Gold Stocks - buying the break...

Is that the price of Gold expressed in dollars is actually the value of dollars expressed in Gold.

Dollars are just paper, and though nobody wants to talk about it, the world is awash in green paper, except here at home. We keep sending them here and there for all the things we import, and they LEND them back to us.

Once upon a time, when a dollar was worth a dollar, $20 would buy one oz of Gold. It was called a $20 Gold piece. and since this Gold was money, there was an oz of Gold (or silver equivalent) for every $20 of money in circulation.

How many dollars are out there now between what our government owes and whet actual paper is out there? We still have the same amount of Gold. Divide the total amount by the oz of Gold to get the value. I think the answer is about $6000 per oz.

The Central Banks are buying Gold these days to "diversify" their reserves. That's code for get rid of U.S. dollars and trade them for something that will hold value over time.

Consider the IMF's statement today that the U.S. Dollar is overvalued by between 15% and 35%

http://tinyurl.com/zugfu

Anyway, I don't think we'll ever see Gold below $500/oz as long as we live.

The other thing is Jack Chan's recent call. Boy was he ever wrong! That will teach him to use a lagging indicator.
 
I completely disagree. Not only will we see Gold below $500 an ounce in our lifetime we will see it by the end of the year!
Massive amounts of gold are coming on line because old, dissused mines are increasingly profitable and there is a heck of a lot of gold in those mines! Check out BDG:AX PAU:AX SAR:AX and there are literally hundreds of tonnes of gold below the surface in Australia alone. There are many reasons why gold is way overvalued but I have already gone into those in earlier posts.
Even if gold falls to $250 an ounce well run and managed gold companies will still make a LOT of money.
Gold stocks make up some of my portfolio but the last few times I heard these erratic and bullish arguments about gold. The price fell off a cliff and quick!
In my opinion a good quick way to make aLOT of money is to short gold ETFs and or NEM:NYSE.
With gold at 650-700 Newmont already missed estimates, imagine if gold falls even to 500 let alone 400.
Newmont was a $19.00 stock in 2001 before the Hedge Funds started to mess with it. I saw an analyst only six months ago saying Newmont was going to be a $80.00 stock by this time this year! Oops. Well he was only off 60%.
 
Consider this. Hundreds of Second World War Japanese and German ships and submarines carrying literally tens of tonnes of Gold in each vessel being hauled up from the ocean floor in the next few years with new salvaging technology.

Thats a heck of lot of gold coming on-line!
 
And what is the name of that company that says it can extract millions of tonnes of gold from seawater with technology that is only a few years off. Check it out! Do your own research!

Millions of tonnes, that IS a lot of gold......!


etc etc etc
 
“ Massive amounts of gold are coming on line because old, dissused mines are increasingly profitable and there is a heck of a lot of gold in those mines!” . Please post a link regarding the “massive amounts”.
"literally hundreds of tonnes of gold below the surface in Australia alone". So what, world annual gold production is 2400 tons which according to the estimates posted here http://anygoldnow.com/whygold.htm#lending is 1300 tons short of demand.
"With gold at 650-700 Newmont already missed estimates". And why do you think they are missing estimates? Ans: Gold production costs are soaring for the same reason that gold is rising: INFLATION. If gold falls to $250, given the rate of currency debasement there will be very few (unhedged) economic mines left, whilst demand on the other hand will invariably continue to grow. In addition, much of the easily extracted gold out there in established mines has already been extracted, so costs can only rise further from here. Your argument is not convincing to say the least. If you were to argue on the other hand that gold may not behave in a deflationary environment in the manner that its proponents make out, that I would tend to agree with.
 
Quote from Alex_in_Oz:

Consider this. Hundreds of Second World War Japanese and German ships and submarines carrying literally tens of tonnes of Gold in each vessel being hauled up from the ocean floor in the next few years with new salvaging technology.

Thats a heck of lot of gold coming on-line!
More...



This is another fairy tale that resurfaces now and then. With commodities in such short supply to Axis powers in WWII, I reckon they would have found more useful things to transport than gold. Even if it is all true and they recover 1000 tons of gold, overall gold supply (excluding central banks if we can call it supply) will not overwhelm demand as you are making out. Give me the pirate stories any day.
 
Quote from Alex_in_Oz:

And what is the name of that company that says it can extract millions of tonnes of gold from seawater with technology that is only a few years off. Check it out! Do your own research!

Millions of tonnes, that IS a lot of gold......!


etc etc etc
More...

As far as I’m aware there is on average 1mg of gold per to ton of seawater. Sure we can extract gold from seawater using electrolysis, but it cannot be economic. Doing a quick calculation, and please correct me if I’m wrong, there are 31100 mg in a troy ounce, so if you believe that one can process 31100 tons of sea water for less than the current price of an ounce of gold you will believe anything. If on the other hand the average concentration of gold in seawater is much more than widely known, please post a link.
 
Your argument is factually flawed and is actually humorous to read. Sorry, my apologies.
You have little, if, no idea what you are talking about. My advice to you is to educate yourself, don't expect me to do it for you.
Time will tell won't it. The biggest fantasy stories I hear is gold will rally to $1,000 an ounce!
 
There are also hundreds of Spanish and Portugues vessels which carried a heck of a lot of gold that they are salvaging as we speak. Not to mention the Dutch wrecks off the Cape of Good Hope. Do your own research, you will be better off for it.
On a related topic, there was recently an assay done on a gold tenement in Victoria , you would be surprised how rich the grade is and how much of it there is down there.

No, it didn't make CNN. How do I know? I invest in the mine.
 
I'm glad you replied. You are so wrong, and the market will prove you very wrong.

Your gold from seawater arguement is plain silly. Reminds me of the magician making gold from lead like in the fairy tales. Imagine how much seawater you'd need to process to get an oz of gold. The same goes for your gold from salvage argument. As far as I know, the only major recovery in recent years was the SS Central America, and it sounds like the investors got taken for a ride. You'd need to find a THOUSAND TONS of gold each MONTH just to cover the U.S. trade deficit with China ALONE.

Gold production is decreasing worldwide. It takes 7 to 10 years to bring a mine to production. Why do you think the majors are all buying up the small up/coming producers? They've sold gold forward and need to come up with reserves to fufill the commitments.

Central banks are no longer sellers of gold. Why do you think this is? They drove the price to $250 with their selling in 1999 or so. Specifically Great Britian. Gordon Browne will never live it down, either, as he lost huge amounts by selling the bottom as he did. It put many mining companies out of business.

The big buyers anymore are in the Middle East, Russia, Asia, etc. For example, Russia's central banks is increasing gold reserves from 5% to 10%. Russia no longer allows gold mined there to leave the country, either. Miners can sell it to the central bank, but its not allowed to leave the country. Sweden reduced dollar reserves by 1/2 recently. Korea talks about it, then retracts the statement. Same with Japan. Argentina has sold most of its dollars for gold and Euros. I won't be surprised when I hear Venezuela diversifies out of dollars. Even our own senators want to devalue the dollar by 40% vs the Yuan. How long does the list need to get before you wake up and smell the coffee?

What do you expect our trading partners to buy with all those dollars they are sitting on, anyway? Or do you expect them to sit by idly as they get devalued by 30% or so? I think not.

I think you are just talking your book. I can wait. My investments are all fully paid for.
 
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