Gold and Metals

Gold vs SPY, JJC Copper and JJN Nickel

Gold vs SPY, JJC Copper and JJN Nickel

OK, so we had a load of hype over gold in the last few months. What has it done? Net, gone nowhere since that peak last November. The bottom is “wedging up” that, in classical charting is supposed to mean that it will breakout to the topside. To me, it looks more like it is banging into $1400 and folks just balk at buying then.

At any rate, the range is narrowing lately to the point where even day trading on a fast chart has little room to work with. We’ve got ADX (the bottom black line) at about 15 which is a very weak to trendless reading. DMI is “Blue on top” and that is a ‘positive call’ but with very little upward strength.

Now look at Copper JJC and Nickel JJN. They have both “broken down”. They are “industrial metals” so that is saying not a lot of demand to “make stuff” right now. Even in the face of a falling dollar they are falling in price. That does not “speak well” for gold as the metals are all “inherently valuable” and in a poor economy folks demand for gold (in jewlery, electrical contacts in electronics, etc.) drops off too.

All in all, I’d use the movement in copper and nickel as an “early indicator” that looking forward, the economy is not so good right now on a global basis. That gold price is unlikely to hold, IMHO. At best it ought to be an “inverse dollar inflation hedge” but it brings with it all the risks of gold (high volatility for one, central bank manipulation for another). Notice, too, that GDX (the gold miners fund) did a little overshoot and is now settling back. They have a load of gold ‘in the ground’ so if folks really wanted long term gold, they ought to be rising. They are not.

MACD is “red on top” that says to be out of the trade; and while it is above zero (a positive sign) it is trending toward zero. The steam is leaving the gold price. Williams%R is also at the midline (as very weak position) and with the last positive lobe very narrow. When it does go up, it fades fast. Right now to be in gold is to take all the risk for very little reward.

And what about that silver bubble? Well, it’s still bubbling along…

SLV Silver vs other metals

SLV Silver vs other metals

It looks exactly like a ‘classical bubble’ to me. Runs way higher than any reasonble person would expect. Doesn’t move with it’s peers (other metals). Driven by a “story”. (In this case that silver is being “remonitized”… except that it isn’t being made into money anywhere, folks are just buying it on speculation that it’s better in some way than currencies) and the notion that it will return to the 16:1 gold:silver ratio which would make it $87/ ounce. That ignores the facts of consumption of silver. Most of it used to go into things like photographic film (replaced by digital) and papers (replaced by organic inks and home printing) and when was the last time the average person had sliver “silverware”? No, the ‘industrial demand’ is down in many uses. The Chinese are shooting a load of it into the sky trying to make rain (as they would rather have food than silver…) over their drought areas, but other than that, it ought to be moving with copper and nickel if industrial demands were driving it.

(Silver is a byproduct of copper mining, so to the extent copper mining is down, silver supply drops and silver prices can move opposite that trend on supply issues. So it isn’t a direct tie to industrial demand.)

No, the “story” here is just one of a large herd of folks all ‘running into the silver trade’ and that is what makes a bubble.

With that said, the chart is saying “more room to run in the bubble”. It has moved through the prior top. ADX is a spectacular 35, so it’s a strong move. DMI is very “Blue on top” and MACD is high above zero and in that “merged sideways” form it gets in a prolonged steady state rise. Williams%R is also showing “be in” with the “down dips” very narrow and the “above lumps” very broad. So this puppy likely has some more room left to get all the suckers investors sucked in.

Me? I’m going nowhere near it. I’ve seen silver drop 50% in one day when a bubble burst. It’s a fairly thin market, so can move a very long ways from not too much money wanting in, or out. Furthermore, my “favorite indicator” for gold is to watch for “Buy Gold Now!” ads on TV. When they show up, folks “in the know” are trying to exit their positions and not getting enough buyers. It’s modestly reliable (if sometimes a bit early). And what am I seeing now on TV? Ads to “buy SILVER!!!!” … If the guy selling it has to spend money on air time to move it out, and he is in the business of silver, what does that tell you?

