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Author Topic: Gold collapsing. Bitcoin UP.  (Read 1803524 times)
miscreanity
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April 17, 2013, 10:14:36 PM
 #4761

misreality,

you keep saying "it iz tim".  either you're lying to me or you're an idiot.  which is it?:

A while back, I stated that I would no longer offer time estimates. The "markets" have been destroyed and offer no ability of price discovery now. I also had said that a dollar spike with no correction before consolidation, combined with a commodity collapse (esp. gold), would indicate paper/physical separation; general lack of dollar support in terms of real assets.

I do like the ad hominem, though. You'll end up eating your words regarding gold. Maybe you'll donate some of your BTC to a worthwhile organization when it happens.
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April 18, 2013, 01:14:13 AM
 #4762

Gold collapsing.  Bitcoin UP.
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April 18, 2013, 06:18:15 AM
 #4763

misreality,

you keep saying "it iz tim".  either you're lying to me or you're an idiot.  which is it?:

A while back, I stated that I would no longer offer time estimates. The "markets" have been destroyed and offer no ability of price discovery now. I also had said that a dollar spike with no correction before consolidation, combined with a commodity collapse (esp. gold), would indicate paper/physical separation; general lack of dollar support in terms of real assets.

I do like the ad hominem, though. You'll end up eating your words regarding gold. Maybe you'll donate some of your BTC to a worthwhile organization when it happens.

The price for gold will surely go down rapidly as the divorce from paper to physical occurs. Are you saying that the price will rise even in excess of where it is now even with the split? I'm not so sure.

Bro, do you even blockchain?
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April 18, 2013, 07:28:59 AM
 #4764

misreality,

you keep saying "it iz tim".  either you're lying to me or you're an idiot.  which is it?:

A while back, I stated that I would no longer offer time estimates. The "markets" have been destroyed and offer no ability of price discovery now. I also had said that a dollar spike with no correction before consolidation, combined with a commodity collapse (esp. gold), would indicate paper/physical separation; general lack of dollar support in terms of real assets.

I do like the ad hominem, though. You'll end up eating your words regarding gold. Maybe you'll donate some of your BTC to a worthwhile organization when it happens.

The price for gold will surely go down rapidly as the divorce from paper to physical occurs. Are you saying that the price will rise even in excess of where it is now even with the split? I'm not so sure.

When the actual "USD/$1 face" price of 90% circulated coins started to go up, while the paper silver was crashing, in Sept. 14-16, 2008, I had less than a week before the friendly SWAT team from Finnish government raided my home and offices, confiscating almost all gold and silver that they could find. When they gave them back several months later, the "paper discount" had already disappeared.

Guys, if you want to buy silver right now, consider buying paper! Last time it gave a windfall to those who dared to buy at $9/"oz" in 2008. Of course there is a risk that it will not be honored, but last time it was. Don't think "this time it is different". Have your physical stash in a safe place, but don't run into the already thin market to buy more - in the event that COMEX defaults, your present stash will be more than enough of an insurance.

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April 18, 2013, 03:25:57 PM
 #4765


It was paper trading alone that stove off this inevitability. There is yet a long way to go to mid 1990's levels.

yes, it was the paper gold that contributed to the drive into the $1923 top in Aug 2011.  USD's were leveraged into paper gold and that is now reversing.

this is what miscreanity has ass backwards.
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April 18, 2013, 03:53:14 PM
 #4766

Demand goes down:


Supply goes up:


Dur.

It was paper trading alone that stove off this inevitability. There is yet a long way to go to mid 1990's levels.

1. Where is the investment demand in that picture?

2. If gold were to go down to mid-90s levels then the gold production would fall to almost zero as it wouldn't be profitable to mine gold. So that's about 95 million ounces of gold supply gone.

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miscreanity
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April 18, 2013, 04:57:53 PM
 #4767

If miscreanity were correct we would be seeing a divergence between COMEX and London Fix—which is totally not happening.

Those are both paper gold prices. Paper does not diverge from paper.
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April 18, 2013, 04:59:12 PM
 #4768

If miscreanity were correct we would be seeing a divergence between COMEX and London Fix—which is totally not happening.

