Gold gold gold!

Discussion in 'Economics' started by jerry11901, Apr 8, 2007.

  1. Most experts are screaming to buy gold. Dollar is expected to fall.
    But on the other side, the Canada, USA and South America are in the process of uniting.
    I am not an expert but, is it possible for thus countries to take the USD as the primary currency? Would that cause the gold fall and USD rise?
  2. No.

    But I am one of the few dollar bulls. The only reason why commodities have spiked is due to the massive liquidity available. Thanks to the FED post implosion.

    The FED will be forced to tighten in the coming months. Bye bye gold, hello dollar.

    Note, 99% of economists disagree with this. Perfect in my mind as they are always sheep.
  3. Uniting? Do you really think they would want to hook their wagons to the fiscal lunacy going on here?
  4. Ya , This gold rush looks dangers ,just check the COT ,commercial traders are dumping it for long time…
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  5. jerry,

    Do you see how the blue line is rising? That's the commercials reducing their short position.

    Note that the price of gold is rising as they reduce the short position.

    What does that tell you?
  6. jayford, you may be right, but if you are, it will be a dooozy of a recession, because of all the outstanding debt that the government, people, and corporations would need to pay that higher interest rate on.

    Every 1% will add $90 billion per year to the Federal deficit just from interest expense, before taking into account another $200 to $400 billion per year in revenue loss if the country goes into a recession. Go back and look at the revenue drop from 1999 to 2001 or 2002 if you think me wrong. If the deficit isn't bad enough to scare you now, just imagine it $300+ billion higher every year. At what point do the foreigners not want to buy more and more bonds?
  7. You are reading it different then me. I was thinking that if the blue line is below 0 (water line) they playing it short. It’s confusing, on top of it is the Iran war, yahhh, I don’t know how to win in this mess.
  8. It has nothing to do with Iraq that I know of.

    There are 3 different groups included as "commercial"

    1. Miners - they are never long, and sell gold forward if that's what they have to do in order to get lenders to be willing to lend them money, typically to finance new mines.

    2. Gold consumers like jewelers - they would usually be long, buying in advance when prices seem cheap, the gold they will need for production.

    3. The big shorts are Goldman Sacs and a few other large financial trading outfits. The Fed lends them gold to sell in order to depress prices when its high, then as I see it, after they create a panic and the price falls, they cover and repay the gold they borrowed, keeping the profit I think the rising blue line says those guys are now covering as the price rises instead of borrowing and shorting more. That's a very bullish sign.

    One last thing. The large central banks in the past have been large sellers, typically selling up to 500 tons per year. The demand for gold typically exceeds production by this 500 tons, and there is the double whammy that world production is declining at the same time as both jewelery and investment demand is rising. This year, with some central banks BUYING gold instead of selling, even the ones that have normally been sellers are balking at selling. After all, if they sell, they are essentially trading their gold for dollars. Given our ever increasing trade deficit and debt, that wouldn't really be smart, longer term, I wouldn't think.

    What I see there is increased demand vs reduced supply, and therefore the price should rise. One other thing. With gold up 14% year on year as it is, it could well be hitting the top of its range. But one thing I really didn't understand was why it didn't drop last week when the middle east tensions relaxed or when the dollar rose on friday. Normally it would have.

    That's how I see it.
  9. That is very interesting news, I was unaware of this.
  10. Am in complete agreement with this. As liquidity falls globally, all those funding commodities, energy, etc. All of this will come crashing down, just as it did when the carry trade collapsed early last month, and funds/investors were forced to pull out of gold and energy to fund losses and margin calls.
    #10     Apr 10, 2007