes the fed is overprinting right now, and because of inflation fears, they will slow down that printing. So the dollar is going to rise compared to other currencies.

This is nothing new. Currency goes through these ups and downs. Not too long ago we had the stronger currency, and Europe had a weaker currency. Americans were taking vacations to Europe because of how cheap it was for them.

I am not going to bet on gold… or currency. Actually investing is better then betting. (Which is why I know how to count cards.)

Invest intelligently in companies, invest intelligently in real estate. Generally these are tied to inflation, and if inflation increases, eventually it will be reflected in both of these investments.

Avoid reacting foolishly, pay attention to what is going on, and you can make money no matter what happens. But reacting emotionally, investing the chicken little way, and you will lose your shirt. (Though you might make money in the short run. But then again 11 black will show up every so often too.)

[quote]Headhunter wrote:
Zap Branigan wrote:
PRCalDude wrote:
Zap Branigan wrote:
Precious metals also slumped as crude oil prices fell and the dollar gained, reducing their appeal as an inflation hedge and alternative investment. Gold has tumbled 22 percent from its record $1,032.70 on March 17. Platinum and silver are down 36 percent and 33 percent from their peaks.

http://www.bloomberg.com/apps/news?pid=20601091&sid=ayx5QadWAqvo&refer=india

Time to buy?

lol

The time to buy was years ago.

Gold fluctuates traditionally at between 10 and 30 times the price of a barrel of oil. Right now, its about 8 times the price of a barrel. This suggests that either oil will come down or gold will skyrocket, if it returns to its historical norms.

Oil will probably come down to about $70/barrel while gold meanders down to the low 700’s. That’s the next buy point.

You should still keep about 5 or 10% of your wealth in gold, particularly mines. At about $720, high-cost producers begin to make money, so you may want to play with the Australian and Canadian mines a bit. Stay away from the South Africans.

[/quote]

Fluctuates between 10 and 30 times. What joke.

[quote]The Mage wrote:
I am not going to bet on gold… or currency. Actually investing is better then betting. (Which is why I know how to count cards.)
[/quote]

Yes. There is a logical way to invest. I typically look at investment in terms of capital goods or consumer goods. The question is where in the business cycle to invest in either of those.

The thing is that gold doesn’t really lose its value. The price of oil in term of gold has changed very little; it is in fact fiat that loses value. If we were able to freely trade gold directly for goods and services (that is, use it as money) I’d still bet on the value of gold over paper.

[quote]Zap Branigan wrote:

Fluctuates between 10 and 30 times. What joke.[/quote]

See…chart…above…

Compare…with…oil…price

Get…head…out…of…ass.

[quote]Headhunter wrote:
Zap Branigan wrote:

Fluctuates between 10 and 30 times. What joke.

See…chart…above…

Compare…with…oil…price

Get…head…out…of…ass.

[/quote]

My weight fluctuates between 100 and 300 pounds.

[quote]Zap Branigan wrote:
Headhunter wrote:
Zap Branigan wrote:

Fluctuates between 10 and 30 times. What joke.

See…chart…above…

Compare…with…oil…price

Get…head…out…of…ass.

My weight fluctuates between 100 and 300 pounds.[/quote]

Minimum price for oil = $10

Maximum price for oil = $30

Whoops…

[quote]Headhunter wrote:
Zap Branigan wrote:
Headhunter wrote:
Zap Branigan wrote:

Fluctuates between 10 and 30 times. What joke.

See…chart…above…

Compare…with…oil…price

Get…head…out…of…ass.

My weight fluctuates between 100 and 300 pounds.

Minimum price for oil = $10

Maximum price for oil = $30

Whoops…

[/quote]

You still don’t get it, do you?

Someone is drawing a false relationship for you to sell you gold.

[quote]Zap Branigan wrote:
Headhunter wrote:
Zap Branigan wrote:
Headhunter wrote:
Zap Branigan wrote:

Fluctuates between 10 and 30 times. What joke.

See…chart…above…

Compare…with…oil…price

Get…head…out…of…ass.

My weight fluctuates between 100 and 300 pounds.

Minimum price for oil = $10

Maximum price for oil = $30

Whoops…

You still don’t get it, do you?

Someone is drawing a false relationship for you to sell you gold.
[/quote]

Nope. Gold is a commodity and commodities have historical value relationships. Platinum is always somewhat more expensive than gold and silver is always some fraction. These are all functions of the market. For example, when gold soared, why did silver follow suit? People sold some of their gold and bought silver because of the history of the commodities.

Now throw in the Fed running wild to rescue the banking/mortgage system, a very low (historically) relationship between the oil price and the gold price, and you’ve got a decent argument for long-term gold.

However, as I suggested, the price is in a short-term downdraft, so the best time to get in will be when it drops to $720 or so. At that price, some of the high-cost mines go into shutdown/slowdown mode and the price will firm as supply slows. No one will mine at a loss.

[quote]Zap Branigan wrote:
Someone is drawing a false relationship for you to sell you gold.
[/quote]
The relationship is only historical and not theoretical.

Like anything else the values of gold and oil compared against each other will fluctuate. The point being it fluctuates up and down between certain values (historically) and doesn’t just lose value the way paper has.

[quote]LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Someone is drawing a false relationship for you to sell you gold.

The relationship is only historical and not theoretical.

Like anything else the values of gold and oil compared against each other will fluctuate. The point being it fluctuates up and down between certain values (historically) and doesn’t just lose value the way paper has.[/quote]

Who keeps their money in paper? Hoarding gold is almost as bad an idea as hoarding paper money. Invest in something!!!

[quote]Zap Branigan wrote:
Who keeps their money in paper?
[/quote]
People who stuff cash in a mattress.

There is a time and place for everything. The person holding gold does not think it is a bad idea when he is watching his neighbors lose everything in a volatile stock market. He still has gold and they have nothing.

For the most part people do not hoard; especially given how modern banks work. The mere fact that one’s paycheck gets deposited into a bank means that money is available to investors. Of course, what happens if there is a bank run and now he cannot withdrawal his money?

It is beyond me why you do not understand that all actions have consequences and that the values associated with the sought ends of those actions are purely subjective.

[quote]LIFTICVSMAXIMVS wrote:

It is beyond me why you do not understand that all actions have consequences and that the values associated with the sought ends of those actions are purely subjective.[/quote]

You make poor assumptions.

[quote]Zap Branigan wrote:
LIFTICVSMAXIMVS wrote:
Zap Branigan wrote:
Someone is drawing a false relationship for you to sell you gold.

The relationship is only historical and not theoretical.

Like anything else the values of gold and oil compared against each other will fluctuate. The point being it fluctuates up and down between certain values (historically) and doesn’t just lose value the way paper has.

Who keeps their money in paper? Hoarding gold is almost as bad an idea as hoarding paper money. Invest in something!!!

[/quote]

How is buying gold mining shares different from buying Coca-cola stock? Both produce something buyers want. Its that simple.

Holding gold as a hedge against inflation is a traditional way of taking your wealth out of harm’s way. No one can print up more and devalue your wealth, whereas mine output is already factored into the gold price.

Seriously, Zap, you’re a sharp guy (I really mean that) but you have an obsessive dislike of gold. Its simply an alternative form of money, like wheat or Swiss Francs. Owning either is fine, as is owning gold.