Gleam is gone as gold prices sink to 4-year low

[Omaha Steve]

Source: AP-Excite

By MATTHEW CRAFT

NEW YORK (AP) — Nothing is going gold's way.

Inflation remains tame, the dollar looks strong and Americans are increasingly confident. Even fears that the Federal Reserve would set off another financial crisis have faded as the central bank ends its effort to pump money into the economy.

In short, all of the reasons for buying gold over recent years have disappeared, helping to drive prices for the metal to a four-year low.

"I think the big reason gold has lost so much ground is because confidence is coming back," says Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis. Last week, a measure of U.S. consumer confidence reached its highest level in seven years.

FULL story at link.



This Wednesday, Nov. 5, 2014 photo shows a Swiss gold coin at Numis International Inc. in Millbrae, Calif. All of the reasons for buying gold over recent years have disappeared, helping to drive prices for the metal to a four-year low. (AP Photo/Marcio Jose Sanchez)


Read more: http://apnews.excite.com/article/20141106/us--fading_gold-ba4f089c7b.html

---

A good friend of mine has his retirement $ in gold.

[Peacetrain]

1. Whew.. don't you know there are a lot of people

who are scared of their own shadow.. and have invested in gold, and will be hard pressed to make up the money they lost..

[Hortensis]

7. Umhm. I immediately wondered how much this may have contributed to the election drubbing.

A generally anxious group of people becoming more anxious -- and angry -- and blaming the party holding the White House.

[candelista]

2. Gold dropped $22 to settle at $1,145.70 an ounce on Wednesday.

FYI.

This could be a buying opportunity, since the stock market is "toppy."

[Submariner]

29. gold to drop all the way to $900 an ounce by 2017

that from the same article. wait a few years.

[candelista]

34. No one knows where it will be tomorrow, much less in 3 years.

Anyone who says they know where gold is going is a fool. In addition to all the other vicissitudes, gold mine companies short their own product.

[jmowreader]

39. I don't think it'll be that high in 2017

On the Kitco 10-year spot gold price chart, the low point is $412. It is just as possible that gold could be $500/oz as it could be $3000/oz.

[n2doc]

3. And Glen Beckkk laughs all the way to the bank

He and his fellow nut cases peddling armageddon and pushing gold to the crazies.

[rurallib]

16. I gotta hope he has lost his ass on this.

[n2doc]

17. I doubt he has any gold other than watches and jewelry

Reminds me of the Simpsons episode where Krusty is shilling for some food product, then when the take ends he yells "Quick, bring me a drink, I think I got some if it on my lips! Ack Ack!"

Beckkk may be crazy, but he is probably not that stupid.

[Crowman1979]

23. He will, once a crazy fan who lost a lot of money goes after him.

[rurallib]

33. let us hope. That will be fun to watch.

I assume you mean in court for fraud.

[Politicalboi]

4. Thanks GOP!

I just can't wait to see what other things they can wreck. Are they squealing yet?

[Kelvin Mace]

5. For people planning on investing in gold, ask yourself this question

If you need to buy gold because they tell you the financial system is going to collapse, why do they take payment by credit card?

[ffr]

6. Time to buy soon.

Republis make for an unstable world. It's one thing you can count on. Instability makes global investors head towards commodities, such as precious metals. Look at the historic trends.

The next two years will be anything but stable.

[Hortensis]

9. Boy, you said it with that last. "Getting off the back of business" meant tearing down

the economic firewalls meant to keep reverses in other nations from sweeping right through our current house of cards. This in an era of rampant, pedals-to-the-floor globalization and both economic and technological interdependence. Gold's way down? I'm tempted to buy some myself...

[ffr]

48. Boehner speaks. Gold rebounds sharply this AM.

http://www.apmex.com/

Let the instability for the GOP permeate the global markets.

The next shoe should be the markets to pull back.

[Spitfire of ATJ]

8. I picture Glenn Beck and Alex Jones having a pitty party over a bottle of scotch.

[Hortensis]

10. I picture commercials inviting their audiences to sell their gold NOW!

[Dopers_Greed]

18. Why would they?

They both probably made a fortune getting suckers into buying gold.

[Spitfire of ATJ]

20. Conservatives often buy their own propaganda....

But in their case, I picture them running out there claiming, "Gold is at an all time low - buy NOW before the inevitable Economic Apocalypse that could happen ANY DAY NOW!!!"

[bullwinkle428]

50. I picture their hardcore fanboys advancing on them with torches & pitchforks!

[Spitfire of ATJ]

51. If there were any justice along those lines the Texas rednecks would have done that to Crawford.

[Z_California]

11. Gold isn't an "investment", it's a "hedge"

And for the typical owner of gold, it's good news when gold prices are down because it probably means his main investments are up.

