Gold. GOLD!!!!! Gooooollllllllllddddddd!!!!!!!!
- Thread starter ChesusRice
- Start date
Harrekin
Well-Known Member
Gold is overpriced (or silver underpriced, relatively) but I'd bet on the first being most likely.
I dunno, gold just doesn't "do it" for me like silver does, I think silver has a higher potential for long term return and is affordable enough that if the price goes up you'll still be able to sell it fairly easily.
Try sell a large gold bar, there's not as many buyers as you'd think
Balzac89
Undercover Mod
I have very little gold. Mostly Silver Bars, Junk Silver and ASEGold is overpriced (or silver underpriced, relatively) but I'd bet on the first being most likely.
I dunno, gold just doesn't "do it" for me like silver does, I think silver has a higher potential for long term return and is affordable enough that if the price goes up you'll still be able to sell it fairly easily.
Try sell a large gold bar, there's not as many buyers as you'd think
The SPDR Gold Trust currently holds 1,000 tonnes of gold valued at $37 billion. That fund has seen 380 tonnes in outflow this year; including other physical gold ETFs, analysts are expecting 800 tonnes of outflow this year. The fact that investors are holding paper instruments doesn't change that gold funds are throwing physical gold into the market.
The bubble burst like every bubble must. For a decade, people have been accumulating gold and the price has been steadily rising, beating many other assets; the gold narrative was that gold could only go up, up, up, especially as the Fed and other central banks printed huge sums of fresh paper currency. People bought in, especially since the financial crisis, and waited for inflation to take hold. Then it didn't--there has been no huge inflation despite QE (Japan-style deflation seems to be viewed as the far more serious threat). The world didn't fall apart, paper currencies didn't drop to zero, and people suddenly had a difficult time justifying their $3,000 price targets. The buyers stopped sending the price up.
With the first rattles that sent the gold price down, investors--who hold most of the gold--saw themselves losing money at the same time stocks were up more than 100%, with no prospect for a turnaround. People lost faith or were jealous of the returns to be had elsewhere, so they sold gold; the price went lower, and more people sold; and this has continued down to the level we're presently at, which is near reported production costs. The investment bubble has simply unwound.
I don't think the correction in gold is over. The feedback loop is probably going to continue: gold investors are going to keep redeeming their gold investments, forcing gold funds to continue selling physical gold. Individual investors, seeing the price below what they paid, might be tempted to sell their holdings in order to buy them back at a lower price, or to take tax losses to offset capital gains in stocks. Even if these positions are ultimately bought back, the price will certainly be driven down from where it is today.
Balzac89
Undercover Mod
The Gold to Silver Ratio is really skewed. It went from 1 to 43 and is now 1 to 63. At the moment Silver is far more undervalued than Gold is. Silver has lost more than Gold.
If the price continues to drop the stored Gold will flood the market like you state.
But then comes a point when the price becomes low enough that it is a deal. The purchasing of ETFs will increase below the price of production. Which Gold is fast approaching for smaller mines. If it drops more mines will close and then supply will take a cut.
I think as the price drops the Central banks will be buying more which are the biggest hoarders of Gold.
The ratio is irrelevant. Silver is valued for its industrial properties; gold is valued almost solely as an investment. There should be absolutely no relationship between the prices.
Harrekin
Well-Known Member
And wait until they realise only about 10-25% of those gold certs actually have physicals ready to back them...
What do you think will happen to the price of physicals when everyone realises "paper" is worthless?
Oh, and tokenperv, "the correction" begun when hundreds of tonnes of paper gold were all of a sudden injected into the market a couple of months ago long before talk of ending QE.
Do you actually follow this at all or just claim to be knowledgable?
I've asked for this paper gold claim to be justified multiple times in this very thread. No one has substantiated it.
silasraven
Well-Known Member
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Harrekin
Well-Known Member
That's because you don't actually follow the markets.
