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February 08, 2010, 02:11:34 PM

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Topic: Gold (Read 1695 times)

TRex

Administrator
Jr. Member

Posts: 86

Re: Gold

« Reply #15 on: February 24, 2009, 02:11:07 PM »

Well, it has been a few months, so I thought I would post again with my own personal gold indexing system. When I thought up this system, I didn't know about the dollar index on forex.com or I might have been tempted to do my calculations with that one.

While there is an ongoing shortage of puchasable metal, primarily a shortage of one once coins, this is pretty much achademic to me. I suspect the real need to purchase gold will be down the road a bit.

Current price today of gold is $ $966 dollars, after rising to a temporary high of almost $1000 per ounce.

Today, the cost factors I use for my formula are
10 Eurodollars $12.80
2 Pounds (Brit) $ 2.90
200 Yen $ 2.07
and inflation x 1.4415
This gives a result of 25.62 so
an index of 30 gives 768.46
so gold is overpriced when one considers the strength
of the dollar against european economies. (While the Yen has
weakened lately, it is still comparably strong from its gains last
year despite Japan's currently weak economy)

Any well reasoned and supported opinions, even
if they run counter to mine, are most welcome.

TRex


« Last Edit: February 25, 2009, 08:09:15 AM by TRex »	Logged

TRex

Administrator
Jr. Member

Posts: 86

Re: Gold

« Reply #16 on: April 16, 2009, 04:52:55 PM »

Markets are quite in turmoil, and I just found out that banks are hiding some of their toxic assets. The government has already borrowed more this year than its entire budget for 2000. In addition they are priniting money (spending money they neither have from tax revenues nor have borrowed).

My expectation is that we will move from recession
to hyper-inflation in the not too distant future.
Of course, I don't know how long.

With the markets in turmoil, and hyper-inflation possibly around the corner, I am beginning to wonder if the time to buy gold might be earlier than I thought only a few months ago.

Just mulling some thoughts.
More later.


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TRex

Administrator
Jr. Member

Posts: 86

Re: Gold

« Reply #17 on: July 10, 2009, 01:06:20 PM »

About three days ago, I checked the markets to see if it would be time to invest in gold, and here are the numbers.

(Look back at the posts on this thread from last May or so to see what these numbers mean.)

2 Pounds 3.24
10 Euro$'s 14.00
200 Yen 2.12
inflation 1.404
gives an index of 27.18
multiplied by 30 $815
So a gold price of $916 is still 12% too high, but if there is indeed
a 10% inflation rate for three consecutive years, that will take care of
the overpricing (but that is highly unlikely to happen within the next
two years, so right now the only risk is that all of the amatures
will figure this out and drive the price of gold up prematurely.)

TRex


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Aleksandr

Administrator
Jr. Member

Posts: 51

Re: Gold

« Reply #18 on: September 22, 2009, 06:58:50 AM »

Apparently people are betting on the inflation side since gold as of this moment is a little over $1,018 an ounce. I am still of the opinion that deflation is a bigger issue going forward (it might be more wishful thinking though).

My reasoning is unemployment and the Chinese foreign currency reserves, but then again it is those factors working against the US governments desire to inflate us out of this downturn. Market looks like it thinks Uncle Sam is stronger.

http://finance.yahoo.com/news/Fed-likely-to-keep-interest-cnnm-4155614384.html?x=0&sec=topStories&pos=3&asset=&ccode=


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TRex

Administrator
Jr. Member

Posts: 86

Re: Gold

« Reply #19 on: September 23, 2009, 10:04:33 AM »

There is some background for this converstaion here.
Well, it DOES look like somebody is betting on the inflation side,
but I am thinking inflation might be a couple years down the road,
due to the unemployment figures. The somebody might be related
to Americans (finally) showing an above zero savings rate.

The ultra low interest rate might be anohter incentive pushing some
people towards gold. If so, it might be a stablizing factor, having
people who don't normally speculate on anything, buy up a little of it.

Looking at the second chart here, I think I will wait for the blue line to go back
below the red line before even thinking about this again.

TRex


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Aleksandr

Administrator
Jr. Member

Posts: 51

Re: Gold

« Reply #20 on: September 23, 2009, 12:01:23 PM »

I have a feeling that the small investors are buying gold as a protection against inflation, while the large institutional investors are buying it as a play against instability they see coming.

The dollar should recover strength, since a weak greenback could mean jobs coming back to the US (not something that China or India want to see). This would cause a drop in gold prices. I think that the big guys with the big pools of money don't believe this green shoot recovery and think stocks will fall back down, which should help keep gold prices up as investors pull out of equities and go to cash and gold, thus restrengthening the dollar.

Of course the biggest issue is Iran and the closure of the Straights of Hormuz. The wild card here is Israel and whether it would go against the no go orders of the US.


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