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Us kick gold down the hill again.
We need to support the Chinese and russia to get the gold to move up :)
Astro,
USA dollar was probably messing up gold for different reasons. China is now allowing imports of gold once again. The premium hit $119 per ounce last week but has now dropped to $80 or so on spot gold price. The reason the ban was imposed was to strengthen the currency. USA bragging on false data on Bloomberg was so over the top as to be obvious and laughable how the presenters could keep a straight face was academy award stuff or someone had a red hot poker nearby. Relaxation by China was an indicator of confidence in their own currency and the economy was responding to a degree to give some confidence.
The FED will do their hawkish pause and last time they did it, gold and gold miners rallied. I suspect a similar event again and we should have some kind of news from Centamin. Hopefully some drill results or something to suggest management and the company still have a pulse. Tony
When first invested into gold I read that historical high inflation is good for gold. But this time inflation was so high gold never rally. It actually cause the opposite...
I wonder anyone can explain why is this happing? Is it because of the strong dollar? And thankyou tony for update...
It is the fact that the FED need to keep the $ high for confidence in it, no matter how. for the all important Worlds Trading Currency.Its not there yet cause the Eastern Nations trust Gold.It will take a few more years.
Statistics massaged .Then sell massive amounts of paper deivitetives every time it goes out of their cofidence zone.
Gold is inverselvely strong to dollar .
Excuse tyopos ,but you should get the message.
Sticky keyboard, sorry.
Astro my explanation as someone who lives in the UK.
In September 2011 the peak gold price was £1,178. Today the same bar of gold is valued at £1,561 and inflation has ran 60% in the UK. Therefore the equivalent peak price is £1885 per ounce of gold and that is an expensive peak price to pay.
The bottom of the market was £708 per ounce in December 2015. Today that bottom is £1,018 which is a rock bottom low.
Inflation calculations are biased low and hence we equate it better to say a property price we live in or some other major asset. I would estimate that real data is 10% higher on both the low and the high. This gives £1120 per ounce low and the high is £2073 which is approaching the normal 100% variation between a bull high and bear low. We are currently £440 above the bottom and £512 below a bull market top. Gold in my opinion is slightly below mean value. £1593 gold ounces or $1975 gold per ounce is exactly on the average mean on what we see here in the UK.
It is pointless using 1980 metrics as the gold price exploded way above any sensible metric value and it took 20 years to get to a bear market bottom. It is therefore best to look at where gold was at 2011 and 2015 to follow where we are now. What determines the future is whether we are in a bull market or bear market. Inflation tells us we are behind by around 3-4% or so. The motivation to buy something other than gold is based on what is safe to buy. If we believe the UK sovereign debt is a potential future problem then gold is in a bull market. If we believe the debt is entirely manageable without printing more money than we can buy bonds and be happy with 5% and gold is less attractive and bearish. If we believe the equity market is undervalued on PE multiple then gold is more likely in a bear market and if we fear a lot of companies are making far less profit than it is more likely a gold bull market. All the time we recalibrate where gold is in ounces to an important non-gold asset we own and that reminds us whether we are near a gold bottom or a top in valuation in our currency.
Tony
Contiuation.
It is unlikely the US has the Gold Reserve it says. Take for example of Germany a few years ago. 8 years to deliver.
If foreign governments want their Gold Bullion back , tough . They will be offered promisiury notes. Like their Government Bonds.
Its been loaned or sold years ago.
But of course my humble opinion.
Gold moves inversely to real interest rates. So inflation raises gold unless interest rise faster which is just what has been happening. Bonds (measured by 10 year TIPS) are now yielding over a real 2%, the highest since the 2009 burst and historically very high. Inflation adjusted gold is near the low of 1970, back where it was at the start of the century and half what it was in 2012. Look at the real prices not nominal