Gold analysis

[01WhiteCobra]

Over the next couple of weeks I'm going to go through my analysis of Gold (and other precious metals) and why I think, in the long term, gold is one of the best investments you can make. The price of gold is toppy at the moment but looking at the price from a macro level I actually think gold is undervalued. Doesn't mean it won't drop like a rock (gold went from about 820 to the 890s in about a month).

The analysis will start with the early 70s when Nixon removed the USD from the gold standard to the present day.

I'll put together the first part tonight. My hope is I'll get some legit discussion (thinking of things I haven't thought of before) as well as educate some people along the way.

[Vertnut]

Over the next couple of weeks I'm going to go through my analysis of Gold (and other precious metals) and why I think, in the long term, gold is one of the best investments you can make. The price of gold is toppy at the moment but looking at the price from a macro level I actually think gold is undervalued. Doesn't mean it won't drop like a rock (gold went from about 820 to the 890s in about a month).

The analysis will start with the early 70s when Nixon removed the USD from the gold standard to the present day.

I'll put together the first part tonight. My hope is I'll get some legit discussion (thinking of things I haven't thought of before) as well as educate some people along the way.
I can use the education. I was a freshman in college, when the Hunt brother's decided to "influence" the silver and gold markets. Those prices were artificially inflated, unlike todays market. I would like to know what makes it work world-wide.

[White trash wagon]

I sold 80 troy oz. of gold when it hit $827. I bought it in the early 90's for $250. I still have 40 oz. left. :D

Scott

[01WhiteCobra]

As a little background... read:

Bretton Woods System
http://en.wikipedia.org/wiki/Bretton_Woods_system

Pay particular attention to the section "The Late Bretton Woods System"

Tomorrow, we'll talk about how the global economy has become codependent on us, the US consumer and how trade imbalances and foreign ownership of American debt has evolved over the past 3 decades.

[Slowhand]

as the dollar goes down in value, the price of gold will go up from what I hear? :confused:

[01WhiteCobra]

as the dollar goes down in value, the price of gold will go up from what I hear? :confused:

Do you want to know why the dollar is getting more worthless and why the trend cannot be stopped without a hell of alot of pain?

[Denny]

Do you want to know why the dollar is getting more worthless and why the trend cannot be stopped without a hell of alot of pain?
Printing on trust, rather than a standard. Even the original basis for the "trust" has been manipulated. Eventually, gold will be the only REAL basis for any currency. Those who base their finances on a foundation, such as gold, have not only a more secure outlook on their worth, but hold a recognized worth to the rest of the world as well.

When we left the gold, even the silver standard, we doomed the dollar. When you print on "trust," make sure you stick to that principle AND have a recovery plan to return to the original standard. Both elements are now completely unreachable.

[BP]

as the dollar goes down in value, the price of gold will go up from what I hear? :confused:

Only for us poor saps that use the US Dollar as currency. It's still $450 an ounce for the Limeys.

[Vertnut]

As a little background... read:

Bretton Woods System
http://en.wikipedia.org/wiki/Bretton_Woods_system

Pay particular attention to the section "The Late Bretton Woods System"

Tomorrow, we'll talk about how the global economy has become codependent on us, the US consumer and how trade imbalances and foreign ownership of American debt has evolved over the past 3 decades.
I just had a flashback to Econ 201, 1979... :o

[01WhiteCobra]

Printing on trust, rather than a standard. Even the original basis for the "trust" has been manipulated. Eventually, gold will be the only REAL basis for any currency. Those who base their finances on a foundation, such as gold, have not only a more secure outlook on their worth, but hold a recognized worth to the rest of the world as well.

When we left the gold, even the silver standard, we doomed the dollar. When you print on "trust," make sure you stick to that principle AND have a recovery plan to return to the original standard. Both elements are now completely unreachable.

Yes, this is true.

"Gold is the child of Zeus. Neither moth nor rust devoureth it." - Pindar

Unfortunately, eventually any currency or debt ever printed has succumbed in one sense or another.

Think of a chart in the form of a pyramid. At the bottom are your penny stocks and going up through the levels, corporate debt, real estate, treasury debt, the US dollar and at the top... Gold. Historically gold has always represented wealth in the "civilized world."

That's an important concept and you'll hear the headlines all the time, "Investors shunned stocks today and treasuries and gold rose in a flight to safety."

Gold outdates all currencies as a sign/show of wealth. But the value is never constant.

Back to Bretton Wood... What emerged from these discussions was the USD was considered the reserve currency. Prior to WWII it was the British Pound. In the competition for global trade (and it is a competition) the overlying issue is seniorage and the benefits given to the country issuing the seniorage. The reserve currency, under Bretton Wood, was tied to the price of gold. The government issuing the currency would exchange its notes into for whatever the prevailing rate was at the time (now, we're talking international banks redeeming, not John Doe on the street.)

Since 1971 and abandonment of the gold standard every dollar created is no longer tied to gold and thus becomes a paper credit backed by faith (as Denny wrote.) Its just an IOU really as money is nothing but an easy way to exchange goods. Instead of having to bring your cow to the grocery store to buy groceries you can sell your cow to someone that needs it and use the dollar to purchase goods at the store (or a new car, or a diamond ring, or a new VCR, etc.)

