Gold, never go down?

Discussion in 'Commodity Futures' started by sledged, May 31, 2010.

  1. sledged


    Is anyone bearish gold? Anyone have any recent articles where traders/analysts make a case for being bearish gold? I cant see how an asset goes straight up, never pulling back, no ones bearish.
  2. I'm bearish gold in the long term. The primary demand for gold is people who want to put it in vaults so they can say they have gold in a vault. That urge goes away in decent economic times. So the only way I can see to be bullish on gold is to assume that bad economic times will continue indefinitely. Every economic force in the world, not to mention the entire history of economic cycles, is arrayed against that outcome. So I can't really see my way clear to be a gold bull.
  3. "Will all the gold in the world fill 2 Olympic sized swimming pools?"

    Density of gold: 19.30 g·cm-3

    g/cm3 equals 1000 kg/m3


    19,300 kilos per cubic meter for gold

    1 kilogram = 32.1507466 troy ounce

    620,509 troy oz. per cubic meter

    1 tonne = 32,150.7466 troy ounce

    19.3 tonnes per cubic meter, acts to check and prove the "kilo per oz." and "tonne per oz." math is correct.

    19,300 kilos = 19.3 metric tonnes per cubic meter.

    155,000 tonnes of gold mined in all of human history
    divided by 19.3 tonnes per cubic meter,
    equals 8031 cubic meters!

    Volume of an Olympic Swimming Pool?

    25 meters by 50 meters by 2-3 meters deep = 25 x 50 x 2.5 = 3125 cubic meters

    8031 cubic meters / 3125 cubic meters = 2.57 pools

    Thus, all the gold in all the world, ever mined in all of human history, will fill 2.57 Olympic Sized swimming pools.

    Since the depth of an Olympic Swimming pool can be deeper, and since the 2-3 meter depth is a minimum, all the gold in all the world would easily fit into two slightly deeper than normal, Olympic Sized Swimming pools.

    Next Imagine thirteen trillion dollars, no 14, no 15, including unfunded pension liabilities:60 trillion dollars... What would you rather own?
  4. sledged


    Interesting break down, with that being said, why hasnt it gone up even faster. Why havent the pros, the real money taken it up to the $2000+ level? Yes it has had an amazing run up but still, why has it held up in the 1000 to current level for the last year or two. I feel that a collapse has to happen at least to flush out the huge bullish sentiment. I am looking into some Dec Puts
  5. A cyclical view of economic behaviour would yield the opposite conclusion: gold has its time and its place. Right now we're in an economic cycle where risk has been transfered from the private sphere to the public. This is resulting in a calling into question of government as a permanent force and natural presupposition to order. What this will result in is widespread hoarding behaviour and consequentially we will see supply shocks.

    Something similar happend in the 1970's but on a smaller scale and the cyclical order of the affected currencies and commodities was different. In the 1970's the end of the Bretton Woods agreement directly resulted in the oil embargo of 1973. Oil exporting Arab countries called into question the value of a dollar not backed by gold. Under the pretense of punishing Western support for Israel during the Yum Kippur war they shut down their export of oil. The resulting supply shock lay the foundation for a series of agreements that included the recycling of oil dollars into real assets in Western countries and the integration of populations of Europe and Arab countries.

    Although the order of events are different as well as the affected currencies and commodities, similar volatility and changes in society are to be expected.
  6. moarla


    as long as goverments can print money at infinitum, gold will go higher.
  7. zdreg


    too vague. you have to eat today if not tomorrow.
  8. gkishot


    It's not only bad economic times when gold rises but also in times of war.
  9. We had a 30% correction in 08.
  10. The gold trade is a simple one. The world ALWAYS needs a reliable currency that can serve as a store of value. It is that confidence that it is AND WILL REMAIN a reliable store of value that allows it to be a medium of exchange that is so widely and readily accepted that taking it requires no thought.

    In London in the 70's there were still merchants in smaller retail establishments that would rather be paid in pounds issued by The Bank of England than The Bank of Scotland. These old timers remembered an era when people would discount "The Scottish" by 5% to get rid of a currency perceived as being backed by a weaker entity.

    The logic behind the current affinity for gold is the fact that growing numbers of people worldwide have come to the conclusion that the dollar and paper currency in general may no longer represent a reliable store of value. Not only are their ranks growing those ranks increasing include sophisticated investors worldwide. I, like many others, thought of those fixated on gold as Gold Bugs or individuals who opted for emotional judgments over logic. In recent years it has become much more difficult to refute the logic behind their conclusions. Confidence is a more fragile commodity than an X-Large Grade A Egg yet it is being handled like a pork belly. When (not if ... in my judgment) the tipping point is reached the value of paper could sink to ... well, the actual value of the paper used to manufacture the currency. Many/most/virtually all of the world's societies have opted to debase their currencies. We have hired fools to do the difficult job of governing because they promise us bright shiny trinkets and ignore real security and stability.

    If you believe that those we have put in charge can sail the various ships of state that are the industrial nations through these perilous waters than by all means continue to have faith in the paper. If, on the other hand, you believe -- as I do -- that these clowns understand very little about what contributes to an enduring resilient society, than an alternative to paper -- most obviously gold -- warrants serious consideration. The paper will ultimately rest on the decisions made by our leaders.

    The paper therefore is, over the long term, likely to be shit.
    #10     Jun 1, 2010