At any rate, silver might well double from here, and could be traded on a day trade basis ( I’d only use a 10 day 15 minute chart…) you can likely make some money. For an “investment” I’d run from it right now. As a ‘trend trade’ it is very high risk (due to that downside volatility) but you may have a few more weeks to “game it”… That the latest price “bar” is a tiny little cross (i.e. not much difference between open, close, high, and low) is also a ‘worry’. You often see those at the top of a spike…

Much more important to me are those rollovers of copper and nickel. They say China isn’t buying, which means they aren’t making, which means folks are not buying stuff, which means “not good” trends… Copper is a fairly reliable indicator of economic activity and when things are growing, copper production grows with increasing demand. That’s not what we are seeing now…

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Economics - Trading - and Money and tagged , , , , , . Bookmark the permalink.

15 Responses to Gold and Metals

  1. NZ Willy says:

    Re the silver “bubble”, I’ve raised the issue of its historic 15:1 ratio to gold, and that people “wanted” it back to that ratio. I see, Chiefio, that you are wedded to your formidable (and laudable) expertise in trendline analysis. Again I call your attention to that trendlines are consequences, not causes. History is a guide but not a dictate.

    In support of my point, think of Imperial measures compared with metric. The foot, pound, and gallon may not be very convertible with eachother, but each by itself is a friendly people-sized measure which people like to use. The metric system bears the meter (too long), the kilogram (too heavy), and the liter (too small) which although very convertible with eachother (e.g. a liter is 10cm cubed), are consequently of people-unfriendly sizes.

    In this era of the end of Bretton Woods economics, the old gold standard is undergoing a renaissance in popular appeal. But it cannot stand on its own. This gold dollar needs its cents — it needs silver to underpin it as in the olden days. Even as gold re-asserts its intrinsic value, that is the measure by which silver regains its historic value. As a matter of fact, it’s fair to say that when silver returns to its 15:1 ratio to gold, that is when the gold standard has truly returned.

    So I will make you a little prediction. Not only will silver continue its rise to $100+/oz, but as it approaches the 15:1 ratio, gold will actually dip to meet it. And that will herald the remonitization of gold & silver — not by government issuance, but by popular usage.

  2. E.M.Smith says:

    @NZ Willy:

    First off, I’ve never said a bubble can’t grow to gigantic proportions. They can. They will. They do. I’ve just said “this is a bubble” and “I’m not interested in the risk profile of bubbles”. YOU are quite welcome to play “double or nothing”.

    I’m not “wedded” to anything. I use the tools that work. Stories don’t work very long. (They work only as long as the story has traction; and silver is a ‘story stock’ right now). As the “story” has run for a while, it can end at any time. It need not reach the end of the tale, (nor need it end at the projected point).

    ALL value is based on “what people want” to some degree, but some cases are more irrational than others. Food is, for better or worse, something we must have. Silver isn’t. So food has more intrinsic value and less ‘story value’.

    So I use “trend analysis” for most postings. I also do some fair amount of “fundamentals” and some “gut check” along with “competition” and “news flow”. It’s a synthesis that goes into the notes. The trends get charts as, well, they are chart things.

    For silver there are no fundamentals for rising. As noted, the industrial demand ought to track the other industrial metals. That it IS NOT says “story stock”. Pay LESS attention to the trend analysis. The trend analysis says buy. I”m not buying. That isn’t ‘wedded’…

    Per people “wanting” silver at a 15:1 ratio to gold: BUNK. Pure and simple. Most folks have no idea what the ratio is, or ever was. A very few people speculating in the metal have bought the STORY that folks want that ratio. The producers don’t care, they just mine and sell. The consumers don’t care, they just want to buy at the lowest price possible and make things from it. It is only a very small group of folks who know, or care, what the ratio is, or was.