Those are both paper gold prices. Paper does not diverge from paper.

Correct, until it does. But it is not right now.

miscreanity
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April 18, 2013, 05:13:21 PM
 #4769

yes, it was the paper gold that contributed to the drive into the $1923 top in Aug 2011.  USD's were leveraged into paper gold and that is now reversing.

Paper prices reflect demand for the underlying asset. Expectation of actualization should physical be requested is the basis for acceptance of paper trading. Since ABN AMRO defaulted, that acceptance of paper is being rejected - it's now physical or nothing.

Result:

Paper trading for gold will be based on the value of paper. Physical metal will be valued independently.

If paper will be traded for physical on exchanges, it will be on a cash basis as Jim Sinclair has stated - no leverage will be permitted. If the west can continue the market charade and obscure the purpose of holding real assets like gold, the paper price may still plummet further rather than retaining or even strengthening the connection.

So yes, leverage into paper gold is unwinding and that price may continue falling.
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April 18, 2013, 05:34:26 PM
 #4770

so i just called my local gold coin dealer and asked the price of a 1 oz Krug.

answer:  $1450 which is a 4% premium over the current spot of $1394.  i then asked what is their usual premium markup and she said it varies anywhere from 3-4.5% which has not varied for many years.  nothing unusual.

but i'm willing to accept your supposition miscreanity and sell you my remaining gold coins for a mere $2500/oz which is a great deal given what you supposedly believe.
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April 18, 2013, 05:47:54 PM
 #4771

answer:  $1450 which is a 4% premium over the current spot of $1394.  i then asked what is their usual premium markup and she said it varies anywhere from 3-4.5% which has not varied for many years.  nothing unusual.

Oh how sad to think just a few months ago I cashed out of Bitcoin at around an average of $12 to buy gold coins, After reading this tread religiously. (Bitcoin hasn't crashed, its my commons sense investing that has crashed)

Silverbox Update:
Gold:  -6%
Bitcoin:  +71%
Diff:  +77% advantage Bitcoin
It's a little silly to gloat about these most recent movements.  They're going to be corrected.  This simply can't last.

The pin that tiped the scale @ about $9/BTC

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April 18, 2013, 05:59:16 PM
 #4772

so i just called my local gold coin dealer and asked the price of a 1 oz Krug.

answer:  $1450 which is a 4% premium over the current spot of $1394.  i then asked what is their usual premium markup and she said it varies anywhere from 3-4.5% which has not varied for many years.  nothing unusual.

but i'm willing to accept your supposition miscreanity and sell you my remaining gold coins for a mere $2500/oz which is a great deal given what you supposedly believe.

Why do you still own gold coins?
cypherdoc
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April 18, 2013, 06:04:42 PM
 #4773

so i just called my local gold coin dealer and asked the price of a 1 oz Krug.

answer:  $1450 which is a 4% premium over the current spot of $1394.  i then asked what is their usual premium markup and she said it varies anywhere from 3-4.5% which has not varied for many years.  nothing unusual.

but i'm willing to accept your supposition miscreanity and sell you my remaining gold coins for a mere $2500/oz which is a great deal given what you supposedly believe.

Why do you still own gold coins?

very small # compared to before. 

mementos of an Ancient Age.
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April 18, 2013, 06:48:41 PM
 #4774

...

mementos of an Ancient Age.

True, true, just like Yap stone money. "Yapbug" and his stash...


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April 18, 2013, 07:54:11 PM
 #4775

The price for gold will surely go down rapidly as the divorce from paper to physical occurs. Are you saying that the price will rise even in excess of where it is now even with the split? I'm not so sure.

When the actual "USD/$1 face" price of 90% circulated coins started to go up, while the paper silver was crashing, in Sept. 14-16, 2008, I had less than a week before the friendly SWAT team from Finnish government raided my home and offices, confiscating almost all gold and silver that they could find. When they gave them back several months later, the "paper discount" had already disappeared.

excuse me, WHAT? Your metal was confiscated in 2008. On what grounds? Please, can you tell this story in a bit more detail?

