Investing talk on: SI's Gold Price Monitor thread
Note: SI member E. Charters is a very very old fart of age 96 born in Flordia,
but when the traveling French Canadian Circus de Or came to his backwater town
Erica joined up because their bread & cheese tasted better than boiled catfish.
From: Phil Jones... Does anyone know if any factors apart from the dropping US dollar
are causing the present welcome surge in the gold price?
From: grusum9... hi to all, i’ve started a new thread to help track the resource stocks
that people on SI like, although the forum’s ‘meat’ will actually be in the header.
i’ve given it a good start, but it will get much better with your contributions...
Subject 55340
From: Valuepro... how about the fact that we are in the early stages of a commodities melt-up.
Many base and precious metals are near, at or above historical highs in nominal terms,
and headed higher. There is a growing shortage of raw materials to feed the economies
of India and China, who lead this boom [is] likely to end in a blow off of biblical proportion,
IMHO, and may even result in the world returning to a hard money system once again.
From: E. Charters
Gold price surges in Asia (US market is not yet open. London fix is close to 451 earlier)
It is often said that gold price is purely inflationary and
not market driven. Others say supply and demand drive the
gold market. Gold is one of the most inelastic commodities
however, as its price changes little with increased demand
(sales). Gold's S-D curve is in fact quite flat. As prices rise, more people in fact are willing to buy gold. As prices fall, most people don't think of it as an investment. It operates slightly in inverse to most commodities. After 1492 when gold was in large supply from the New World its price rose dramatically, reaching an all time high of over US $2500 in constant dollars.
People think that increased selling should drive the price
down. In the short term, economists look at increased sales as
demand. In other words, with a more or less fixed long term
supply, the more people want to buy/sell gold, the higher the
price should go. When people talk about short-term "dumping"
driving the price down, one can say that this is strictly
incorrect. This gold-sale to price-fall phenomena predicted
by the average pundit has also in general never been
operative in practice with all the IMF sales since the 70's.
In fact, gold price is tied to inflation mostly in a somewhat
lagging way. Right now the inflation that is felt is given by
the rise in fuel prices and the fall in the US dollar. There
is also a slight increase due to some long period "short falls"
in the supply of gold, in that new mines are not coming onstream in a big way, despite exploration successes.
Somewhat contradictorily at first glance, the Asian demand for
yellow metal has obviously risen. It can be seen that the price
in Asian markets has bumped the price of gold continually for
the past two years. However this corresponds with the allowances from the Chinese government for citizens to openly own gold. As well, the Indian economy, as saddled with political complications as it is, is booming, especially within the large middle and upper class component. The Indian middle and upper class comprises a State within a State of 100,000,000 people, any one of whom are several times richer both in constant dollars and comparatively than the average Canadian. This large group of buyers should take up the slack in any gold sale program of Central European Banks that is designed to depress prices of gold and inflate currency.
The Chinese growth will no doubt fuel a commodities boom. People coming back from China have witnessed more construction going on throughout Cbina than they would have dreamed of during any post-war construction period of recent times in Europe. China is building a city the size of Toronto every three months. The demand for steel, copper and other alloy metals will be strongly felt in Canada for some time to come. Not to gear up to supply this demand would be a criminal waste of capacity. Obviously it is a good plan to invest in manufacturing, engineering services and resources.
Gold 453.00
Silver 7.64
Platinum 857.00
Palladium 204.00
Last Update on Nov 26, 2004 at 07:12.03
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