Nice post rodden. Definitely a scary scenerio. I am hedged with bullion but I hope it does not come to that.
Hope you don't mind if I reply to you in this forum. I'm in the futures. Please share any thoughts you do have on the relative merits of choosing between the physicals and the futures. I figured that you pay the storage cost and forward in the futures, but you will also have to "pay" that cost in the physicals in terms of opportunity cost of your funds. You get cheaper leverage in the futures than in the physicals (I don't know if gold dealers will lend you money to buy their stock ..... seems unlikely. Your local bank probably will not be amused if you take out a gold loan!) The bid-ask in the physicals must be wider than in the futures. So, short of avoiding CBOT blow-up risk, or liquidity issues when gold closes limit-up or down (is there limit for gold?), what is the advantage of owning bullion over futures - other than forming a nice pyramid in your mantleplace for guests to gawk at of course. (Debt of gratitude to Cutten for that idea )
My sentiments exactly rodden. I have read about the rounds of "begger thy neighbour" games played by nations hurrying to devalue their currencies in the 1930s. The Snow and Bush tours this year of Asia is just a naked attempt to coordinate global macro policy to give the US dollar a soft landing. It's amazing how the same people who nod their heads wisely when you argue why the dollar is overvalued because of all those balance of payment arguments look at you like you have two heads when you start talking about gold going to $800. The two are flip sides of the same argument. It's an illustration I think, of how mesmerized people can be by "experts" and media stories that they just swallow the conclusions reached by these talking and writing heads without extracting the underpinning logic. (although it is starting to worry me how EVERYBODY today takes the decline of the dollar for granted - maybe it won't decline for a while after all)
While the dollar index may be nearing a low, this may be only because it's measured against other fiat currencies. If the 'race to the bottom' begins in earnest, the values of currencies may appear to be merely changing tit-for-tat from day to day in an apparently orderly (non-chaotic) fashion while in fact the whole currency collective is plummeting against the gold criterion. There is no reason for gold to stop at any particular price. Also, the spot price on gold is a point of equilibrium determined by myriad influences; the gold-currencies market is a very complex system and, as in any complex system, the driving of a single element (U.S. dollar decline?) may go on for a long time before there is a sudden systemic collapse. In such a case, a new system will arise, but unfortunately for us bystanders, the period between consecutive systems is always chaotic (major wars and/or depressions are usually inter-system markers). Sounds pretty apocalyptic, but keep in mind that the American Empire is run by very astute people who are aware of all the theories. Greenspan is no dummy; so far he has forestalled the Kondratieff Winter for years - the first time that's ever been done - but his immediate problem is that the cash he's been printing is being disproportionately absorbed into the financials and not finding its way into the general economy. But then again, Greenspan is aware of that too and is likely working on a solution. Maybe he'll pull it off. maybe not. Nobody knows. Nobody can know. Take a position and hope to be lucky. Incidentally - wonder why Bush invaded Iraq? It was to thwart an Opec plan to switch oil pricing from dollars to Euros; such a change at this time would have collapsed the greenback-based system and thrown us into currency chaos. But that's a tricky thing to include in one's platform; it wouldn't sway a lot of undecideds - but it was strong motivator for action. Presidents only seem stupid; in fact, they're just front men for an inexplicbly complex system. It doesn't matter who you vote for, in the end the logic of the system always sets government agenda . Gore would have invaded too, just less enthusiastically.
Speaking of, when exactly is next rollover for gold futures? Is there a site that shows when each rollover date occurs? I take it gold futures do not rollover on a regular pattern like spoos (december was front month for a while now).
People are trying to over-analyse this market IMO. The simple fact is that gold is acting like it's in a major bull market. The fundamentals are good, the price action is good, it has just come out of a 20 year secular bear market, and sentiment is broadly sceptical of the rally. That's all I need to know to get long. If I'm wrong then so be it, but right now it's a bull market and in bull markets you make money mainly by getting long and staying long.
True. Given that the nature of the interplay of the forces involved in the outcome is not visible to us, the best we can do is study the surface manifestations - trends, statistics, etc. Lately I've noticed the manipulation of stock technicals through wildly out-of-market trades on the "Intermarket Market" - a 3rd level NASDAQ regular-hours market available only to institutions (read stock promoters) . Trades on this insiders' market tend to occur much above or below the Composite daily ranges and yet these trades are included in the daily range reports on Stockscores, Yahoo Finance, etc. For instance. today Texas Instruments shows a high of $30.49 ; excluding the trade of a few board lots on the Intermarket Market, the Composite high today was $29.79. Quite a difference. This kind of B.S. makes even basic analysis of questionable value.
In Asia its the poor rather than the rich who buy gold. Gold is the principle investment vehicle of very poor people: farmers, food sellers, prostitutes, factory workers...people earning only a few hundred dollars a year. If the economies of Asia take off it won't necessarily increase the demand for gold IMO.
=========================================== Study & traded gold stocks since SPIKE of 1980s; now in multi year uptrend, multiday uptrend. Love learning -Solomon trader king. Gold stock dividends are good balance with tek stocks.