S&P reached a new high yesterday so I don't think any of these fucks are having a pity party.

[NCjack]

21. Even liberals such as myself should hedge about 10% of wealth in gold.

Why 10%? Well, if the economy crashes and loses 90% value, your gold will (approximately) retain its value and keep you floated at the same standard of living. All the unhedged people will be financially ruined. Let's assume you have $5,000 in gold and silver coins -- you are rich in sea of people who must sell their goods and commodities at steep price declines. That is a cheap price to maintain your standard of living. The best forms are gold and silver coins issued as currency, as their value is easier to establish than crap forms, such as those manufactured and sold by private companies. But, there is risk you may be robbed of your coins. IMO a better hedge is a publicly traded precious metal mutual fund that owns mostly North American mines. The crazy-ass Republicans control Congress and gold prices are low. I think it's time for me to buy a little more.

[cosmicone]

24. It actually doesn't work that way for any asset.

If everything else collapses, people's buying power and thus demand for your gold will also bottom out and your 10% will lose substantial value.

Suppose you have 10% of your assets in walnuts and 90% in coins. Everyone else has 100% in coins. When coins lose all their value, what will they give you for your walnuts? What can they give you for your walnuts? Thus you'll be forced to wait until the coins develop some value so you can exchange your walnuts for coins again. By that time, 90% of your holdings in coins also recover and you don't have to sell the walnuts anymore.

[Art_from_Ark]

36. Gold coins will never lose all their value

Base metal coins will lose all of their value, as can be attested by any number of failed currencies, like the Zimbabwe dollar, or most of the pre-Euro currencies. However, the complete loss of gold's value has never happened, in the 1000s of years that gold has served as a monetary medium.

However, if your walnuts are rotten, then what do you do?

[cosmicone]

37. I didn't say gold coins. Just ordinary coins. n/t

[Art_from_Ark]

38. But in your first paragraph you talked about gold bottoming out

so I assumed you were talking about gold coins in your second paragraph.

Base metal coins have lost all value at one time or another in virtually every country. The US is a curious exception, as all coins it has issued since the Mint first started making coins in 1793 are still considered legal tender (although one would have to be vary naive to try to spend, say, 19th century US coins at their face value, since they are worth much more to collectors).

[WHEN CRABS ROAR]

25. If you must buy precious metals, buy junk silver

its value is based on the silver content of the coin that is based on actual known weight making it very easy to convert or spend in the real world. Also the most affordable to purchase.

[Zynx]

54. 10%? That's way way way way way too much.

Gold isn't the hedge people think it is. In inflationary outbreaks, it works okay, though I'm not sold that it's any better than real estate or stocks (eventually) since both assets follow nominal income levels. Stocks take a hit short term in high inflation environments due to interest rate increases, but eventually stock prices catch up.

[Dawson Leery]

12. I take comfort in knowing many teabaggers lost a bundle

on this speculative nonsense.

[mnhtnbb]

13. My husband has been a gold bug for the almost 30 years I've been married to him.

I could have quadrupled his money--if I could have gotten him to sell it 25 years ago.

I FINALLY convinced him to sell some near the high about three years ago and we put it towards
not having a mortgage on the house we built to replace the one that burned down. He'll be 72
in December and not having a house payment now--or in the future--is definitely worth more
than that gold ever was!

[Elmer S. E. Dump]

14. The very reason I ignored all the people touting IT Trading and other gold sites

Randi, Thom, Ed, everybody was telling me to buy gold! But what they really give you is a "goddamned piece of paper" which doesn't provide me with much security.

I wasn't so much as tempted. Lucky me!

[happyslug]

15. Here is a counter Position on this issue:

Basically they are saying the Gold Market is rigged, for what is being valued is NOT gold itself but the future value of that gold. Gold is a physical asset and the requirement of a physical exchange is a check on rigging the price of actual Physical Gold.

On the other hand the Future Value of Gold is a paper asset and abled to be rigged and is and continues to be rigged:

http://www.paulcraigroberts.org/2014/09/22/rigged-gold-price-distorts-perception-economic-reality-paul-craig-roberts-dave-kranzler/

http://www.counterpunch.org/2014/09/22/the-gold-riggers/

http://www.counterpunch.org/2014/03/13/the-assault-on-gold-2/

Please note, as far as economic reality is concern, if a market is rigged or not if you want the product you have to pay the price. The problem is in a rigged market, there are incidents to undermine the rigging, thus such rigged markets tend to be unstable (Unless the rigging is open and above board, i.e government regulation that makes it illegal to undermine the rigging. Even this can lead to instability if the Government is NOT willing or able to punishe such speculators. This is what happen in 1970 when the US had to abandon $35 to an ounce of gold. Nixon was unwilling to increase taxes to keep the dollar at that level and the speculators pounded on the feeble efforts to keep it at that level till the US had to abandon the rigged price).

