Comments on: Will Gold Break $1250 by 2011?

By: Augustine

Augustine — Tue, 08 Dec 2009 04:34:56 +0000

Bearly,

I understand now. However, even if the fundamentals are right, they may overshoot into overvaluation and bounce back in panic. Treat cautiously and cost average your exposure, as usually.

Gold luck!

By: Bearlyinvesting

Bearlyinvesting — Mon, 07 Dec 2009 20:16:26 +0000

The fundamentals of the market are not what I am talking about. Gold is more about the continued devaluation of the USD, and the printing of money by most central banks.

By: Augustine

Augustine — Sat, 05 Dec 2009 22:49:00 +0000

Fundamentals? The market has been running on fumes for at least 3 months…

By: Bearlyinvesting

Bearlyinvesting — Sat, 05 Dec 2009 20:32:11 +0000

Now this seems like an even better idea to me. The fundamentals for a gold bull are still in place.

By: Augustine

Augustine — Fri, 13 Nov 2009 22:59:39 +0000

Apropos, this chart at Kitco – http://www.kitco.com/kitco-gold-index.html – shows how the recent push in Au has been largely due to the falling dollar.

By: Bearlyinvesting

Bearlyinvesting — Sat, 24 Oct 2009 02:25:41 +0000

Joe,

Got it, thank you.

By: Bearlyinvesting

Bearlyinvesting — Sat, 24 Oct 2009 02:10:48 +0000

The AUD has done extremely well against most currencies. That is interesting… I appreciate your point Augustine.
I was under the impression that all important central banks were inflating. If I read that correctly, the AUD is up over 20% against the USD in a very short period of time. (3 months?!)

Joe, I see your point about gold being a “non-essential” asset/commodity. The only caveat to that is that, would be that gold is also a financial instrument. We couldn’t actually use (as in your example) oil as an instrument of commerce. If money were to become valueless tomorrow would I rather have soup or gold? I’ve heard this point before, and I frankly don’t really understand it. Depends on the situation does it not? If I were in Venezuela circa 1994, I’d rather have gold, and a way to broker it internationally.

By: JOE

JOE — Fri, 23 Oct 2009 23:45:53 +0000

Augustine -
I appreciate the chart you link to, but I think you were replying to BearlyInvesting, not me. Your observation is accurate, I’d like to see a bit of a longer term chart though. One going back to 1980 would be great, wasn’t the Yen at 250 to the dollar? Now 100 or so. So in Yen, gold isn’t even halfway to its old high. great store of value if you’re Japanese.

By: Augustine

Augustine — Fri, 23 Oct 2009 20:49:36 +0000

Joe,

I was referring to the past few months and the charts at Kitco confirm that there’s a spread between the Dollar and the Pound and other currencies of about 30%. Try http://www.kitconet.com/charts/metals/gold/2a-aud-us-60d-Large.gif and you’ll see that, while Au has climbed 10% in USD, it has changed practically 0% in AUD in the last couple of months. Is it a coincidence that Au is going up primarily in “helicopter” countries?

By: JOE

JOE — Fri, 23 Oct 2009 18:27:08 +0000

Let’s stay with the GLD pricing. The $100 strike price costs $14.50 (now), if GLD was $120, a $100 option would be worth $20 at expiration. Now, multiply by the 100 shares, and the $1450 is worth $2000. This is the leverage that options offer, even more so with a strategy that I showed.