After WWII, the US held about 26 billion of the 40 billion in global gold. We used that power to rebuild Europe and develop and promote capitalism which accelerate global trade.

We claimed the top spot in the world after WWII and the era of monetary debasement and credit creation was born. Woo hoo! When your parents complain about how the acted in the 50s and 60s and how "you kids" don't know the value of the dollar... tell them you not only have to pay for your own way but you are paying for their way of life in the 50s/60s/70s. The gravy train needs to stop and refuel every now and then and that is where we are.

By the late 50s the size of the US gold base had barely grown but the value of the US dollar had already mushroomed beyond the value it held in gold. Sort of like the tech bubble of the late 90s or the housing bubble of the 2000s. Eventually it has to come back down to earth. After Bretton Wood, 100% of the US reserves in gold covered the US dollar. By the late 50s, only 16%. We posted our first trade deficit in the late 50s and by 1962 only 11% of the USD was backed by gold (so much for the gold standard!!)

As our deficits expanded the price of gold started creeping back up and eventually the big boys at the time decided to maintain a price of $35 per ounce. A gold pool was created and would flucuate (add gold to the pool to support the dollar, etc.) It worked until 1966 until speculators started driving up the price of gold again (sort of like oil now.) The British Pound had an "attack" on it and the British goverment had to devalue the Pound. President Johnson had no choice but to change the value of the dollar against the pound.

Faced with hard decisions President Johnson enacted a series of measures that would stimulate US exports and stop the flow of gold out of the country. During the same time our reliance on oil imports caused a major increase in Soviet-USD holdings (petro-dollars) which the Soviets funneled into European banks which was the start of the eurodollar market.

By the end of the 60s the "black market" for gold was nearly 5x that of the amount deemable by the USD. The outflow of gold in the US was at an all time high.

Nixon came on board in 70 and the energy crisis forced him to raise the oil import quotas established earlier and the flood of US dollars out of the country hit all time highs. We almost depleted all of our USD reserves by mid 71 and the run on redeeming USDs for gold hit an all time high.

Nixon stopped the redemption of USD for gold and the Smithsonian Agreement was born. We raised the official price of gold to $38 an ounce and we revalued (devalued) the dollar. All in all the average devaule was around 8-9%. The Smithsonian Agreement was also important that it allowed the price of gold to flucuate and the USD was put into competition against all other currencies.

All in all there are some key themes that started after WWII and intensified after 1971:

- the global economy needs the US consumer
- the US consumer has no savings
- real wage is deflating
- until recently the US consumer was banking on housing values to create credit for consumption
- Asia has no way in consuming everything they produce (they need to export to us)
- Asia is willing to continue buying up dollars to perpetuate their exports to us (for now)

There are two ways to solve the USD's lead in devaluing every currency in the world. We can deflate debt (painful) or we can reflate the USD.

By deflating debt we basically engineer a recession and hope that debt can be paid down without a depression. By reflating the USD we payoff debt with newly printed money which would result in further devaluation of the dollar.

As humans we look to avoid pain so deflating debt is probably not an option politically. This leaves us with devaluing the world currencies in lock step. Why would other countries agree with this? Because, at least at this point in time, the US consumer is king in the world. If the politicians engineered an recession in the US the global economies of the world would follow suit.

So to get back to SOHC's comment about the dollar falling and gold going up... yes in theory this is correct. In fact, by removing the smoke and mirrors of politicians, you will see this is currently happening.

Personally I think gold should probably be sitting at over $1000 an ounce based on the current world economies. I trade in an out of gold but currently I'm long (I own it) and have owned it since late December when it was trading for $823 an ounce. Currently it is at $903 an ounce for almost a 10% return in less than a month. Its getting a little extended at this range in the short term so I'm looking at $900 as a support level if it closes above $900 today. If it does, I'll sell on a break below $900 but will keep my position for now. I've also been long the Australian dollar agains the US dollar since the AUD is a proxy for gold prices (second largest exporter of gold).

I'm trying to find a decent set of charts to display that don't cost money for use that highlight things like exports, debt held by foreigners, consumer credit, M1/M2 money supply, margin debt, personal savings, etc. The charts are mind numbing and really put into perspective just how much we've been living well beyond our means as a country and how the rest of the world has helped us do it. Eventually you have to pay up.

[Geor!]

So the question really is, how do I invest in gold? :)

[BP]

So the question really is, how do I invest in gold? :)

Gold chains and wear them around your neck like Mr. T.

[01WhiteCobra]

Gold chains and wear them around your neck like Mr. T.

That certainly is one way! haha.

Futures/Options - big gains, big losses. Can lose all your money fairly quickly. :D

Mining Stocks - you can go speculative and hope one of the junior companies find a mine (little too risky for me) or you can go with the larger mining companies like Newmonth (NEM) or Barrick (ABX)

Mutual funds - there are mutual funds that invest in precious metals

coins - (bleh)

raw gold - bullions and bars

You can also trade gold against the US dollar on the retail Forex market although it a highly unregulated industry so consider it the "wild wild west."

[slow99]

So the question really is, how do I invest in gold? :)

Gold ETF...GLD. Traded on the exchanges, just open a brokerage account and trade that like you would a stock.