If the rigged price is within the control of the rigger, then rarely a problem. The Texas Railroad commission did this from the 1930s to 1970 when it come to the price of oil. The Texas Railroad Commission had to power to restrict Texas oil production, if the price of oil was to high, the Texas Railroad Commission permitted more Texas oil to be pumped, if the price of oil was to low, the Texas Railroad Commission restricted how much oil could be pumped. As long as Texas was the single largest producer of oil in the world the system worked. When Texas no longer could open wells to increase oil production (which is what happened in 1969), the Texas Railroad Commission lost its ability to control the price of oil world wide. The problems of the 1970s in many ways was the lost of that rigged system, till it was replaced by another rigged system centered on Saudi Arabia (OPEC had tried to control it, but to many of its members cheated, the House of Saud finally took it upon themselves to rig the system by controlling how much oil was produced in Saudi Arabia. This system worked till 2002 when Arabia fell into the same trap Texas did in 1969, Saudi Arabia's ability to increase oil production was NOT enough to keep the price of oil low. The price of oil kept rising till it peaked in 2008 and do to increase production do to that high price it has been dropping since 2008 (and expected to drop for another 2-3 years). One of the advantages of a Rigged system is price stability. The problem is if the person doing the rigging can not do it, then you quickly fall into price instability (Which is what happening today).

I bring up the price of oil, for it shows what happened when a rig system collapses. At the time of the collapse you have massive price instability (first up then down). That can be seen in the 1970s and since 2002 when the Rig systems of oil collapsed (first the system run by the Texas Railroad Commission and then the system run by Saudi Arabia).

If the price of gold is a product of a rigged system, then it is subject to a rapid jump in price followed by a rapid collapse. All that is needed is for one of the large speculators in gold no longer wanting paper gold, but actual gold. If that happens, and no gold can be found to fulfill that demand, the price of gold will go through the roof, while the price of the future price of gold collapses.

Sorry, I would stay out of the Gold Market, to many speculators in the market and it appears to many people have reasons to cheat on the price of gold. This cheating is affecting the future price of gold AND the price of actual gold. I hate to say it, US Government bonds are safer, for the Federal Government has great incentives to being able to borrow money, as oppose to how much is the value of gold in Fort Knox. Buying actual oil would be another area of investment (as oppose to the future price of oil), providing you have a way to store it. Avoid Gold, to many speculators and to many cheats are in that market.

[Demeter]

19. First of all, those prices are for PAPER, NOT GOLD

If you want to buy a piece of paper that says on such and such a day, I'll give you an ounce of gold, be my guest. You won't get the ounce. The Issuer of the paper will give you whatever the going rate for a piece of paper is.

There isn't actual physical metal trading hands at those prices. It's the gold bankers doing what the Federal Reserve asks them to do, selling "naked shorts": promissory notes for gold they don't own, to depress the apparent price of gold.

It's all a con. Why do they do this? Psychological warfare, plus to screw anyone who owns actual metal, plus to allow Big Spenders to gamble, plus their commissions.

If you want to buy actual gold, go to an actual gold dealer, and see what happens. Also, take delivery....there's way too much fraud in storage to trust anyone.

[Psephos]

40. smart post n/t

[Sgent]

59. You can buy

that paper and demand physical delivery of the gold, go to Chicago, and load it on your truck. Gold, like corn or oats or frozen oj, is traded as a physical commodity, meaning you actually can get the underlying commodity. This differs from cash settled commodities where only cash changes hands.

[cosmicone]

22. Gold will be trading between $500-$800 in one year n/t

[mitchtv]

26. it will go back up...

one war with Iran,and we're on our way

[Yavin4]

31. Bingo. We're one more election cycle from that happening.

All it takes is a Christie or Jeb Bush win and we're at war in Iran or Syria in time for the 2018 mid terms.

[olddad56]

53. it is probably a good time to start buying gold.

as a hedge, as was mentioned before.

[elleng]

27. Definitely not smart to have everything in one place,

and GOLD? Betting against stocks, bonds, etc? Listening to beck?

[JNelson6563]

28. I got out long ago at $1900 or so.

Went long at under $400. I knew Team Bush was going to fuck it all up.

Julie

[Yavin4]

30. This recovery is based on cheap money from the Fed.

At some point, that cheap money is going to turn expensive again which will set off another stock market correction and corresponding economic slump.

