There are many reasons why gold got hit hard recently, but I think the main reason was a coordinated attack by the central bank on the metals.
Last Friday, they raised the margin requirements on gold, copper and silver. I believe the exchange came out and hiked margins requirements on gold by 21%, on silver by 16% and on copper by 18%.
Do you think the big guys at JPM knew of this? I'd have to bet they did and since they had such a gigantic short position in the metal, they used that foreknowledge to nod to the syndicate that they'd work their high frequency trading platforms and drop silver/gold like a rock.
It looks like that worked and they made a lot of money! Sounds criminal to me, but I'm just a little guy, how would I know?
What's your opinion about what happened to gold? Do you think the smaller investor will use this opportunity to buy gold in smaller quanities now?
Monday, September 26, 2011
Saturday, September 24, 2011
Gold Prices since 1970
According to KB Vision, where you can purchase smaller amounts of gold, these are gold prices since the year 1970:
1970 - $38.90
1975 - $139.29
1985 - $327.00
1990 - $386.20
2000 - $279.11
2005 - $444.74
2009 - $972.35
Today - + $1,656.00
1970 - $38.90
1975 - $139.29
1985 - $327.00
1990 - $386.20
2000 - $279.11
2005 - $444.74
2009 - $972.35
Today - + $1,656.00
Friday, September 23, 2011
Why Buy Gold?
Yes, gold is money. This has been a fact since well before the introduction of paper banknotes. The public is generally unaware how currency came into being. What is certain is that without gold, there would never have been any form of currency anywhere in the world.
At one time, gold and other precious metals were the only means of trade throughout the world. Gold was considered a source for acceptable exchange or recognized as a method of payment for goods and services. As we progressed into the modern age, gold began to be stored in safes and vaults resulting in paper currency being circulated in its place. People accepted that this paper was secured by gold and that it corresponded to its exact face value.
The Gold Standard was introduced in 1821. In 1834, one US dollar had a parity value of 1.504632 grams of gold. The Gold Standard was abandoned in 1914 with the outbreak of World War 1. It was later re-established in 1928 but due to the relative scarcity of gold, The Gold-Exchange Standard was adopted by most countries supplementing gold reserves for currency dollars. In time, debt and rising interest rates forced an increase in the manufacture and circulation of paper currency and the disparity between the true value of gold and that of paper currency resulted in a scissor-like divergence.
With the devaluation of the dollar and growing debt, the Gold-Exchange Standard was unilaterally removed by former US President Nixon in 1971. This meant that direct convertibility of the United States dollar to gold was no longer needed. This act was known as the Nixon Shock. This led the way for governments to print as much paper currency as they required. The real value of money was lost.
Paper money is a product manufactured by human hands, which can be replaced at any time. “People who own gold, possess money in perpetuity.” This slogan was sent around the world and was quoted by none other than Alan Greenspan, former chairman of the US Federal Reserve (1987-2006).
In times when currency was scarce as was the case in Germany between 1945 and 1948, one could buy a house for five grams of gold and three grams of gold would provide for an entire family.
Gold is financial security for you and your family!
At one time, gold and other precious metals were the only means of trade throughout the world. Gold was considered a source for acceptable exchange or recognized as a method of payment for goods and services. As we progressed into the modern age, gold began to be stored in safes and vaults resulting in paper currency being circulated in its place. People accepted that this paper was secured by gold and that it corresponded to its exact face value.
The Gold Standard was introduced in 1821. In 1834, one US dollar had a parity value of 1.504632 grams of gold. The Gold Standard was abandoned in 1914 with the outbreak of World War 1. It was later re-established in 1928 but due to the relative scarcity of gold, The Gold-Exchange Standard was adopted by most countries supplementing gold reserves for currency dollars. In time, debt and rising interest rates forced an increase in the manufacture and circulation of paper currency and the disparity between the true value of gold and that of paper currency resulted in a scissor-like divergence.
With the devaluation of the dollar and growing debt, the Gold-Exchange Standard was unilaterally removed by former US President Nixon in 1971. This meant that direct convertibility of the United States dollar to gold was no longer needed. This act was known as the Nixon Shock. This led the way for governments to print as much paper currency as they required. The real value of money was lost.