Guys, if you want to buy silver right now, consider buying paper! Last time it gave a windfall to those who dared to buy at $9/"oz" in 2008. Of course there is a risk that it will not be honored, but last time it was. Don't think "this time it is different". Have your physical stash in a safe place, but don't run into the already thin market to buy more - in the event that COMEX defaults, your present stash will be more than enough of an insurance.

You can't be taking to me because my stash is miniscule... Isn't it a good time to increase ones physical silver/gold stack? I wouldn't even know how to buy paper silver. Seems like pure gambling to me anyway.

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miscreanity
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April 18, 2013, 07:55:38 PM
 #4776

The London Fix comes from the London Bullion Market... It is simply the securitized market at COMEX that drives the curves for price expectation.

I actually think that Bitcoin has highlighted the Achilles Heel of gold markets... That gold has a proof problem. The securitized gold markets provide much needed liquidity, and it is that liquidity that has been driving the price increase over the last decades because gold is goddamn heavy. Once belief in the value of that liquidity is eroded, so will the price support that it provides.

Your assertion seems to assume that the LBMA has not been acting as a fractional banking system, and actually holds sufficient physical to satisfy all outstanding claims.

Gold does not really have a proof problem so much as it has a scaling problem (it can be argued that counterfeiting dollars is easier than faking physical gold). At local levels, it functions well. At large scales, physical limits preclude efficiency unless sufficiently large quantities or relative value is used in trade.

Yes, securitization provided liquidity in a convenient form, just like gold certificate dollars did (there are >150 billion grams of gold, making liquidity less of an issue than suggested). The value of that liquidity enabled gold to function on a wider scale and at higher volume than it could normally. It also concentrated custodial trust for too many participants. With only governments and other major institutions participating in the gold market, it becomes very difficult to obscure supply and demand. When millions of individuals are involved, accountability is fleeting due to societal momentum - who watches the watchers?

The price support for securitization will collapse, but that concerns the securitization instrument only; the underlying asset still has value. Physical gold remains a very strong store of value, and no amount of price decline changes the number of protons and neutrons in a gold atom.
miscreanity
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April 18, 2013, 08:03:34 PM
 #4777

so i just called my local gold coin dealer and asked the price of a 1 oz Krug.

American gold markets will have a delay. There is little understanding of gold's nature in the west, not to mention lack of funds among much of the populace. Supply shortages starting elsewhere take time to propagate, like an earthquake.

Let's accelerate the issue: ask your dealer what the price is for physical delivery of 32,150 troy ounces (1 metric ton). See what the reply is both hypothetically and practically, with and without shipping costs.
miscreanity
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April 18, 2013, 08:21:36 PM
 #4778

That doesn't do anything but highlight the liquidity problem. If gold is illiquid that does not make it more valuable. That makes it less valuable.

With appropriate valuation, liquidity is determined by physical supply, not overly-diluted fractional shares. Gold is too scarce for its present price in fiat denominations.

If gold were $31,000/oz, one gram would be $1,000 of savings. Not everyone would be able to scoop up kilos of the metal. While not ideal for transactional purposes, it functions very well for debt and trade settlement.

The same situation applies to Bitcoin, with the difference being that Bitcoin is used by a tiny subset of those using gold; i.e. the room for growth is much greater for Bitcoin than gold.
MatthewLM
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April 18, 2013, 11:18:25 PM
 #4779

Where is it? It is in the price divergence.

As you can see, it took years for the price divergence from "investment demand" to wind up, and it will take a little while for it to wind down. Gold mining will necessarily become unprofitable because we already got all the easy gold. We are waaaay past peak gold, but demand for the phys is also way off. And there is little reason for the paper markets, because people are realizing that the risk profile of securitized gold does not actually help you in the scenario in which there would be high demand for the otherwise useless metal... Perhaps a fashion trend can reverse things.

Gold has various uses such as in electronics and dentistry, not only as jewellery and as money. But the most important aspect for the price right now should be the demand for gold as an investment and/or money.

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April 18, 2013, 11:44:54 PM
 #4780

...
And yes, the most important aspect for the price right now is the demand for securitized gold—that demand is waning.

Couldn't happen to soon in my opinion.  To bad for the people who will realized in one big batch that the value is actually right around zero.


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