Gold continues slide; down $100 US since May highs

[AngryAmish]

"Investors who thought gold has nowhere to go but up have recently been getting a sharp lesson in just how volatile the precious metal's price can be.


Gold is down more than $100 US after hitting a 26-year high of $730 US in May. (CBC)
In morning trading Wednesday on the New York Mercantile Exchange, gold futures for August delivery were down $11.20 US to $623.50 US an ounce.

That's their lowest price in almost seven weeks, and a drop of more than $100 US since May 12, when gold hit a 26-year high of $730 US an ounce before retreating on profit-taking.

The main reason cited for this week's slide — gold has dropped about $35 US since the weekend — was a comment Monday by U.S. Federal Reserve chairman Ben Bernanke."


Why the drop, gold bugs?

[maxsolomon]

1. Gold & high grade Marijuana were once the same price

at about $300 an ounce.

:smoke:

[stop the bleeding]

4. I wonder which trades more in volume on daily basis? n/t

[dysfunctional press]

7. while gold has doubled, pot has halved...

at least around here, where i get primo smoking weed for $150/oz.

[maxsolomon]

8. not here

and BC is just an air conditioned tunnel sprint away.

[Kelvin Mace]

11. Adjusting for inflation

Gold would have to hit $2200 an ounce to reach its high point from 1981.

[dysfunctional press]

14. i don't really follow gold prices, as i don't invest in it...

pot pricing, on the other hand...is one market i follow very closely.

[Kelvin Mace]

17. I will defer to your superior judgement

on that :)

[BeyondGeography]

15. Sounds like a good time to invest in pot futures

pot being clearly under undervalued with historically low p/e (price/enjoyment) ratios and all.

[dysfunctional press]

18. oh, for the day...

when pot futures are freely traded on the chicago mercantile exchange. :hippie:

[pokercat999]

33. I remember when they were both about $35.00 an ounce

and factory made cigarettes were 35 cents for a pack of twenty. Am I gettn' old or what.

[NI4NI]

36. Accapollco Gold

25 a Z in '65.....LOL!

[Orsino]

2. 'Cause gold owners got so desperate...

...that they hired Randi Rhodes to pimp it (heard her radio spots?). Possibly, enough ordinary citizens have recently bought into the myth that the price can now drop, neatly separating the rubes from their money.

Prices don't skyrocket when just anybody can participate.

[larrysh]

6. Read something on this

last night. Some gold investors are pulling away from gold and moving to the US Bond market, expecting higher interest rates. But, this
same article pointed out the Iranians have begun shifting paper assets into gold and then moving the gold to Tehran banks....leaving little
in the way of assets to be frozen by the Bush Admin. The feeling is
gold will linger a few days, then start bumping back up, partly due to large Iranian purchases.

[Tempest]

10. It's also because Iran said they would consider U.S. proposals

Regarding the nuclear standoff with the U.S.

It has cooled down the situation to a big degree.

Once Iran rejects the proposals, which they will, gold will go back up.

[SmokingJacket]

29. I remember, shortly before tech stocks plunged a few years ago...

listening to some 20 yr old guys in Denny's chatting about their stocks. I thought if I had any stock, it would be time to sell!

[MadHound]

3. Hey, for me, it's good either way, going up or going down

Just so long as gold is going somewhere. No, I didn't invest in gold itself, I invested in mutual fund comprised of gold dealers, and they make money whether the market is going up or down, just so long as it is doing something.

[NVMojo]

5. I agree ....

[Mojorabbit]

9. Russia is buying tons of gold

I don't pretend to understand the gold market but I have read a lot of countries like India and the Saudis are buying it. I have a little bit of it as part of my portfolio.

[Sapere aude]

12. Every time I read about volatile precious metal prices or stock market

ups and downs I laugh because I have no money to invest thus I have nothing to gain and nothing to lose.

I've heard of people killing themselves because their investments tanked. I will never do that.

[catmandu57]

13. You and me

It reminds me of the line in the Alabama song about the depression. "Somebody said that Wall street fell, but we were so poor that we couldn't tell".

I'd rather have a few ounces of seeds than a few ounces of gold, if things did collapse I think I'd have better luck bartering with that.

[plasticsundance]

16. Gold will back down to perhaps 590 before going up again

As James Turk from goldmoney.com stated:

That we had to reach so far back into history to find larger declines suggests that maybe $715 may prove to be a difficult hurdle. This conclusion may be strengthened by another comment from my April 16th alert: "Gold hurdled over barriers 1-3, and barrier #4 waits above at $715." In other words, I identified the $715 level as a point which could represent significant overhead resistance, comparing it to three previous formidable barriers noted on the chart above. These were $325, $410 and $500. So the question is, will $715 be a difficult hurdle?

To answer this question, I again refer to my April 16th alert. In it I identified three "fundamental factors that are driving gold higher" - inflation, government deficits and protectionism. None of these problems have been solved over the past month.

Will $715 Be a Difficult Hurdle?

The gold bears have been talking the same way since 2004, or even earlier. They suspected the bear market for gold prices when gold pulled back from its upper 400's back to the lower 400's, but gold then continued to climb. The gold bears are as full of shit as those economic pundits and advisors on CNBC and Bloomberg in 2004 predicting that the price of oil would go back down to $34 dollars.

Gold is rising because of the troubles with the dollar. The fundamentals behind the decline of the dollar have not and will not change.