Paper money is a product manufactured by human hands, which can be replaced at any time. “People who own gold, possess money in perpetuity.” This slogan was sent around the world and was quoted by none other than Alan Greenspan, former chairman of the US Federal Reserve (1987-2006).
In times when currency was scarce as was the case in Germany between 1945 and 1948, one could buy a house for five grams of gold and three grams of gold would provide for an entire family.
Gold is financial security for you and your family!
Monday, August 9, 2010
Is Gold Demand Increasing...???
Every investor should know that nothing goes up in a straight line forever. Gold is no different. There will be temporary reactions as events change around us and, as the global financial crisis is proving, events cannot be anticipated even by the brightest of economists, who are not always so bright. Many of them still don't even realize that China is a bigger energy consumer than the US, not to mention being the biggest buyer of autos worldwide.
This increased demand means rising prices in the most basic commodities which are moving in the same direction. Oil is still holding at around US$80 per barrel when it is normally lower at this time of year. The drought that has hit Russia's grain belt, which runs from the Black Sea to Siberia, is starting to affect food prices as water becomes an ever-growing problem.
But what about the supply and demand for gold? First, let's look at the advances being made for its industrial use. Normally, in this area, gold has always lagged silver which has many applications in the medical, electrical and photographic arenas. It has come to our attention that a team of scientists at Oregon University think they have discovered a way to release energy from bacteria found in raw sewage. The key to this process is coating the graphite anodes with a tiny amount of gold. This tiny amount of gold on an anode will use a massive amount of gold if the technology is duplicated around the world. What do you think this would do for the price of gold?
And now China has just announced measures to liberalise its local gold market even further. Thai farmers traditionally have put a bit of gold under their beds after a good harvest as insurance against worse times ahead and now the Chinese have adopted the same basic view. It has an essential role in the psyche of people in Asia and the Far East..
As you may know, the current population of China is around 1.32 billion people. What if they all bought 1 gramme of gold this year- 1 gramme not one ounce? That would remove 1,750 tonnes of gold from the market, which is more than half the world's annual production. Now apply that to India with a population of 1.15 billion and rising, and total production is accounted for. In both countries there is a massive migration from country to towns as citizens look for higher income. Along with higher incomes will come higher amounts of gold being put aside for investment or decoration or both.
This increased demand means rising prices in the most basic commodities which are moving in the same direction. Oil is still holding at around US$80 per barrel when it is normally lower at this time of year. The drought that has hit Russia's grain belt, which runs from the Black Sea to Siberia, is starting to affect food prices as water becomes an ever-growing problem.
India and China are already seeing rising domestic inflation rates. As the old saying goes, "America catches a cold and Europe gets pneumonia". Now we are in thrall to the East.
But what about the supply and demand for gold? First, let's look at the advances being made for its industrial use. Normally, in this area, gold has always lagged silver which has many applications in the medical, electrical and photographic arenas. It has come to our attention that a team of scientists at Oregon University think they have discovered a way to release energy from bacteria found in raw sewage. The key to this process is coating the graphite anodes with a tiny amount of gold. This tiny amount of gold on an anode will use a massive amount of gold if the technology is duplicated around the world. What do you think this would do for the price of gold?
And now China has just announced measures to liberalise its local gold market even further. Thai farmers traditionally have put a bit of gold under their beds after a good harvest as insurance against worse times ahead and now the Chinese have adopted the same basic view. It has an essential role in the psyche of people in Asia and the Far East..
As you may know, the current population of China is around 1.32 billion people. What if they all bought 1 gramme of gold this year- 1 gramme not one ounce? That would remove 1,750 tonnes of gold from the market, which is more than half the world's annual production. Now apply that to India with a population of 1.15 billion and rising, and total production is accounted for. In both countries there is a massive migration from country to towns as citizens look for higher income. Along with higher incomes will come higher amounts of gold being put aside for investment or decoration or both.
Monday, July 19, 2010
America Heads Down The Path Germany Took In WWII...????
