Price of gold down YTD in a highly inflationary environment. I was always told, whether true or false, it was an inflation hedge. Not sure what to think about continuing to hold it with these kinds of correlations. I just feel like I am back in the boat of being tied to a dollar currency (as gold is priced in dollars) that is subject to wild manipulation by the FED.
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Explain Gold price action to me
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Last: 3 yr ago by bmks270
If u plan on investing in gold or silver, just put money in your savings and draw a higher interest rate. Total waste
When the paper market controls the price of a physical commodity, this is what you get. If the gold and silver market was actually decided by how how much the world mined and not the futures market, the price would be much higher.
I treat gold/silver like I do travel industry/casinos/ oil. It's all cyclical. I invested in silver twice in my life so far.
BUY 2008/2009 and sold spring 2011 - tripled my money - bought coins pre 1964, ASEs, silver bars
BUY Spring 2020 COVID dip and sold 2021 - doubled my money - bought SLV ETF in Roth IRA.
Didn't bother holding it for investment any other time. Unfortunately, the banks/market control the price well, so you don't get the action you expect. I have some silver coins I keep more for collection/memory.
BUY 2008/2009 and sold spring 2011 - tripled my money - bought coins pre 1964, ASEs, silver bars
BUY Spring 2020 COVID dip and sold 2021 - doubled my money - bought SLV ETF in Roth IRA.
Didn't bother holding it for investment any other time. Unfortunately, the banks/market control the price well, so you don't get the action you expect. I have some silver coins I keep more for collection/memory.
Mining new gold only address new supply and does not address the demand side of the equation. BTW, the cost of mining new gold is heavily correlated with the cost of energy, because mining and refining are very energy intensive. So, by this metric, the price of gold should be way up, because the price of energy has gone up considerably. But it hasn't. Why not? That's the demand side. Or lack thereof. The factors causing demand for gold are numerous and disconnected from each other. So much so, that I could never bring myself to invest in gold for the very reason OP mentions.Cypresslakeag said:
When the paper market controls the price of a physical commodity, this is what you get. If the gold and silver market was actually decided by how how much the world mined and not the futures market, the price would be much higher.
Oh, and username does not check out.2wealfth Man said:
Price of gold down YTD in a highly inflationary environment. I was always told, whether true or false, it was an inflation hedge. Not sure what to think about continuing to hold it with these kinds of correlations. I just feel like I am back in the boat of being tied to a dollar currency (as gold is priced in dollars) that is subject to wild manipulation by the FED.
Whoever told you Gold was a good inflation hedge wasn't looking at the facts.
Lack of demand for gold? Gold has had a pretty steady demand. Demand for silver is off the charts. Expected to reach an all time high in 2022. Demand has very little to do with the price. Very little. So why is the price going down? The ETFs and COMEX can crush the price even as demand is at all time highs (which is the exact scenario we are in). It happens quite often that the COMEX will trade on a single day enough contracts that equate to 12-14 months of GLOBAL mine production. With every single one of those contracts eligible to be settled in physical metal, it tells the market that their is WAY more supply than demand. Which is not even close to reality because all of those contracts are naked shorts crushing the longs. As long as institutions and banks don't have to actually show proof of the metal, the price will stay suppressed. Demand could not be more irrelevant.
Looking at historical data gold was an inflation hedge during periods when inflation was above 6-7%. Otherwise, equities kicked its ass.
Why it's not performing as it historically did with our current environment can be explained by someone else because I don't know. Clearly, something is different this time around.
Why it's not performing as it historically did with our current environment can be explained by someone else because I don't know. Clearly, something is different this time around.
Good analysis; I also perceive that as long as the FED remains hysterically hawkish on monetary policy it is bad news for longs in gold: (1) the dollar is just too strong and (2) liquidity is tight in all markets, either in cash or marginOutdoorag011 said:
Lack of demand for gold? Gold has had a pretty steady demand. Demand for silver is off the charts. Expected to reach an all time high in 2022. Demand has very little to do with the price. Very little. So why is the price going down? The ETFs and COMEX can crush the price even as demand is at all time highs (which is the exact scenario we are in). It happens quite often that the COMEX will trade on a single day enough contracts that equate to 12-14 months of GLOBAL mine production. With every single one of those contracts eligible to be settled in physical metal, it tells the market that their is WAY more supply than demand. Which is not even close to reality because all of those contracts are naked shorts crushing the longs. As long as institutions and banks don't have to actually show proof of the metal, the price will stay suppressed. Demand could not be more irrelevant.
Longer-term; stagflation may be beneficial for the gold longs.
You may have said it better. Yeah, the whole morass of the metals markets on both sides and this crap you mentioned is why I stayed out of it.Outdoorag011 said:
Lack of demand for gold? Gold has had a pretty steady demand. Demand for silver is off the charts. Expected to reach an all time high in 2022. Demand has very little to do with the price. Very little. So why is the price going down? The ETFs and COMEX can crush the price even as demand is at all time highs (which is the exact scenario we are in). It happens quite often that the COMEX will trade on a single day enough contracts that equate to 12-14 months of GLOBAL mine production. With every single one of those contracts eligible to be settled in physical metal, it tells the market that their is WAY more supply than demand. Which is not even close to reality because all of those contracts are naked shorts crushing the longs. As long as institutions and banks don't have to actually show proof of the metal, the price will stay suppressed. Demand could not be more irrelevant.
Gold is more highly correlated to long-term inflation and interest rate expectations than it is to near-term dynamics.
Long-term rates and inflation are still widely believed to be moderate to low, thus gold isn't running as an inflation hedge.
Absent a return to/toward the gold standard or extreme and persistent global economic chaos, gold likely will be a poor store of value through the lens of opportunity cost, in my view.