[slackmaster]

23. It's all bullshit

Gold is rising because of the troubles with the dollar.

Gold has been on a rising trend because of PERCEIVED troubles with the dollar, and geopolitical considerations like wars.

[ret5hd]

27. so, in your world...

creating $2Billion - $3Billion a DAY should have no effect on the value of the dollar?

[slackmaster]

30. Having great difficulty figuring out how you got that from what I wrote

:crazy:

[TrogL]

19. Maybe that will finally shut the gold bugs up

Unlikely, though.

[ret5hd]

20. for a little perspective:

considering the state of the dollar, the state of the economy, and the state of world politics, do you really think this current dip is heralding the end of th bull market in gold and other commodities?

i'll add a chart to make it a little clearer.

[slackmaster]

22. The fundamentals of gold are quite clear

Its true, core value is related only to what it costs to dig it up and refine it. Anything over that is pure speculation; basically gambling. If you have a technical strategy that works for you as a small investor, good for you; but most little people get soaked for fees and dealer markups and never make any real headway.

[dkos refugee]

38. yup

look what happened back in Feb '03. It dropped bigtime, far worse than the current slide. Yet it was back up by June and up 20% within a year.

[dkos refugee]

37. why would it?

the price is going to fluctuate, just like oil. But the trend is up. The fact is that gold is up 50% in less than a year, even after factoring in the slide.

[slackmaster]

21. Kudos to anyone who sold at the right time

I missed the chance to unload a Maple Leaf or three.

[ret5hd]

25. ahhh, i get it...

you're long (own) gold, didn't sell it at $700 or so, you think it's going down further, but yet you hold onto it.

That makes sense. :spray:

[slackmaster]

31. My sell point was $900

I would sell most of it without hesitation at that price.

[ozone_man]

39. Could be a while for that target.

I think it'll hit $500 before seeing $700 again. But I think if you hang on long enough, it may make it back up. The dollar is rebounding now. I think. :freak:

[JNelson6563]

24. Still long on gold

considering everything else is on a precipice, teetering. :toast:

[54anickel]

26. Heh-heh, I was wondering if I'd find you here. Still sewing away at

that robe?

Did you happen to catch this one the other day? But remember, deficits don't matter.
Costs of ageing 'could give US credit rating junk status'
http://business.timesonline.co.uk/article/0,,16849-2214791,00.html

THE United States could see its credit rating relegated to “junk” status in as little as 15 years unless it takes “concerted” action to tackle the intense budget pressures created by an ageing population, Standard & Poor’s, the ratings agency, said yesterday.

In a stark analysis, which highlighted the huge stresses imposed on government finances caused by ageing Western populations, S&P said that without offsetting action being taken, America’s age- related public spending would double to 20 per cent of gross domestic product (GDP) by 2050.

The result would be that the US budget deficit would balloon from the mid-2020s, climbing to 29 per cent of national income by 2050, with America’s national debt reaching 350 per cent of GDP by the same year, Standard & Poor’s estimated.

David Wyss, the ratings agency’s chief economist, said that these trends would not be consistent with America’s present, rock-solid AAA credit rating. After 2015, it would fall to single A, “and would then drop further into the BBB category by 2020”. That would leave America’s credit-worthiness on a par with “speculative grade” or junk debt of some emerging market states.

more...


To be fair, S&P has been beating on the rest of the developed world as well


Rich world must act to avoid overpowering debt - S&P
http://www.stuff.co.nz/stuff/0,2106,3690929a6026,00.html

LONDON: Developed economies face overpowering debt levels by around 2050 unless they implement key fiscal reforms to address the problem of ageing populations, a Standard & Poor's report warned on Monday.


The study by the ratings agency focused on the 25-member European Union, Norway, the United States, Australia, New Zealand, Japan and South Korea.

"Without further adjustment either to the current fiscal stance or to pension and health care costs, the median general government net debt-to-GDP ratio for the sample will reach an overpowering 180 per cent of GDP by the middle of the current century, from 33 per cent in 2005," said Standard & Poor's credit analyst Moritz Kraemer.

"Higher debt-service costs and age-related spending will significantly increase the economic weight of the state, with government spending rising to 56 per cent of GDP in 2050, from 44 per cent today."

If these economies do not change their fiscal policies vis-a-vis age-related spending, their sovereign ratings could begin to fall from their current levels early in the next decade.

more...

[JNelson6563]

32. See what I mean?

Looks like trouble almost everywhwere. Ah but gold, shiny, pretty gold, that'll keep. If things keep up we can wrap those gold bars in old, worthless stock certificates for when we flee the country.

:toast:

See ya in the Stock thread 54!

Julie

[pokercat999]

34. How about changing this

"if these economies do not change their fiscal policies vis-a-vis age-related spending"

to this

if these economies do not change their fiscal policies vis-a-vis military and other wasteful spending........

[upi402]

28. and dollar bugs are... what?

gold will go up a lot unless jesus comes back to rescue the doomed to decline greenback

good luck to all though. i think of it this way, if it goes down it means the dollar escaped collapse. if it goes up, i eat food and live indoors. no big deal, just hedging.

[Sammy Pepys]

35. Because gold (and precious metals in general)...

...are volatile. In a certain way, the huge upswing in gold and other metals was par for the course, but they can plummet just as quickly.


It's good to invest in precious metals but only in limited doses.