[89gt-stanger]

This will be rather interesting. I find it interesting that precious metals affect the value of the american dollar. Heres an interesting silver article:

http://news.silverseek.com/TedButler/1125522079.php

heres an exert:

"Is silver rarer than gold now? The answer is yes."

[mikeb]

As I recall printing money leads to runaway inflation - Italy tried this and suffered greatly for it in the past.

As I also recall when a country is facing economic collapse they have 3 options:

1. Print more money (and suffer runaway inflation).
2. Default on the debt (and risk war).
3. Tighten the belt and pay off debt (ravage the economy).

I submit that in the US there is no stomach for #2 and #3, leaving #1 as the short term politically acceptable "solution". But long term it will screw us.

[01WhiteCobra]

Gold currently retraced to ~879. Sold when it crossed under 900. Looking to get back in if it holds 875 and at some point look for it to cross 1000.

[01WhiteCobra]

repurchase at 875... currently 918.

[TexasDevilDog]

http://www.golddrivers.com/tgdl/image/charts/200706/DOWGOLD.gif

old chart

Dow = 12,207
Gold = 910

dow/gold = 13.41

[01WhiteCobra]

Gold... 928.10 on the spot market.

I love this world.

[TexasDevilDog]

Gold... 928.10 on the spot market.

I love this world.

FOMC policy statement tomorrow. The market has priced in 50 basis points. The FED cuts, the dollar drops more, the FED does not cut, the market drops more.

Sticky-widget

[TexasDevilDog]

by Stephen Roach - "If we had been running our economies the old-fashioned way, for example, where saving and consumption were funded by income, maybe we wouldn't be in this mess we are in now."
...
The reason this crunch will be so much worse, he said, is that the chunk of the economy which is shuddering to a halt - homebuilding and housing dependent consumption - is six times bigger than the spending on IT, which triggered the last one.

http://www.telegraph.co.uk/money/main.jhtml;jsessionid=KMKID3DNESTTBQFIQMGSFFWAVCBQ WIV0?xml=/money/2008/01/28/ccusecon128.xml

[01WhiteCobra]

FOMC policy statement tomorrow. The market has priced in 50 basis points. The FED cuts, the dollar drops more, the FED does not cut, the market drops more.

Sticky-widget

It will be interesting tomorrow. Some decent eco numbers today. Fed doesn't want to run out of bullets. Market calling for at least .50 but I can see the Fed only relaxing .25 in a wait and see.

If so, bye-bye market. It will be a "policy statement" from the Fed if they lower .50 as it tells me they are going beyond the original mandate of 1) stable prices and 2) "full" employment and adding a 3) stability in the financial markets.

[BreedLove]

Sorry guys I have zero knowledge on this subject, how much is one troy ounce of gold actually worth?

[01WhiteCobra]

Sorry guys I have zero knowledge on this subject, how much is one troy ounce of gold actually worth?

About $921.25/oz as of 1:30pm CST 1/29/08.

[Denny]

About $921.25/oz as of 1:30pm CST 1/29/08.
Wish I had the coin to slang it with ya...

[01WhiteCobra]

Wish I had the coin to slang it with ya...

Leverage buddy... leverage... haha.

Trade value: $92,165.00
Margin used: $1843.30

$18.43 required to trade one ounce of gold against the dollar.

:D

[Denny]

I'm still small-time for the time being. Just wait, though, I'll be up there to make some big boy moves. Right now, I'm experimenting with a small cash account to see how it goes... until I'm comfortable with myself.

[TexasDevilDog]

Leverage buddy... leverage... haha.

Trade value: $92,165.00
Margin used: $1843.30

$18.43 required to trade one ounce of gold against the dollar.

:D

That's a big lever.

[01WhiteCobra]

That's a big lever.

fiddy to one. :D

Some more from Barrons this week:

A Growth Maven's New Favorite: Gold
Interview with Joseph McNay, Chairman, Essex Investment Management
By SANDRA WARD

NOT MUCH ESCAPES THE ATTENTION OF THIS wise and wily investor. Near visionary in his ability to identify trends and capitalize on them, Joseph McNay has made a lot of people and institutions wealthy in the 40-plus years he's been plying the investment trade. He manages more than $3 billion at Essex Investment Management in Boston, a firm he founded, including its flagship long-short fund and a natural-resources fund. One of the all-time greats of growth investing, McNay is now pounding the table for, of all things, gold. Attention must be paid.

Barron's: Are we in a recession or are we perhaps talking ourselves into one?

McNay: We certainly are in an economic slowdown, and my personal opinion is that we are in the early phases of a recession.

Whether we are in a recession or not is irrelevant because we are slowing down, and results are becoming more negative. The Federal Reserve has been very much aware of this and has been acting consistently in that regard. They've been increasing the money supply at a much faster rate than people realize, near a 15% annual rate of increase in M3 [a broad measure of the money supply].


Barron's: What would be more typical growth in M3?


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McNay: Five percent, maybe. Increasing the money supply kept the situation from getting worse faster than it would have otherwise. From one point of view, that's good. But there is a point of view from which it is not good, and that is it decreases the value of our currency on a consistent basis and sometimes at an accelerated rate. In the past four or five years, the euro has gone from 82 cents to the dollar to $1.48. That is all lost purchasing power in our currency. We are in a lose-lose situation. The decline in the value of our currency is directly inflationary: Lost purchasing power is inflation. The bigger risk is that, at some point, the large holders of U.S. dollars may decide they want a lot less of them, if any. This is a very challenging set of conditions for us.