    There is NO MAGIC in that ratio. It was set initially based on the relative costs of production in the 1700s. When those changed, the ratio changed, and there were raging debates about how hard it was to support “bimatalism”. Do a search on that term and you can find the historic “issues” surrounding it. 15:1 failed WHILE we had silver in circulation as coins.

    Per monitizing:

    That, frankly, is the most wrong assertion possible.

    There is NO monitizing happening. None. NADA. Zilch. No coinage. (Other than collectors coins). Look in your pocket and you do not find silver. The nation isn’t minting it.

    Money is produced by the government and they are making if from paper, nickel/copper clad, and computer bits. Not silver. Period.

    So the “story” has 2 parts. One is the mythical 15:1 as somehow having merit, when it failed and was part of the reason we stopped making silver and gold coins. (Those issues of bimetalism). The other is the Monitizing when there is no monitizing in progress.

    Now, if you want to say that people are buying silver as an inflation hedge, fine. Go right ahead. SOME very FEW folks are doing that. But that is not “monitizing”.

    Will the USA ever go back to a “gold standard”? Who knows. But in my lifetime? No way. I’ve gone over this before, but it would take decades worth of total world gold supply to make the needed money for circulation. Oh, and the complete overthrow of all the present occupants of the congress, and all their fellow pary members. Oh, and we’d need to come up with about $30 Trillion …

    So no, not going to happen.

    But it makes a good story…

    What price will silver rise to? I have no idea nor do you. It will be based entirely on how many people can get how slobbering silly over it. That is how bubbles work. Folks once paid the price of a house for a tulip bulb…

    But frankly, that’s part of why I don’t like to “ride bubbles”. Because when they collapse, and they always do, the fall is swift and brutal.

    I was alive and watching during the last Silver Bubble. AFTER silver lost 80% of it’s value, from $50 to $10, it then dropped from $10 to $5 IN ONE DAY. 50% gone, one day. If you were not watching for a bit longer, you lost 90%.

    So frankly, predict $100, or $200, or even $2000. It is meaningless. All you are predicting is how crazy out of control emotional folks can get, and there is no limit on that. And that is EXACTLY the problem. Because once that euphoria drug wears off, fear and panic drive prices the other way 10 x faster.

    So, as stated in the article, right now the indicators say “folks going to shoot up that heroin a bit more for another spike” in essence. It’s headed to new highs.

    If you like that drug, go ahead and feel the euphoria.

    I’m not buying it. As I know how the story ends.

    And it does not end in a return to 1880 and gold and silver coins in circulation as money…

    BTW, I would strongly suggest that you look into the changes in the costs and technologies of mining gold and sliver if you are going to play that game. The historic costs to produce are no longer important. Things like heap leach extraction and electrorefining copper have dramatically shifted the costs to produce. And in the long run it is only cost to produce that matters as miners will keep producing and selling until the demand is satisified and the price erodes down to the high cost producer margins (and they shut in production).

    But how big with this bubble inflate before it pops? I’s say to let your imagination run wild, but that would seem to be unneeded advice…

    To summarize:

    1) There is no monetizing happening. You see no silver money in use.
    2) There are some folks treating silver and gold as inflation hedges. That is not monetizing.
    3) The 15:1 ratio had failed when silver was still in coins.
    4) Technology drives cost to produce, which drives stability pricing.
    5) Technology has pushed cost to produce very low.
    6) A “story” can drive prices to crazy levels. For a while.
    7) When the bubble pops / story ends, collapse is fast and furious.
    8) I’m not interested in that ride. Period. Ever.
    9) I’ve seen this movie before. (Several times, most recently in houses …) It always ends badly.
    10) You can do what you want, not my problem. But that’s the whole point. I’m not interested in gaining problems…

    for a sample on bimetalism:

    http://www.reference.com/browse/bimetallism

    bimetallism , in economic history, monetary system in which two commodities, usually gold and silver, were used as a standard and coined without limit at a ratio fixed by legislation that also designated both of them as legally acceptable for all payments. The term was first used in 1869 by Enrico Cernuschi (1821-96), an Italian-French economist and a vigorous advocate of the system. In a bimetallic system, the ratio is expressed in terms of weight, e.g., 16 oz of silver equal 1 oz of gold, which is described as a ratio of 16 to 1. As the ratio is determined by law, it has no relation to the commercial value of the metals, which fluctuates constantly. Gresham’s law, therefore, applies; i.e., the metal that is commercially valued at less than its face value tends to be used as money, and the metal commercially valued at more than its face value tends to be used as metal, valued by weight, and hence is withdrawn from circulation as money. Working against that is the fact that the debtor tends to pay in the commercially cheaper metal, thus creating a market demand likely to bring its commercial value up to its face value. In practice, the instability predicted by Gresham’s law overpowered the cushioning effect of debtors’ payments, thereby making bimetallism far too unstable a monetary system for most modern nations. Aside from England, which in acts of 1798 and 1816 made gold the standard currency, all countries practiced bimetallism during the late 18th cent. and most of the 19th cent.

    See J. L. Laughlin, The History of Bimetallism in the United States (1897, repr. 1968).

  3. Luís says:

    Another frivolous article on silver, like those we get at the MSM. No figures on industrial demand (forgoing medical applications) no figures on investment demand; no figures on production either.

    Incidentally gold is posting another all time record high against the US$ today. Investors might have taken your article as a buy signal.

  4. E.M.Smith says:

    @Luis:

    Nothing “frivolous” about it. Majority of it is trend analysis with some opinion mixed in. For example:

    The bottom is “wedging up” that, in classical charting is supposed to mean that it will breakout to the topside. To me, it looks more like it is banging into $1400 and folks just balk at buying then.

    The first sentence is trend analysis from the chart. It says “buy”. That gold is “breaking out” today is in keeping with that analysis. The second sentence is opinion, flagged by “looks to me”. I am allowed my opinions, am I not?

    In the next few days we’ll find out if the technical traders (who will have read the chart the same way I did) win, or if the fundamental buyers (my opinion part) shy away and we have a ‘failed rally’.

    Oh, and if you think the price of Gold and Silver in the short term are set by production figures, you need to do some more historical research. While production / consumption dominate long term, short term gold is driven by central bank buying / selling for / from inventory and by speculation.

    So I could give you a load of production numbers, then The Bernank could decide to dump a ton of paper on the world, or the Bank of Japan could decide to sell a few dozen tons of gold for “spending cash” and it’s all out the window.

    Or we could even get a bunch of hype about a ‘remonitizing’ of metal with no foundation in actions by the governments that must do the monetizing…

    So please note:

    I am not saying you can’t make money trading this bucking bronco and that there is no way in hell it will ever go up from here. That would be lunacy.

    I am saying that it is not a safe “investment” for the typical “friends and family” who follow my financial postings. I also am saying that there is a load of hype in the metals markets right now and they are being driven by speculation and news flow. That is very hard to trade, though possilble for the day trader, and not suited to folks who want to sleep well, like me.

    I’ve lived through a few metals bubbles before. They are very volatile and end badly. If this were fundamental inflation driven, there would be a broader participation of commodities (that might still develop) of about the same degree. So longer term, you could well see the price of gold “validated”. Short term, there’s just no ‘there there’.

    Silver is worse.

    If you think the price of silver is moving due to increased “industrial demand” or an industrial demand / supply imbalance, I strongly suggest you go read the MSM hype about silver… then think again.

    THE major buyer right now is ETFs. When folks start to cash in those ETFs to do things like pay taxes, buy a home, or even just go to dinner, THE major seller will be the ETFs.

    There is no natural buyer then.

    So as long as they hype continues, prices will shoot up. As soon as the hype ends, prices will plunge (that ETF must sell on redemptions in size).

    Classic derivatives based bubble.

  5. H.R says:

    @E.M.

    “I was alive and watching during the last Silver Bubble. AFTER silver lost 80% of it’s value, from $50 to $10, it then dropped from $10 to $5 IN ONE DAY. 50% gone, one day. If you were not watching for a bit longer, you lost 90%.”