Look at April/May of this year, paper was being dumped at a ridiculous rate for physicals and there were crazy silver shortages.
Some suppliers are still back ordered for the popular oz coins.
But whatever, Professor TokenPerv knows better than the guy actually buying it
I see that you actually have no empirical evidence for your claims, then, just some generalized suspicions based on the supposed shortage of silver in the market.That's because you don't actually follow the markets.
Look at April/May of this year, paper was being dumped at a ridiculous rate for physicals and there were crazy silver shortages.
Some suppliers are still back ordered for the popular oz coins.
But whatever, Professor TokenPerv knows better than the guy actually buying it
Now tell me, Mr. Market Expert, what percentage of the silver supply is consumed by investment demand? Ah yes. Such a tiny, tiny fraction, isn't it, Mr. Market Expert? Of course, we can break that down even further: what percentage of silver in the world is even available for retail investment? Even less. What percentage of the silver supply is actually consumed by retail investment demand? Don't you think it's peculiar that you're basing your claim about fake paper on this little segment of the whole picture?
Somehow I really doubt that the iShares Silver Trust--with $10 billion in metal--has its silver in 1 ounce bars and coins that can readily be sold to retail investors. If they dump all $10 billion of their silver into the market tomorrow, you won't see a single additional silver coin for sale.
Harrekin
Well-Known Member
If you want empirical evidence, look at the markets for the months I quoted, dumbass.
You need a fish-bowl stomach, cos your head is so far up up your ass.
Your post talks about the price declining and there being huge shortages of physical silver. You mean at the retail level, which is a tiny segment of the silver market. Investment fund silver, as I suggested, is likely not suitable for retail sale. You would not see their sales impact the retail market unless the bullion they have is melted down by someone else and sold into that market. If the holders are just selling to other investment funds, this silver never comes on the market. If they sell it to someone who will melt it into much smaller bars, that can't be done immediately.
I can give you some other very simple explanations for retail shortages:
1) People bought everything up when the price went down because they thought they were getting a good deal. No inventory left.
2) Retail investors weren't selling physical silver, so little physical silver fit for retail sale came on the market.
As I already pointed out, a $10 billion investment fund isn't holding 1 ounce coins. Their sales are totally disconnected from the retail market
Balzac89
Undercover Mod
Since the Indian government banned gold coins and bars. The amount of silver being imported into India is on track to double this year.
But I agree Retail shortage is lack of smaller size coinage / production issues.
Harrekin
Well-Known Member
He asked for a comparison between paper and physical markets, he just doesn't actually get what he's even talking about.
I didn't ask for any comparison. You commented on my post and declared that only a fraction of the paper gold was actually backed with physical gold. I asked you to prove it, and you responded by citing shortages in the retail market a few months ago, when selling was driving precious metal prices down. My point is that the shortages in the retail market--a tiny fraction of the total market--are totally unrelated to investment fund physical sales, because those sales weren't in retail grade products. You asserted such shortages as proof that physical metal wasn't actually being sold into the market.
You are the one who clearly doesn't understand what you're talking about. I think you're confusing investment funds that buy physical gold with other synthetic precious metals investments. There are products designed to simulate the performance of gold prices, for example, that own no physical gold. But selling in these paper assets has no impact on the price of physical gold--instead the price of the paper assets is tied to that price. It responds to the price, it doesn't influence the price.
As for the investment funds holding physical metals: you've given us no reasonable basis to be suspicious other than a shortage in the retail market that seems meaningless given how small a piece of the overall market it is, and considering that investments funds weren't selling metal that could simply be thrown on retail shelves.
Harrekin
Well-Known Member
So the dumping of hundreds of tonnes of "paper" gold on the market doesn't lower the price of physicals regardless of "real" demand?
You're so fucking stupid.
Central Banks, investors, etc are crawling over themselves to drop paper and pick up physicals...wtf would they do that if paper gold "actually worked" like a delivery contract?