Barron's: What does this mean for the market?

McNay: We are going to have an even more narrowed and focused market than we had last year. Something the world is going to want now is a currency alternative. An investment I have felt positive about but now feel dramatically more positive about is gold. Gold is probably the single most important investment that most of us can have a representation in.

Barron's: It has run up quite a bit in the past five years.

McNay: Well, it depends on how you look at it. It is back to its old high. But if you compare it with the value of the Dow Jones and the value of the dollar, it's not up nearly as much as one might think. At most tops in gold, gold and the Dow Jones Industrial Average sell at the same price. Right now, gold is about one-fourteenth the price of the Dow. We are denigrating the value of our currency at a much faster rate than we have in the past. The government is running a $250 billion to $400 billion deficit, and our balance of trade is running at a $700 billion or $800 billion deficit. This has all created money at a rate faster than we produce and means that we are further in debt and the value of our money falls faster. One has to come to decisions on how to protect the value of money. Cash is king in the minds of some people. But the biggest question associated with that decision is what currency do you keep your cash in?

Barron's: And?

McNay: I would rather own the Chinese currency than the U.S. currency. As they revalue upwards, it's a growth investment and it gives protection against losing purchasing power, and that is what we are all facing.

Barron's: When you talk about gold, should people be thinking in terms of the mining companies or bullion?

McNay: Both. The metal has outperformed the mining companies in the last three years, but that relationship is in the process of switching and mining companies will be the best investment. But they will both be good investments. There are two ETFs that are convenient for a lot of people: streetTracks Gold Trust [ticker: GLD] tracks the gold and Market Vector Gold Miners [GDX] tracks the mining companies.

-------------------------------

As we noted last week, what we're seeing is a typical bear-market rally, predictably paced by the very stocks -- home builders, financials and the like -- that spearheaded the big plunge. The action is much more reflective of sellers' fatigue -- strenuous unloading of big positions can tire out even the most dedicated dumper -- than any intimation of a turn.

Indeed, as the estimable David Rosenberg of Merrill Lynch, who consistently comes up with some great stuff, points out, in the 2000-2002 bear market, there were no fewer than 16 rallies of at least 5% in the S&P, each lasting on average about a month, and no fewer than 35 bounces of 5% or more in the Nasdaq (which still managed to wind up losing nearly 80% of its value).

The investment byword remains don't buy the rally (rather, sell it). And stay defensive. This bear market is nowhere near over.

-------------------------

Not only me sayings short the rallies and long gold...

[01WhiteCobra]

Did I mention I love gold? Long since 875 spot. 950 here I come.

[slow99]

Did I mention I love gold? Long since 875 spot. 950 here I come.

In at 903. ;)

[Trip McNeely]

Oil > Gold. :)

[01WhiteCobra]

Oil > Gold. :)

Gold will outperform oil in 2008. Bookmark this post.

When oil hits $150/bbl... I'm gonna be glad I'm in gold.

[Trip McNeely]

Gold will outperform oil in 2008. Bookmark this post.

When oil hits $150/bbl... I'm gonna be glad I'm in gold.
Gold has always been wishy washy, and hasnt really done anything until recently. I dont see it as surpassing oil anytime soon. Thats just what I feel anyway.

[01WhiteCobra]

Gold has always been wishy washy, and hasnt really done anything until recently. I dont see it as surpassing oil anytime soon. Thats just what I feel anyway.

I like that feeling. Because, well, I can make money off of it. Wishy washy? LOL.

http://www.golddrivers.com/tgdl/image/charts/gdrcharts/monthly/GOLDOILRATIO.gif

[01WhiteCobra]

Yea, gold has sucked against oil over the past three years.

[Trip McNeely]

I didnt say it sucked, but it hasnt surpassed it by much if at all, and it wont. Just wait until BP gets the refinery up and running here in a few months, youll see plenty of change.

[01WhiteCobra]

I didnt say it sucked, but it hasnt surpassed it by much if at all, and it wont. Just wait until BP gets the refinery up and running here in a few months, youll see plenty of change.

You said oil was > than gold. Actually, at this point in time, gold has much more "room" to move up than oil does.

Just wait until BP gets their refinery up and running? Exactly how is that going to do something to the price of oil?

[Trip McNeely]

You said oil was > than gold. Actually, at this point in time, gold has much more "room" to move up than oil does.

Just wait until BP gets their refinery up and running? Exactly how is that going to do something to the price of oil?
Who knows, but production will increase dramatically.

I believe oil has more value than gold, take a look around you.

[01WhiteCobra]

Who knows, but production will increase dramatically.

I believe oil has more value than gold, take a look around you.

It doesn't matter which has "more value" it has to do with what is currently priced correctly. If anything oil is a little high at the moment and I see it falling back to 80.

Gold on the other hand, even with oil priced at $80, is undervalued at the moment.

I've given you lots of information on why I think gold is undervalued at the moment. To you care to actually provide analysis on oil or are you just gonna continue to give sophomoric statements like "look around you?"

Really doesn't matter, I'm long term (like 20 years) bullish on gold and I play the daily moves every day the market is open. I'll take my 500-1000 point moves in gold every day.