Managed futures have served as a more effective hedge than gold through most recent recessions and superior to gold in my opinion barring extreme circumstances.
Long-term rates and inflation are still widely believed to be moderate to low, thus gold isn't running as an inflation hedge.
Absent a return to/toward the gold standard or extreme and persistent global economic chaos, gold likely will be a poor store of value through the lens of opportunity cost, in my view.
Managed futures have served as a more effective hedge than gold through most recent recessions and superior to gold in my opinion barring extreme circumstances.
Here is a simple cheat sheet for #gold traders: pic.twitter.com/4OfFVZ7Tdq
— MacroTourist (@Gloeschi) July 5, 2022
Do you think Basel III will have a positive effect on this?Outdoorag011 said:
Lack of demand for gold? Gold has had a pretty steady demand. Demand for silver is off the charts. Expected to reach an all time high in 2022. Demand has very little to do with the price. Very little. So why is the price going down? The ETFs and COMEX can crush the price even as demand is at all time highs (which is the exact scenario we are in). It happens quite often that the COMEX will trade on a single day enough contracts that equate to 12-14 months of GLOBAL mine production. With every single one of those contracts eligible to be settled in physical metal, it tells the market that their is WAY more supply than demand. Which is not even close to reality because all of those contracts are naked shorts crushing the longs. As long as institutions and banks don't have to actually show proof of the metal, the price will stay suppressed. Demand could not be more irrelevant.
1. Gold has outperformed S&P since 2000.
2. It is absolutely manipulated, Almost as much as silver. You have to buy these metals when the chart is ugly, when everyone is ****-talking it.
3. Even then, you need a year plus horizon. It's not a quick trade but it can be lucrative. Or soul crushing.
2. It is absolutely manipulated, Almost as much as silver. You have to buy these metals when the chart is ugly, when everyone is ****-talking it.
3. Even then, you need a year plus horizon. It's not a quick trade but it can be lucrative. Or soul crushing.
Some data I have seen indicates that gold trends lag the s&p500 trends by some years. Meaning, the market had a huge growth, so now it's golds turn.
What really drives pricing? No idea.
What really drives pricing? No idea.
Physical Commodities don't yield any realized value in storage. Therefore, carrying costs are way more important to precious metals than most give them credit for. This goes for all commodities but people have all forgotten this because rates have been so low for so long now.
I think in the longterm it will have a positive effect on the price. But short term I doubt it. Paper gold is not seen as a 0 risk asset like the physical form is with Basel III. So theoretically institutions are required to have a form of insurance against those leveraged gold paper positions.
Don't let this fool you though, Basel III was written for the banks. I'm sure they have a beautiful loophole for them to jump through.
Don't let this fool you though, Basel III was written for the banks. I'm sure they have a beautiful loophole for them to jump through.
Thanks. That's what I was thinking too.
20 year was good for gold (2000 wasn't exactly a great year for equities).jagvocate said:
1. Gold has outperformed S&P since 2000.
2. It is absolutely manipulated, Almost as much as silver. You have to buy these metals when the chart is ugly, when everyone is ****-talking it.
3. Even then, you need a year plus horizon. It's not a quick trade but it can be lucrative. Or soul crushing.
5 Year, 10 Year, 15 Year, 25 Year, 30 Year...not so much.
Diggity said:20 year was good for gold (2000 wasn't exactly a great year for equities).jagvocate said:
1. Gold has outperformed S&P since 2000.
2. It is absolutely manipulated, Almost as much as silver. You have to buy these metals when the chart is ugly, when everyone is ****-talking it.
3. Even then, you need a year plus horizon. It's not a quick trade but it can be lucrative. Or soul crushing.
5 Year, 10 Year, 15 Year, 25 Year, 30 Year...not so much.
Yeah, this is a college football record debate. Any one of us could pick a time period and show how one or the other is better. Over the long haul, equities have done better but in certain time periods gold has been better. Just depends on the time frame you pick.
Since 1972, there are only 4 years where a lump sum investment in gold is worth more today than the same investment in the S&P.YouBet said:Diggity said:20 year was good for gold (2000 wasn't exactly a great year for equities).jagvocate said:
1. Gold has outperformed S&P since 2000.
2. It is absolutely manipulated, Almost as much as silver. You have to buy these metals when the chart is ugly, when everyone is ****-talking it.
3. Even then, you need a year plus horizon. It's not a quick trade but it can be lucrative. Or soul crushing.
5 Year, 10 Year, 15 Year, 25 Year, 30 Year...not so much.
Yeah, this is a college football record debate. Any one of us could pick a time period and show how one or the other is better. Over the long haul, equities have done better but in certain time periods gold has been better. Just depends on the time frame you pick.
'99, '00, '01, '02.
FAT SEXY said:
We will see how equities fare when the QE spigot is turned off.
I keep hearing this argument like precious metals are immune to that effect.
FAT SEXY said:
Precious metals do not benefit from manipulation like equities do. HTH
Aside from the federal government who has once already forced private citizens to sell it, of course.
Outdoorag011 said:
Lack of demand for gold? Gold has had a pretty steady demand. Demand for silver is off the charts. Expected to reach an all time high in 2022.
Silver is expected to be over $34 this year?
I call b.s. on silver. One of the most manipulated deals out there. My silver ETF has only ever been down since I first purchased it a year ago.
A great investing principle is don't invest in things you don't understand.
I can say I know nothing about precious metal supply and demand or pricing. Therefore, I don't invest in it.
I stick to stocks, ETFs, and real estate…. and my own skills and health.
I can say I know nothing about precious metal supply and demand or pricing. Therefore, I don't invest in it.
I stick to stocks, ETFs, and real estate…. and my own skills and health.
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