    Ah, the ol’ Hunt brothers. I was alive for, alert to, and amused by that episode as well. The MSM was all over it at the time. It was my first lesson in bubbles and attempts to corner a market.

    Anyone listening to drive-time radio is being hammered by “buy gold” commercials. When every huckster and his brother has jumped on a wagon, it’s time to jump off. (IMO)

  6. Donniker says:

    When the Bernank is printing trillions and the USA debt is in the many trillions already, there will have to be a “store of value” when the worthless paper and electronic bits and bytes can no longer buy bread. That will be precious metals and food. And of course, some way to protect them if you have them because most people won’t. So in worthless paper terms, Silver could go to $25,000 an ounce, but it won’t matter, will it?

  7. E.M.Smith says:

    @Donniker:

    The present hype in silver (in particular) and gold (in general) is realted to, but differnt from, the issue of general inflation.

    You can see that a variety of stuff is dropping in price right now. From copper and tin to my wages ( 8-{ ) and home value. That is not a general wide spread inflation.

    The printing of tons of paper money is intended to prevent that drop of asset values. (prevent deflation).

    I think it will fail (as the home prices were largely inflated via a government sponsored program to ‘promote home ownership’ via folks like Fanny, Freddy, and the Dimocrats promoting them… with Republicrat support… ) but that is just an opinion. It might well be that Keynesian Economics is vindicated this time…

    But the fact is that some prices are rocketing up (food, fuel) while others are static (wages, home rents) and others are dropping ( home ‘values’…)

    Which of them do you chose to use to support the gold price? And as gold has been static for months on end in price (those peaks are not rising to any degree of merit) how can you say that the rocket ride of the silver bubble is due to inflation?

    So yes, there will need to be a ‘store of value’ and that has never been paper currencies. (The US $ has lost about 90% of the value it had when I was a kid…) However, this loss of value is of the order of 1-3% / year. Not 10% per quarter or faster…

    I’m not saying gold and silver would not work in that roll. Just that things are ‘out of whack’.

    Somehow, tossing rocks at the present bubble is like telling some folks their kids are stupid an their wife is ugly… I guess they are “vested” in the observation ;-)

    I am saying that the rate of rise is not justified by the reality on the ground, it is out of proportion to other assets (copper, tin, wood, water, oil, etc. etc. etc. etc. etc.) and it is a ‘bubble’ with high risk.

    So I’d rather buy wood or oil properties, or even copper mines on the bottom of the dip, than buy into a silver bubble.

    Yet somehow that causes some folks to blow stack and come unglued. Oh well. Not my problem. I’m more in the “risk mitigation” business than in the “juice Juice GIVE ME JUICE NOW!!!!!, tomorrow be damned” business.

    So yes, I own some silver. About 40 ounces as coins. Bought it decades ago. It’s my “bug out money”. I’m not adding to it, nor selling it. It is a long term “store of value”.

    But I’m also not going to put $10,000 into the SLV sliver ETF and expect to have it double over the next 3 months then hold that value for 2 years either. It’s a bubble based on news flow and hype.

    IFF you recognize that and trade accordingly, you can make a load of money off the hype. That’s what the promoters are doing. IF you do not recognize that, you can get fleeced.

    FWIW, before the housing collapse, my neighbor sold mortgages. He wanted me to “take the equity out of my home and invest it in stocks”. That was the hype then.

    I gave him the 10 minute lecture on why that was a Very Bad Thing!

    Both stocks and home prices went up for a year or two after that point. There was much “smugging” as a result.

    Then the crash of the stock market and the collapse of home prices hit.

    The neighbor sold their home at a loss and has now moved to a much lower cost place to live…. (They are happy, and very good folks… just had not seen a bubble before and didn’t know what they were dealing with; nor what I was saying when I chose to walk away from such “easy money”…)

    So, again: I’m not saying you can not make money off of trading this bubble. I am saying that the risks are high, it will pop, and when that happens prices will plunge fast and hard. And that it is not a suitable investment for the average Joe and Jane. (They would be better off with WIP, or with a food storage system and a back porch freezer full of beef… IMHO).