Haven't played oil in a while but will at some point in 2008.

[Trip McNeely]

It doesn't matter which has "more value" it has to do with what is currently priced correctly. If anything oil is a little high at the moment and I see it falling back to 80.

Gold on the other hand, even with oil priced at $80, is undervalued at the moment.

I've given you lots of information on why I think gold is undervalued at the moment. To you care to actually provide analysis on oil or are you just gonna continue to give sophomoric statements like "look around you?"

Really doesn't matter, I'm long term (like 20 years) bullish on gold and I play the daily moves every day the market is open. I'll take my 500-1000 point moves in gold every day.

Haven't played oil in a while but will at some point in 2008.
Well Ill be the first to point out I'm still learning things, but from my current understanding of the market trends, thats what I base my knowledge off of. You obviously know a lot though so I'll take your word for it. I try to pick up as much as I can from many sources.

[01WhiteCobra]

As far as playing the daily moves in gold... I play the spot market and bet USD against Gold.

I take the hourly high/low at 9am CET (3am CST) for the past hour. I set a buy stop at the high +15 points and a sell stop at low - 15 points. I set a stop loss of 40 points and a take profit of 70 points. After a 50 point gain I move the stop loss to break even. If the difference between the high and low is 100 points I don't submit the buy/sell stops.

I repeat again at 3pm CET (9am CST).

I've averaged about 400 points a week for the past 6 months. A point is worth $1-5 depending on the week and my confidence in the strategy that day.

I'll start posting up the dailies.

[Trip McNeely]

As far as playing the daily moves in gold... I play the spot market and bet USD against Gold.

I take the hourly high/low at 9am CET (3am CST) for the past hour. I set a buy stop at the high +15 points and a sell stop at low - 15 points. I set a stop loss of 40 points and a take profit of 70 points. After a 50 point gain I move the stop loss to break even. If the difference between the high and low is 100 points I don't submit the buy/sell stops.

I repeat again at 3pm CET (9am CST).

I've average about 500 points a week for the past 6 months and have been average 400 points per week. A point is worth $1-5 depending on the week and my confidence in the strategy that day.
So do you day trade as a full time job, I take it? I've thought about that, but I need much more knowledge before i delve into something like that full time. I've seen these many stories on these day traders trading hedgefunds and the like and they do pretty well, although they take a lot of major loses here and there also. Very risky.

[01WhiteCobra]

So do you day trade as a full time job, I take it? I've thought about that, but I need much more knowledge before i delve into something like that full time. I've seen these many stories on these day traders trading hedgefunds and the like and they do pretty well, although they take a lot of major loses here and there also. Very risky.

I have the benefit of working at home so I can trade whenever I want and not be affected by commuting times, hassles, etc.

I've swing trading (3-5 days) and day traded going on about 12 years before that I've been active in the equity markets since 1980 or so. I also wrote alot of software for hedge funds and day trading shops through out the years. I've finally have a comfortable bankroll from which to play (if I lose it all I'm ok.)

Risk is relative. You would do well as a day trader if you are an exceptional gambler because, well, that is basically what you are doing. No one truly knows where the price of gold (or oil or any other commodity) will be in the next day. You can make relatively good assumptions over a long period of time but tomorrow is a different story. The key is to set your trades as positive expectations and take the occasional loss without feeling bad.

Day trading will incur loss without exception it's how you handle the loss and how you come back that determines your success. Truthfully, day trading keeps me from having to book a flight to Vegas every month. :D

I'm also a partner in a software company that pays the day to day.

[Trip McNeely]

I have the benefit of working at home so I can trade whenever I want and not be affected by commuting times, hassles, etc.

I've swing trading (3-5 days) and day traded going on about 12 years before that I've been active in the equity markets since 1980 or so. I also wrote alot of software for hedge funds and day trading shops through out the years. I've finally have a comfortable bankroll from which to play (if I lose it all I'm ok.)

Risk is relative. You would do well as a day trader if you are an exceptional gambler because, well, that is basically what you are doing. No one truly knows where the price of gold (or oil or any other commodity) will be in the next day. You can make relatively good assumptions over a long period of time but tomorrow is a different story. The key is to set your trades as positive expectations and take the occasional loss without feeling bad.

Day trading will incur loss without exception it's how you handle the loss and how you come back that determines your success. Truthfully, day trading keeps me from having to book a flight to Vegas every month. :D
Damn, you saw the big crash of the oil if you traded in the 80s huh? Shit, Im gonna hire you as a consultant. :D

[01WhiteCobra]

Damn, you saw the big crash of the oil if you traded in the 80s huh? Shit, Im gonna hire you as a consultant. :D

I lived it. I worked for Coastal Corporation at the time and my dad was a VP of projects for a petro-chem company and my then soon to be father in law was a 30 year employee of Gulf/Chevron. :D

My brother in law is about to start his third energy company (first one sold, second about to be sold) so I think in 2008 I'll get back into the energy field. Software has become very boring in the past couple of years. haha.

[black01gt]

I
My brother in law is about to start his third energy company (first one sold, second about to be sold)
What and where were the companies he has put together?

[01WhiteCobra]

Hmmm... spot gold sitting at 938.65 at the moment... actualy peaked at 945 and some change this afternoon.

Did I mention I love gold?