Wars cost a lot of money. Take Germany which had to borrow heavily to pay for World War 1. The result: inflation. By 1923 the wildest inflation in history was raging in that country and things often cost twice as much in a few hours. People stampeded to buy goods and get rid of their money. Toward the end of 1923, it took 200 billion marks to buy a loaf of bread. Millions of German citizens found that their life's savings would not buy a stamp to mail a letter. They were broke.
When conflict broke out in 1914, the German Central Bank (Reichsbank), suspended redeemability of its notes in gold. Following that there was no legal maximum as to how many notes it could print of thin air (like the U.S. government is doing now). Not wanting to upset people with heavy taxes, the government borrowed large amounts of money which was to be paid by the enemy after Germany had saw victory in the war. Alot of this borrowing was discounted and monetized by the German Central Bank and this amounted to printing money. In modern terminology it is called "quantitative easing".
Toward the end of the war the floating debt of the Reichsbank had jumped from 3 billion to 55 billion marks! The move towards inflation and then hyperinflation was set in stone. There are no longer many people around who had this personal experience, but it is stamped deep in the psyche of the German race and needs to be awaken in the American public.
On that note, the annual Precious Metals Conference of the London Bullion Market Association will be held in Berlin later in 2010. Wilfried Held, managing director of Fachvereinigung Edmettale, the German Precious Metals Association, said one big subject for discussion would be "the high uncertainty about the future of the euro caused through discussions about potential sovereign defaults and the related role of gold".
For Germany, the most powerful country in the EU, the problems have not gone away, they have done what the US politicians are doing and that is simply sweeping then under the carpet! They are hoping against hope to get their economies back on track. Lots of luck with that...!!!!
When conflict broke out in 1914, the German Central Bank (Reichsbank), suspended redeemability of its notes in gold. Following that there was no legal maximum as to how many notes it could print of thin air (like the U.S. government is doing now). Not wanting to upset people with heavy taxes, the government borrowed large amounts of money which was to be paid by the enemy after Germany had saw victory in the war. Alot of this borrowing was discounted and monetized by the German Central Bank and this amounted to printing money. In modern terminology it is called "quantitative easing".
Toward the end of the war the floating debt of the Reichsbank had jumped from 3 billion to 55 billion marks! The move towards inflation and then hyperinflation was set in stone. There are no longer many people around who had this personal experience, but it is stamped deep in the psyche of the German race and needs to be awaken in the American public.
On that note, the annual Precious Metals Conference of the London Bullion Market Association will be held in Berlin later in 2010. Wilfried Held, managing director of Fachvereinigung Edmettale, the German Precious Metals Association, said one big subject for discussion would be "the high uncertainty about the future of the euro caused through discussions about potential sovereign defaults and the related role of gold".
For Germany, the most powerful country in the EU, the problems have not gone away, they have done what the US politicians are doing and that is simply sweeping then under the carpet! They are hoping against hope to get their economies back on track. Lots of luck with that...!!!!
It is worth remembering that a wheel barrow load of marks would not have bought an ounce of gold during those years of hyperinflation in the 1920s. Those who already had a few ounces in their back pockets were the ones who survived.
Monday, July 12, 2010
Pension Funds Buying Commodities
According to Bloomberg, pension fund assets in commodities rose to 2% in 2009 from 0.4$ in 2008, based on the 100 biggest pension fund managers in a poll.
Evidently, they are doing this to take advantage of declines in prices, and the pension funds may purchase raw materials this year..........
Wednesday, June 23, 2010
China National In Deal With US Coeur Alaska
Coeur Alaska, Inc. has inked a deal with China National Gold Group Corporation, which is now China's largest gold producer. The amount will be for about half the projected gold output from the new Kensington gold mine in Alaska.
The Kensington mine will begin production shortly, according to Coeur's website.
It should produce 50,000 oz of gold in 2010 and average 125,000 oz/year over an initial 12.5 year life based on current reserves of 1.5 million oz.
Presently, China National Gold runs about 60 gold mines in China, which is more than 20% of the country's total gold production.
The Kensington mine will begin production shortly, according to Coeur's website.
It should produce 50,000 oz of gold in 2010 and average 125,000 oz/year over an initial 12.5 year life based on current reserves of 1.5 million oz.
Presently, China National Gold runs about 60 gold mines in China, which is more than 20% of the country's total gold production.
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