    FWIW, I’d rather have a safe full of guns, 20 lbs of lead and bullet moulds in the garage, and a few thousand rounds of brass and primers than a bunch of silver coins…. Oh, wait, I already have that ;-)

  8. Luís says:

    Michael, you’ll never understand metals staring at charts. On the same day you post this, gold advances 20$ to a new record high…

  9. David says:

    E.M. Thanks for the thoughts. As you noted, central bank purchases have been a part of the rise in gold. This made me feel more secure in the price as apparently they rationally felt a need for a secure store of value (we do live in interesting times) and gold has some history of that. I agree with your cautions and prudence.

    I sold my house late in 2003, a bit early,but even I, a relatively uneducated bloke, could see the bubble being blown which the “experts” claim no one saw coming.The bubble was not just in real estate, but in the leveraging of that bubble via home equity loans to a million other products. I was right, just early. Prior to my house purchase in 1998 I was virtually broke after a divorce. ($10,000 and an economy car, that was it) I bought a home with a very low down and some help from a friend whom I paid back with interest. After the price went from $220,000 in 1998 to $420,000 in 2003 I sold as fast as possible, and missed out on another $100,000 in rise. So what, I paid off my legal and other debt, invested my assets in I-Bonds mostly and some gold, and had debt free peace of mind. Seven years later I am retired and remarried. My dear wife is always alternating, asking if we should sale the gold one moment, to stating we should have bought more, to thinking I sold the house too early, to being grateful I sold when real estate collapsed.

    I guess the lesson in all this is balance. At 54 I have divided our small assets into 25% I bonds, (inflation protected direct obligation of US Govt) 12% gold, 15% play investment money to listen to E.M, and my Father, (-; and the rest went into repurchasing a house with 5 acres, views, and water. The price I paid, $275,000 with 20% down, (on a property with a former bubble value of $700,000) is afordable even if I were to lose 35% of my retirement income in the next 8 to 10 years. So we have somthing that is never out of vogue, land with water; a traditional international store of value in gold; an inflation protected investment in the worlds currency and a direct obligation of the worlds most powerful nation, I bonds; and some speculative money to invest in whatever markets I choose, which fortunately I doubled in the last 5 years and avoided the recent crash. It took a while to get there, but balance is under rated. Balance in investments, balance in politics, balance in intellect and emotions, balance in time alone and social time, balance in work and play; yes I think balance is highly under rated.

  10. P.G. Sharrow says:

    @David; Good show sir. Bulls make money, Bears make money, Pigs never make money. It is always better to own a piece of farmable land with water then not. Even better when it is paid for. Then you only have to pay “rent” to the local government. pg

  11. David says:

    Thanks P.G. ; It would have been cool to know at twenty what I know now, but the saying is live and learn, not learn and live, only the brilliant do that.

  12. Donniker says:

    Hi again.

    I am getting “up there” and remember when a silver dime would buy a loaf of bread. After Canada and the USA demonetized silver, well, today at 30Xface for a silver dime, or 3.00, it will STILL buy a loaf of bread. So I suppose it is reasonable to think that when a loaf of bread is 7.00 (not far off my friend, when currently a large box of Ritz crackers is 13.00 and was only 2.29 five years ago) that a silver dime will be worth 70xface. Or you might think that silver will then be 70.00 per ounce when bread is 7.00 a loaf. That is something to watch for. It IS coming. (I really liked your response to my previous post.)

  13. E.M.Smith says:

    @Luis:

    Either contribute something positive or find somewhere else to be. “Carping” is not welcome here.

    And, BTW, gold does not jump up $20 in one day because of some supply / demand imbalance. It moves because traders who looked at the charts saw the same “rising lower excursions” I saw and place orders at the point of the penant.

    You will never understand metals price movements by NOT staring at charts.

