sophie wrote: ↑Sat Feb 22, 2020 9:56 am
from dualstow's signature: Gold has passed 1645/oz
Thought this was worth recording permanently because...Geez. What is going on with gold? Is this maybe about the coronavirus? Then again...who knows. It's all crowdspeak.
On CNBC, it was noted that even as people continue to pour money into the market (Stock Scream thread has an article about Mom and Pop investors excited by fee-free trading), there is also money going into classic safe havens. Hence the falling yields and rise in the price of gold. Why are they also going into safe havens? Supposedly a lot of it *is* corona. Some think that the market is finally ready to tank because corona is eating into profits: airline companies, internationally sold beverages, lots of things.
Others think that this will be wrapped up by May- that the virus will be contained, things will go back to normal, and in the rear view mirror, this will look like a buying opportunity.
Or a selling opportunity for gold.
I'm going to be selling a modest amount but not for that reason; I'm planning to buy a house this summer and am raising cash.
Cortopassi wrote: ↑Mon Feb 24, 2020 8:41 am
Today is a shining example of the calming effect of the PP. Gold and bonds more than making up for the stock massacre.
I'm a little ashamed to say I get a bit excited on days like today, so maybe not so "calming". Happy to have days like this which make up for the tracking error against stocks when they're humming along to new highs every day.
(a lot of my future compensation is stock-based, so there's some sadness inside too as I think about that)
Cortopassi wrote: ↑Mon Feb 24, 2020 1:59 pm
Interesting that gold is getting crushed back down but bonds are holding.
Yes, gold is getting "crushed back down" to being up only $16 on the day. Woe is me!
Crushed was a hard word, but when you consider that stocks held their losses, bonds held their gains, and gold did this in the afternoon, it is definitely an odd man out for some reason.
Gold has always been the most volatile component in the PP, by far. And it marches to its own drumbeat. Same with silver. Bonds and precious metals were up today and helped to offset the stock market's trip to the woodshed. Life is good.
If Budd were still here, he would be complaining that gold and bonds "failed to buoy the PP as advertised" since they merely softened the blow from stocks instead of more than offsetting the losses
Let me channel Budd here, and say, what the hell? I mean, sure it is still technically up for the past few days, but is this the old BS of people selling gold to fund their margin calls?
4 days and no gold scream room discussion, interesting.
tech, I was wondering what your thoughts are over the past 2-3 days where gold has languished. It was upsetting to me this morning to see it down again, but then I ran a 3 month comparison and felt better.
I know there is no 1:1 guaranteed inverse correlation, but it did start out really strongly when the markets tanked.
Personally, I think it's because the market is sniffing deflation... and they are going back to the old trusty deflation handbook. Long bonds are *the* asset right now and nothing else matters. If the virus starts to take hold in the U.S. I expect to see gold react a bit more. I also think it will react more if/when the Fed announces rate cuts or QE. But I'm not surprised to see it consolidating right now in the short term while bonds are running like they stole something. From a long term perspective, it's probably better for it to consolidate and digest its recent gains a bit. If it kept screaming higher like bonds are it would also put gold at risk of a blowoff top.
I think we must be in the end times.
I say that because I sold a chunk yesterday just before today's plunge.
This is against all previous history, which would predict that it would soar after I sold.
Cortopassi wrote: ↑Fri Feb 28, 2020 8:20 am
I was wondering what your thoughts are over the past 2-3 days where gold has languished.
Is is possible that gold is loosing because the investors want to free up cash to buy stocks, which can stop plummeting any moment if the fear goes away?
Cortopassi wrote: ↑Fri Feb 28, 2020 8:20 am
I was wondering what your thoughts are over the past 2-3 days where gold has languished.
Is is possible that gold is loosing because the investors want to free up cash to buy stocks, which can stop plummeting any moment if the fear goes away?
I don't think that's the explanation. I think speculators are selling to meet margin calls in the stock market, but of course now there are also margin calls in the gold market.
But once everything settles out I think gold will resume its uptrend.
"Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it
would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At
$1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion. Call this cube pile A.
Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400
million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most
profitable company, one earning more than $40 billion annually). After these purchases, we would
have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying
binge).
Can you imagine an investor with $9.6 trillion selecting pile A over pile B?
Beyond the staggering valuation given the existing stock of gold, current prices make today’s annual
production of gold command about $160 billion. Buyers – whether jewelry and industrial users,
frightened individuals, or speculators – must continually absorb this additional supply to merely
maintain an equilibrium at present prices.
A century from now the 400 million acres of farmland will have produced staggering amounts of corn,
wheat, cotton, and other crops – and will continue to produce that valuable bounty, whatever the
currency may be. Exxon Mobil will probably have delivered trillions of dollars in dividends to its
owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The
170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can
fondle the cube, but it will not respond.
Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m
confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at
a rate far inferior to that achieved by pile B."
A century from now we can be getting all our power from Mr. Fusion, and making our own food in our 3D food printer in the kitchen. Farmland is all national parks and Exxon is long gone.
Meanwhile I've cornered the market for gold jewelry for 100 years and am a gazillionaire. I also give tours of the shiny metal cube for $10 a pop.
Cortopassi wrote: ↑Thu Mar 05, 2020 8:17 am
A century from now we can be getting all our power from Mr. Fusion, and making our own food in our 3D food printer in the kitchen. Farmland is all national parks and Exxon is long gone.
Meanwhile I've cornered the market for gold jewelry for 100 years and am a gazillionaire. I also give tours of the shiny metal cube for $10 a pop.
Wasn't there a Twilight Zone episode where some robbers with stolen gold put themselves into suspended animation for 100 years, then try to hike through the desert to civilization with their gold? They die along the way. A passerby later finds them and notes that all the gold has been worthless since it was discovered how to manufacture it artificially.