[TexasDevilDog]

Hmmm... spot gold sitting at 938.65 at the moment... actualy peaked at 945 and some change this afternoon.

Did I mention I love gold?

Not while it was down below $900 this last week. I thought you forgot.

[01WhiteCobra]

Not while it was down below $900 this last week. I thought you forgot.

Long term. Ebbs and flows are part of the market. I've been in since 875 so I was never below break even.

I know where it is going, so I hold this position long term and day trade in and out as the situation dictates. I've probably taken 15 positions (both long and short) since 2/8.

If I would have chickened out at ~896 (intraday low since 2/8 on 2/13) I still would have made made more than the average monthly salary in the US.

[Casper]

It is enough to realize that industrial uses are expanding faster than projected resourcess can accomodate, East Timor is still a mess, and political reserves are oversold and don't show any sign of relief.

30-60-90 year cycle. Time to invest in Uranium.

[TexasDevilDog]

http://www.kitco.com/images/live/gold.gif

[01WhiteCobra]

Flight to safety.

http://s.wsj.net/public/resources/images/OB-BB574_hotnot_20080222185301.gif
,

[01WhiteCobra]

960 spot. :D

[01WhiteCobra]

Gold gold baby... 969.50 spot.

[slow99]

Gold gold baby... 969.50 spot.

Damn straight. Glad I got in at 903. :cool:

[01WhiteCobra]

984.50 spot. :D Over 10,000 points since the last call at 875 (point = one penny).

Combine that with 50:1 leverage... and I just produced UpOnOne's income for one year.

[Thats M Life]

984.50 spot. :D Over 10,000 points since the last call at 875 (point = one penny).

Combine that with 50:1 leverage... and I just produced UpOnOne's income for one year.

lmfao! zing

[01WhiteCobra]

Gold futures hit $1,000 an ounce for the first time Thursday, pushed past the benchmark by the sinking dollar and record crude oil prices.

Just sayin'.

[01WhiteCobra]

What? No Love? If y'all would have listened to me you could have made the median income of the US in a few short months.

[slow99]

What? No Love? If y'all would have listened to me you could have made the median income of the US in a few short months.

I'm enjoying it. :)

[01WhiteCobra]

Just another top off before I go.

While y'all are figuring out who's spritual leader is saying what.... I'm making more than all you.

Get with the program. It has nothing to do with who is elected. The game is being played and either you are a spectator or a participant. You decide.

You can go back and decide who is "godly" and who is "lucifer" after you made your bones.

If you would have purchased spot gold, when I recommended it, at a ludicrous leverage like I did 50:1, you would have made more than the average household income in the United States... in a year.

Might not sound like much but you would have done better than 99% of the entire world.

Either way, I'm done. :D I'm about to get on a plane and spend stupid money for the next week.

[Trip McNeely]

Very smart man. I stuck my foot in my mouth debating with you a few weeks ago. With the latest trend, its gone even further. lol :o

[93coupelx]

Hmmm gold jumped again...

http://finance.yahoo.com/banking-budgeting/article/104605/Fed-Pumps-More-Money-Into-Financial-Markets

[Mychael101]

Wish I had the money necessary to invest when you said to jump on it.

[slow99]

Hmmm gold jumped again...

http://finance.yahoo.com/banking-budgeting/article/104605/Fed-Pumps-More-Money-Into-Financial-Markets

Cool, and welcome to two days ago. How are things in Tuesday?

[01WhiteCobra]

Hmmm gold jumped again...

http://finance.yahoo.com/banking-budgeting/article/104605/Fed-Pumps-More-Money-Into-Financial-Markets

Really? No shit?

[slow99]

Really? No shit?

Hey, we landed on the moon, did anyone catch that?

[01WhiteCobra]

Hey, we landed on the moon, did anyone catch that?

No fucking way. I thought I just heard on CNN where we landed on Hawaii.

[93coupelx]

Cool, and welcome to two days ago. How are things in Tuesday?

Lol. I am in the desert so news is a little slow. I didn't see a thread on that.

[slow99]

Lol. I am in the desert so news is a little slow. I didn't see a thread on that.

Ha, no harm no foul. :)

[Casper]

Get with the program. It has nothing to do with who is elected. The game is being played and either you are a spectator or a participant. You decide.

You can go back and decide who is "godly" and who is "lucifer" after you made your bones.


Amen bruddah!

<---another unwashed heathen

[01WhiteCobra]

Taking the profits tomorrow regardless.

Commodities took a huge hit today even though Gold held.

Will figure out the re-strategy after I get back from vacation.

[Thats M Life]

Taking the profits tomorrow regardless.

Commodities took a huge hit today even though Gold held.

Will figure out the re-strategy after I get back from vacation.

Who are you trading with to get the 50:1 leverage? If you dont mind me asking

[slow99]

Taking the profits tomorrow regardless.

Commodities took a huge hit today even though Gold held.

Will figure out the re-strategy after I get back from vacation.