    That I choose not to play that high stakes game is not a reflection on understanding of how the game is played. It means I’m looking at longer term time horizons than you are.

    So, just to make it clear:

    Statements of the form “You idiot”, no matter how politely paraphrased, are unwelcome. Statements of the form “Here is a factor that I think is missing” are very welcome.

    Saying “You are clueless” without providing the clue you think is missing is “shitcan fodder”. Got it?

  14. E.M.Smith says:

    @David:

    One of my mantras is “late in early out”. Maximises risk adjusted benefit. I’m happy to wait for a “new trend” in gold before jumping in (something Luis seems to not grasp) and avoid the risk of a ‘failed new high’.

    That you exited the home a bit on the early side is a major benefit compared to exiting a bit on the late side… Just as I’ve said “buy silver” and “I’d rather be playing this rise with silver” in several prior postings over the last many months and am now saying “it’s getting late, I’d leave the party early”… Folks who have been following along with the WSW postings will remember those long ago nudges toward silver (at about the time gold topped out into the present sideways run).

    Prudence is something hard to practice as a trader, but well worth the effort. It’s easy to make money, the hard bit is hanging onto it afterwards…

    Central Bankers are strange folks. They were dumping gold like crazy back at $275-$300 / ounce (and I bought a load of it then). Now they are buying it (and I’m sold out, other than my permanent ’emergency gold coins’). You can make decent money just watching the central bankers and taking the opposite side of the trade. They tend to cycle on a decades scale, though, so it’s a slow trade…

    FWIW, I’ve not done the chart yet (got distracted by some climate things and the garden) but my expectation of the “best next ride” is in the platinum / paladium group. No timing on it yet, but when car production picks up again, the catalyst demand ought to run it up nicely. Most of my “emergency money” is presently in platinum coins. As a “store of value” it is less political and more economic…

    @P.G. Sharrow & David:

    Sadly, I lobbied hard to sell about 1 year before the top of housing prices and move to a ‘low cost place” then be prepped to buy back in to about 20 acres with water and view. SWIMBO and family balked, so I’m stuck… Not enough land to live on in an “Awshit”, but enough to play with… The good news is that my mortgage is still less than 1/6 the present sales price… and things didn’t go down all that much where I live.

    Ah well, perfectly timed even if not executed…

  15. E.M.Smith says:

    @Donniker:

    FWIW, I remember the “dime loaf” too. It makes up part of my personal “inflation index”.

    Bread was a dime, postage rose from 4 cents to 5 cents and everyone screamed (now it’s moving from 40 to 50 …) and a car was about 2500, now 25,000. The house my Dad bought for $7000 I sold for $88,000 a few years back (Dad got a good deal on it ;-) Etc.

    The Dollar, but that measure, would be about $10 and that means the silver in it would place a 1 oz round at about $15 (rough guess not doing all the math of percentages and actual weights, just remembering the heft…)

    That’s part of why I look at $30+ silver and say “a bit out of whack”. So at ‘a double’ I’m ready to push away from the table…

    And look for the thing that has NOT had that run up yet…

    Oh, and Gasoline was 25 cents a gallon, but then went to 35 cents. It’s run ahead a bit too…

    Also, I ought to add, Gold was about $35 an ounce, but artificially so, and floated up to $45 an ounce once the tie was broken. That makes the “equilibrium” price of gold today about $450 if the ratio were held. Even with the case that it was too low by half, you would only be at $900 gold…. Today the price was $1457 / ounce. I rate that a bit on the high side. Another metric is an ounce of gold ought to by a nice “mans suit”. But ‘that one’ can vary a bit based on personal tastes… That “$20” jump in one day for gold that Luis mentioned above? It’s 1.37% or about a 27 cent move in a $20 stock. Not very many folks would be excited about a 27 cent move… That’s why I do the charts as “races”, so everything is leveled to a percentage change and the dollar size doesn’t distract… So a “big move” in gold would be something like a 5% move. Or $73 in one day.

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