Irrational Sell off

SilverSanchez

SilverSanchez

Active Member
This will mark the turning point!

Gold may come back to touch 1550 - but i doubt it would go lower....

The XGD has made a new low - and thats significant

This is where the smart people buy - im obviously not one of them because I bought before, but at least im learning. :)
 
Im looking at the parcels sold/bought and parcels over $100k for RRL, SLR etc
So this big selling is being bought by equally big buying as the buyers let the price come to them
 
The Gold market just opened.
Gold has started slightly up; 1609 to 1613. Let's see where this goes, could do absolutely anything.
 
Those who can't afford, sell. Those who can afford, buy. It's not the little fellows who are doing the major buying at this type of juncture.

Just a massive reshuffling of assetts. For every loser there is a winner (or as is increasingly the case, one winner for more losers). Unfortunately, the "winners" are the larger institutions and the "losers" more often those who can't afford to lose.
 
Gold and silver will continue to be manipulated downwards until the bankers are sure that they hold most of the gold, and most private investors have been wiped out.

Only then will the manipulation cease and then gold and silver will truly go to the moon!

But mose of us wont have any left at that stage :lol:
 
capt.sparrow said:
Gold and silver will continue to be manipulated downwards until the bankers are sure that they hold most of the gold, and most private investors have been wiped out.

Only then will the manipulation cease and then gold and silver will truly go to the moon!
Click to expand...

You forgot the bit where just before it is unleashed to go "to the moon" it is confiscated.
 
The cynical would look at the trading glitch this morning and conclude that the big boys are testing a waterfall to 1539 - perhaps the end of this week when the options expire...

Certainly unpleasant things are happening to my modest mining portfolio, and I've been gritting my teeth and buying, but if it *is* all being driven by the gold price I would keep some paowder dry and ready for more buying opportunities (aka position losses :)).
 
My gut is telling me tomorrow is the day to buy because the sell off will have reach its bottom.
Then probably a short bounce up for a week or two.

Takes a brave person to buy.
 
In what way is it irrational? I get the debt thing and all that, but the reality is that the numbers coming out of the U.S. are much better than were thought possible at this time. QE3 has done nothing to propel prices upwards indicating a severe lack of momentum in the price of gold, so lower prices look highly likely now.

The stock market is sucking in funds from everywhere else, including precious metals, I really can't see gold going much higher in the medium term.
 
QE3 has done exactly what its s'pose to do - increase asset prices (ie stocks)
QE only propells Gold when a default is imminant - the US is not going to default so why should gold have upward price momentum?
Gold is however, in a range, and we are at the bottom of the range - therefore the sell off in gold stocks is irrational because they are already under valued

Japan and Europe are in much more trouble than the US, and that is still alot of people who may need gold in the future.

If you read Graham's book 'The Intelligent Investor' he said stocks are the place to be during high inflation
Gold will also benefit from inflation somewhat, platinum and palladium obviously do but the driver for gold will come, just not yet.

Gold will apreciate with inflation if nothing else
 
I think this is a good quote from John Hathaway from the Tocqueville Gold Fund

"...Hathaway concluded, "The lesson, which I believe will become evident in six months or so, is that bull market shakeouts are designed to ensure that the fewest number of possible participants will be aboard for the entire ride."


Since the divergence of the stocks to gold in September 2011

Gold price has fallen 15%
Both the HUI and the XGD have both fallen 40%

In a market where the miners index for gold has outperformed the gold price, you would expect in a correction for the reverse to be true.
People make the mistake that QE is teh driver for the Gold price - thats not true. There was NO QE untill 2009... gold price rose on its own strength from 2001 till now.
The easy money crowd speculators drove gold's price higher and caused 2 things

1. Over supply of gold stocks and number of shares in the companies as people scrambled for IPO dollars and funding in general during a credit crisis
2. Over bought situation in the metals

The effect of this correction is three fold
1. Getting rid of the dross (pardon the pun) in the gold mining sector - bankrupt that rubbish
2. Refocusing the managment of gold companies from a scramble to get ounces (which has been sloppy at best), to the scramble to cut costs and improve the economics.
3. Reduces the over supply of spec money to create a real price bottom on the technical chart, and repair the valuation metrix of the metals

The improved fundamentals
1. Nobody is going to stop china, russia and other non western contries and central banks from increasing gold supply either through repatriation, purchase or confiscation
2. Nothing is going to stop western contries from inflating away their own debts and reducing their currency values to inprove trade balances

The risks are
1. Governments trying to redistribute wealth via legal plunder (taxes) which will focus on private wealth
2. The paper manipulation of short term prices

The truth
1. Equity markets are being funded by cheap money
2. Soverign bonds in the US are headed for meltdown
3. The energy required to sustain the growth created by imporving economies is limited in supply at such a cheap price - you cant deliver goods cheaply if petrol is expensive. In Melbounre metro today pretrol is 1.59 per litre of unleaded.... think about that!

Cars, motorbikes, trucks, delivery vans, planes, trains, computer networks, telecommunication networks require commodities.... and there is increasingly limited supply at the current price points in oil, copper, silver, REEs, Uranium, Coal, Zinc, Palladium, Platinum, corn, wheat, protiens.... in the next 12 months you will see beef, lamb and pork increasing in price.


Seriously, just step back and look at the bigger picture
 
SilverSanchez said:
Gold will apreciate with inflation if nothing else
Click to expand...

This idea that gold is an inflation hedge is an oversimplification. Gold isn't a hedge against inflation, there are far better ways to achieve that than to buy gold. The key to increasing gold prices is devaluation of currencies. What's happened around the globe is that just about all currencies (of importance) have been devalued and as a result it has been impossible to move from one currency to another to protect the home country's currency. So instead they buy gold, which in effect is a highly stable currency that can't be devalued.

If inflation starts to rise in the U.S, there is no way that the Fed will continue with monetary easing policies. That isn't bullish for gold. So the opposite is true if you want to see higher gold prices - lower inflation, not higher. If you look at a long term chart of inflation versus the gold price, there is little correlation between the two.

Gold stocks haven't benefited from the rising gold price in the past, and neither will they now. If the US improves significantly, gold is going lower and stocks will go lower in the process.

Hey, I own plenty of the stuff, I don't want it going down either, but sometimes you just have to face facts.
 
That's the whole point. There is little correlation between gold and inflation. To just say it will inflate with inflation is an oversimplification and inflation certainly isn't a catalyst for higher gold prices.
 
jparrie said:
That's the whole point. There is little correlation between gold and inflation. To just say it will inflate with inflation is an oversimplification and inflation certainly isn't a catalyst for higher gold prices.
Click to expand...
I never said it was,

inflation is a catalyst for stocks, soverign default (or a bond meltdown) is catalyst for gold. But gold price increases with inflation.
 
SilverSanchez said:
jparrie said:
That's the whole point. There is little correlation between gold and inflation. To just say it will inflate with inflation is an oversimplification and inflation certainly isn't a catalyst for higher gold prices.
Click to expand...
I never said it was,

.... But gold price increases with inflation.
Click to expand...

That's exactly what you said and keep saying. But it simply isn't true. In the early 90s inflation was 5% or so, gold didn't go up. In the late 90s inflation was 3%, the gold price fell. So gold doesn't just 'increase with inflation'.
 
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