I own gold because I do not have long term confidence in the global economy.

[roamer65]

35. The Fed cannot raise interest rates.

Last edited Fri Nov 7, 2014, 03:28 AM - Edit history (1)

The federal debt is so large now that even a 3-4 pct return on short term Treasuries will swamp the federal budget with HUGE interest payments on said debt. The Fed will continue QE, ZIRP and any other policies to avoid such a situation. That means cheap money as far as the eye can see and inflation that is hidden by rigged numbers.

Your gold is a good long term investment in this climate.

[Psephos]

41. sad to say, you are exactly right n/t

[Yavin4]

42. BTW, I own physical metals, not paper

Yes, it's getting killed, but I know full well that another correction (or collapse) is only a couple of years away.

[roamer65]

45. Good on 'ya. N/t

[Odin2005]

32. So what is the Gold-Bug excuse gonna be, now?

[nilesobek]

43. Gold's natural level is about 350$ a troy ounce.

Oil's natural level is about 25$ a barrel. These commodities will find their own natural level no matter what any administration does. There are rumors the Russians want to flood the gold market and have thrown open their mines. Totally unsubstantiated at this time.

[happyslug]

56. $25 a barrel was true prior to 2002, but NOT today

The reason for this is the concept of the cost to produce what is needed to fill demand sets price, no matter what is the cost of produce most of the item in demand.

Today, what is needed to fulfil demand is the oil from Fracking. The cost to produce oil from Saudi Arabia is about $2 a barrel, but Saudi Arabia lost control of the price of oil when it could NOT increase oil production enough to offset the drop in production from the North Sea Oil Fields of Britain (The UK today is a net importer of oil, through the North Sea is producing Natural Gas), the North Slope of Alaska, Indonesia, and Mexico.

With the huge drop in production from those areas (and the continued drop in production from conventional US oil fields) and no one able to increase production except for the offshore Mexico Gulf fields (Which was the main replacement for oil from 2002 till about 2006). When oil hit $80 a barrel you finally hit the price where Fracking of Texas oil fields became profitable. Thus the natural price today is $80 a barrel not $25 a barrel and once the fracking fields "Peak out" around 2017 who knows what the price will be.

Please note, given the nature of Fracking financing the price is expected to drop till 2017. I wrote about this elsewhere so I will not repeat it here but in simple terms below $80 a barrel the fracking fields can NOT break even,BUT do to how they are finance, it would cost more NOT to pump then to pump. i.e. They lose the equivalent of $20 a barrel if they produce no oil, but only $5 a barrel if they do pump. Thus the oil is being pumped but at a lost. Thus to minimize lost, the oil must be pumped which put more downward pressure over the next two years. Thus the price will go down, how far no one knows, but it will only last a few years.

[DeSwiss]

44. Yeah, what does Alan know?

ZEROHEDGE -- Alan Greenspan: QE Failed To Help The Economy, The Unwind Will Be Painful, "Buy Gold"

- Send your friend a nice Christmas present so he'll remember you kindly later.....

[Shoonra]

46. Investing in gold is poor practice

Despite the hype from the people who make a living selling gold or gold investment schemes, investing in gold is not a good idea. Yes, there's a limit to how sour gold can be, and it's a good deal better than Enron stock in that regard, but it won't be as good as prudent investment in industries and commodities.

For one thing, the value of gold depends on its popular value - this is very changeable and seems to be inverse to confidence in the nation's economic health. Moreover the value of gold depends on the world supply of gold - the principal gold-mining countries are Russia, China, and South Africa -- three countries we're not real tight with -- and the more gold any of them find, the less value to the gold you've invested in.

And, ultimately, betting on gold means betting against the home team. It means expecting - even hoping - that the normal US economy goes sour.

[Yavin4]

47. You do realize that the entire global economy is a complete sham

It can crash and has crashed repeatedly in my lifetime. The U.S. economy is entirely dependent on cheap money. Either the money will get more expensive and we crash or the money will remain cheap and we have higher inflation. Or, as is the case now, we suppress labor wages in order to avoid inflation, but that situation is untenable. The average American cannot afford a basic lifestlye on the wages that they're currently getting, so they borrow money to make up the difference.

Can this system go on for a while? Sure. There's still room to raise wages without incurring inflation, but how much longer?

It's not a question of betting against the home team. it's preparation for a system that is bound for disaster.

[workinclasszero]

52. Thousands of hate radio addicted baggers

are crying in their beer right now.

Too bad, so sad!

[Zynx]

55. Gold is the anxiety disorder investment. There are not reliable economic factors behind it.

[sakabatou]

57. It was only a matter of time for the bubble to burst

[Old Nick]

58. Awww!