Turned out we made a good move. Sold at 10am this morning...thanks for the entry point. :cool:

[clean89]

Every time the fed lowers rates our dollar is going to lose value. At the same time look at the CPI it is out of control. I say the feds need to let all of the banks that lent people money for a home who should have been denied go out of business. We need to combat inflation not this bullshit housing crisis. Let the people lose there homes/ They did not deserve it in the first place. At the same time how can you go to war and lower taxes. Lets see increase spending (borrow from china) and lower taxes. Hmmmm thats really going to work. It like the stimulus package I mean I like the extra cash but really is it going to do us good to borrow money from china to buy china made stuff. We are digging a hole and it is only going to get worse before it gets better. I personally think it is what we need as a country we need to bring manufacturing jobs back to the US.

Do you want to know why the dollar is getting more worthless and why the trend cannot be stopped without a hell of alot of pain?

[slow99]

Every time the fed lowers rates our dollar is going to lose value.

The Fed lowered today and the Dollar was up and Gold was down roughly 3%. I know what you're getting at, just sayin'.

[clean89]

more money in circulation the less it is worth.

The Fed lowered today and the Dollar was up and Gold was down roughly 3%. I know what you're getting at, just sayin'.

[Denny]

more money in circulation the less it is worth.
How is the Fed lowering rates = to more money in circulation? :confused:

[clean89]

Are you kidding me?

How is the Fed lowering rates = to more money in circulation? :confused:

[Denny]

You're not going to answer?

[ayzo]

You're not going to answer?

The easiest way to think of it is supply and demand, every time the fed lowers rates they can't just use the backspace button and replace the digits they have to either contract the money supply or expand the money supply to adjust for its new "value". In the end the federal reserve is just a bunch of guys with a printing press.

[clean89]

You're not going to answer?

I thought you were joking. When the fed lowers interest rates they are lowering the rate at which banks trade money. This is the way the Federal Reserve puts more currency into circulation. Usually this is a way the FED impacts our economy with the rate they set they can put money into or pull money out of circulation. They are not trying to combat inflation at the moment they are trying to save banks ass who lent money to people who the should not have. I personally think we should be raising rates and combating inflation. Remember banks do not have to lower there rates because the fed lowers theres it is two totally different things. I have not been watching lately but haven't interest rates on home loans been going up as the fed lowers the rate. The GOOD consumer is being punished for banks screw ups.

Another way to think about it every time the FRB lowers rates our currency is devaluing. At the same time we are seeing inflation in prices. It is a revolving thing. We lower rates which cause the dollars value to go down and commodities values are increasing. Look at Gold and Oil. If the price of oil was based upon Euros the price would still be around 50-60 a barrel according to OPEC. So what happens our currency is becoming worthless on the world market and it is costing us more dollars to get the things we need such as oil. This increases the price of shipping normal and necessity items such as milk. Who pays these cost the consumer so the price of the good on the shelf increases. When normal goods are rapidly increasing in price there is a huge problem with inflation. The FRB should raise rates and take money out of circulation so that people have less money to spend thus the dollar would become more valuable to everyone. Remember Money is a commodity such as Gold and Oil. The more of it the less it is worth the less there is the more it is worth.

Instead the FRB is not combating inflation they are trying to fix this housing crisis that BAD business decisions got us into. This affects normal everyone instead of just the people that caused this situation.

[Zarathustra]

good post

[Denny]

I thought you were joking. When the fed lowers interest rates they are lowering the rate at which banks trade money. This is the way the Federal Reserve puts more currency into circulation. Usually this is a way the FED impacts our economy with the rate they set they can put money into or pull money out of circulation. They are not trying to combat inflation at the moment they are trying to save banks ass who lent money to people who the should not have. I personally think we should be raising rates and combating inflation. Remember banks do not have to lower there rates because the fed lowers theres it is two totally different things. I have not been watching lately but haven't interest rates on home loans been going up as the fed lowers the rate. The GOOD consumer is being punished for banks screw ups.

Another way to think about it every time the FRB lowers rates our currency is devaluing. At the same time we are seeing inflation in prices. It is a revolving thing. We lower rates which cause the dollars value to go down and commodities values are increasing. Look at Gold and Oil. If the price of oil was based upon Euros the price would still be around 50-60 a barrel according to OPEC. So what happens our currency is becoming worthless on the world market and it is costing us more dollars to get the things we need such as oil. This increases the price of shipping normal and necessity items such as milk. Who pays these cost the consumer so the price of the good on the shelf increases. When normal goods are rapidly increasing in price there is a huge problem with inflation. The FRB should raise rates and take money out of circulation so that people have less money to spend thus the dollar would become more valuable to everyone. Remember Money is a commodity such as Gold and Oil. The more of it the less it is worth the less there is the more it is worth.

Instead the FRB is not combating inflation they are trying to fix this housing crisis that BAD business decisions got us into. This affects normal everyone instead of just the people that caused this situation.
Ah, gotcha. I wasn't trying to be a smart ass earlier. I just honestly wanted to know exactly how that equated. I can see how moves like these could and likely would lead to inflation. Like I said in an earlier post (different thread) is that banks are so powerful because when they do right, they make money... when they screw up, others pay for their mistake. This, again, is another prime example.

[Denny]

The easiest way to think of it is supply and demand, every time the fed lowers rates they can't just use the backspace button and replace the digits they have to either contract the money supply or expand the money supply to adjust for its new "value". In the end the federal reserve is just a bunch of guys with a printing press.
And people cheer for these moves :rolleyes:

[ayzo]

And people cheer for these moves :rolleyes:

Yea its a real shame, all they want is the dow to be at 14,000 and on its way to 15,000. What everybody seems to forget is that stocks are priced in USD and if the USD slides the value of your stocks also slide. If you price the dow jones index in gold, silver, oil, wheat, yen, euros, or anything else but the USD we've been going down for the past decade along with the dollar. Getting a 15% return on your 401k is great but its of no use if the dollar drops 13% that same year.

