Total B.S. -> Gold faces more pressure as inflation stays tame

Discussion in 'Economics' started by hayman, May 25, 2013.

  1. hayman


    What kind of propaganda is this?

    Here in NY, my year-over-year inflationary increase has been on the order of 7%. This includes items such as food, home heating oil, gasoline, real estate taxes, healthcare insurance, etc. Total B.S. how certain items are conveniently and perpetually excluded by the government from inflationary calculation - this has been going on for a decade+ now, and mostly a conspiracy to help buoy the equity markets, justify 0% S.S. increases to our Seniors, and to help justify the FED's continued stupid actions.

    Bernanke is in deep doo-doo with his money printing press scheme, and their interpretation of inflation is an absolute scam, IMO.

    The weak hands are selling Gold now. For me, physical Gold is the best hedge against a mad experiment that has gone very awry.
  2. Lucrum


    I read recently that the true overall national rate of inflation is around 8%.

    I'm not much of a conspiracy theorist, but clearly the official inflation rate. Like the official unemployment rate, are intended to keep the sheeple in the dark.
  3. I would be very careful with gold. Silver is pretty much priced right, but gold is waaaaay overpriced especially when compared with other commodities like energy & housing. For example. In the 1960s when we used silver in our coins, you could buy a gallon of gas with .1818 oz of silver (25 cents) Today gas is about $4 per gallon and .1818 oz of silver is $4.05 at todays prices.

    Gold is different. In the 1960s 1 oz of gold would buy you 140 gallons of gas. Today 1 oz of gold will buy you 346 gallons of gas. Something is wrong there...Gold & gas SHOULD be in unison like silver & gas.

    A new house in 1960 cost $12,500 or 9,625 oz of silver. Today 9,625 oz of silver is worth $215,500 which is about the same cost of a new house today. In 1960 $12,500 was 357 oz of gold. 357 oz of gold today is worth $495,000.

    So this leads us to 2 conclusions. Either oil, housing, and silver is too cheap, or gold is too expensive.

    So for gold to maintain its monetary value, Gas needs to be about $10 per gallon, avg home price $495k and silver $79 per oz...

    Or gold needs to be at around $500 to $600 per oz.
  4. hayman


    Interesting analysis, thanks.
  5. Cash costs of production range from $598/ou in North America to $957/ou in South Africa and South African miners recently want a 60% wage hike. Average cost across continents ~$895/ounce.
    Real average probably ~$725/ounce since South Africa no longer a major producer as in late 1970s. Price of gold is unlikely to fall below cash costs for any extended period of time.
  6. Why is that. Houses in certain parts of the country often fall below the cost of new construction and stay there for long periods of time. Unlike houses no one needs gold. Like houses new construction for gold accounts for a very small percent of overall stock outstanding.
  7. What effect does the changing of contract margin on commodity trading have?

    My reasoning: Raising margin lowers leverage, the players can buy less of the commodity with a given amount of cash. In deflationary times, cash and gold are (in a relative way) scarce. That puts downward pressure on the price doesn't it?

    The excuse given to do it is volatility. Look at Gold's volatility around the margin change time ( April 16) and before.
  8. I sold all my gold at 1340, that was high enough for me, then bought some more at 1600 and sold it at 1700

    then bought some more at 1600

    and sold it at 1600

    have no interest in it anymore
  9. There are higher production rates per oz because people are willing to mine lower grade sites when gold prices are high. For example:

    Say you have two sites, both with 1,000 oz of gold. In site A you have to move 150,000 yards of dirt to get the 1,000 oz. In site B you have to move 300,000 yards of dirt to get the 1,000 oz.

    Obviously site B is going to cost twice as much money as site A to mine, so with average production rate of $600 per oz, you can find that site A cost $400 per oz to mine and site B cost $800 per oz to mine giving the average $600 per oz. So if gold falls to $800 per oz, suddenly people will not mine site B and you see avg production costs supposedly drop to $400 per oz. Cash costs will generally always find its way to 50% of spot gold. As prices rise, people will spend more to find gold and as prices drops people will spend less. Unless there is some other influence to push gold up though, we are likely to see it find its way to the $500-$600 range. Bubble Ben is the wild card in this equation. We could have some massive inflation and get those $495k home prices, $10 gas prices and $79 silver prices and gold will keep its price. Either way, its better to be in silver than in gold.
    #10     May 26, 2013