[01WhiteCobra]

I thought you were joking. When the fed lowers interest rates they are lowering the rate at which banks trade money. This is the way the Federal Reserve puts more currency into circulation.

Ah... no.

The Fed buys and sells government securities on the open market to expand or contract the money supply. The interest rate has nothing to do with it.

Also, member banks are required to keep a certain percentage of capital on deposit with the Fed. The Fed will ease the required percentage to increase supply or increase the percentage required to shrink money supply.

Interest is just the cost of money and doesn't determine how much money is in supply at any given moment.

The currency is devalued in two ways... 1) the amount in supply and 2) the interest rate of the currency.

[clean89]

I was not even going to bring government bonds into the equation or the required deposits. The increasing and decreasing of rates indirectly impacts the circulation of dollars in the economy. As I said before it is the rate at which banks borrow money and trade money at. When banks get cheaper money they lend out more money thus increasing the amount of money in circulation.

Ah... no.

The Fed buys and sells government securities on the open market to expand or contract the money supply. The interest rate has nothing to do with it.

Also, member banks are required to keep a certain percentage of capital on deposit with the Fed. The Fed will ease the required percentage to increase supply or increase the percentage required to shrink money supply.

Interest is just the cost of money and doesn't determine how much money is in supply at any given moment.

The currency is devalued in two ways... 1) the amount in supply and 2) the interest rate of the currency.

[01WhiteCobra]

I was not even going to bring government bonds into the equation or the required deposits. The increasing and decreasing of rates indirectly impacts the circulation of dollars in the economy. As I said before it is the rate at which banks borrow money and trade money at. When banks get cheaper money they lend out more money thus increasing the amount of money in circulation.

rate is the cost of money and not the quantity of money. The deposit requirements and treasury auctions are what bring money into the system. I'm talking physical money in supply. Interest rates have an indirect effect on increasing money supply because it makes borrowing money from the Fed to subsequently lend out at a higher rate more attractive (up to their deposit requirement.)

For example, even though the rates were lowered the banks continued to tighten their lending requirements thus were not lending out money... even at the lower rate. The drop in interest rate didn't do what the Fed wanted it to do... get the banks to loan money... up to their deposit requirements.

Here is a good primer for anyone interested:

http://www.econlib.org/LIBRARY/Enc/FederalReserveSystem.html

[TexasDevilDog]

I was not even going to bring government bonds into the equation or the required deposits. The increasing and decreasing of rates indirectly impacts the circulation of dollars in the economy. As I said before it is the rate at which banks borrow money and trade money at. When banks get cheaper money they lend out more money thus increasing the amount of money in circulation.

I disagree. The changing of interest rates by the FED changes the propensity to borrow, it does not change the propensity to lend. A bank will always want to lend to get a return on money in its possession when possible, but a person or business might make the judgement not to borrow. The lower rate does not increase the money supply itself. The money supply can increase through the fractional banking loans though.

[ayzo]

uh oh, here comes the deflationary depression

http://i26.tinypic.com/2myyr1j.jpg

[TexasDevilDog]

Just found this. http://www.streettracksgoldshares.com/

[slow99]

Just found this. http://www.streettracksgoldshares.com/

Huh?

[Slowhand]

In the end the federal reserve is just a bunch of guys with a printing press.

Just for reference, the Federal Reserve is not the ill-famed Bank of the United States. Just saying, you know, since the Federal Reserve can't print money and what have you.

[slow99]

since the Federal Reserve can't print money and what have you.

Get outta here with that shit!

[Slowhand]

Get outta here with that shit.

It won't happen again! I know that having your facts straight isn't exactly kosher in the political forum. :o

[slow99]

It won't happen again! I know that having your facts straight isn't exactly kosher in the political forum. :o

Lol. All your post will turn into, is people stating how the Fed indirectly controls shit like the Treasury, fyi.

[Slowhand]

Lol. All your post will turn into, is people stating how the Fed indirectly controls shit like the Treasury, fyi.

Lol, my first thought when I typed that out was, "How is someone going to make the connection that Bernanke and his buddies hold some strange power over the US Treasury?"

It's inevitable that someone on here will always throw out a conspiracy theory they saw on youtube and declare the argument won.

[slow99]

Hell, I'm just wondering how someone dug up an old thread and posted that they just heard about the StreetTRACKS Gold, when I posted it months ago in like post 13 or 14 of this thread. :o

[Slowhand]

Hell, I'm just wondering how someone dug up an old thread and posted that they just heard about the StreetTRACKS Gold, when I posted it months ago in like post 13 or 14 of this thread. :o

reading comprehension > dfwstangs

[TexasDevilDog]

Hell, I'm just wondering how someone dug up an old thread and posted that they just heard about the StreetTRACKS Gold, when I posted it months ago in like post 13 or 14 of this thread. :o

Because reposts are a way of life on here. Screw the search button. ;)

[TexasDevilDog]

USD chart, hmmm