Gold and silver prices are down

[Varmint]

Gold inches above $1590.

Silver near $18

ETA at 11:07AM :

Now over $1600/ounce, and silver at $18.15

today and this week will be huge, if gold can hold $1600 and maybe break through $1610 it'll be a huge breakout and silver and the miners will join in. We could be at $1700 in no time.
Some of the miners have started joining in and were up at new highs yesterday. Silver will be the last to join in.

 

[DJBrad]

Gold inches above $1590.

Silver near $18

ETA at 11:07AM :

Now over $1600/ounce, and silver at $18.15

Its gonna hit $2k

Just be patient

 

[Varmint]

$1616 is the level we need to get through. If we can close above $1616, we'll probably shoot straight to $1690. At that point, $1400 gold will be a distant memory that you'll never see again.

But I feel like we're gonna go back and test $1540 first.

 

[richc]

Gold clears $1620, silver at $18.35.

 

[In God We Trust]

I need silver to hit $40 an ounce before it’s worth the time and aggravation to sell it. Probably not gonna happen in my lifetime now.

 

[Varmint]

Gold clears $1620, silver at $18.35.

$1690 is next, but watch for a last-ditch effort tomorrow to get it back below $1600. Glad I did my PM buying at $1200-1400, I wouldn't want to be paying $1700. Huge premiums now too.

 

[Varmint]

I need silver to hit $40 an ounce before it’s worth the time and aggravation to sell it. Probably not gonna happen in my lifetime now.

You wouldn't want to sell at $40, maybe at $100. When your Uber driver is recommending buying silver, it's time to sell.

You'll see $40 in 2-3 years I think. Maybe sooner.

 

[richc]

Gold is at $1641 at the moment. Another healthy jump.

Silver at $18,57.

ETA:

Gold did pop above $1650 briefly. But has settled back down to the $1640 level.

Oh, and 30 year bonds are at historic low rates.

 

[Win]

 

[oldgunner]

 

[Win]

Someone here as a Precious Metals Verifier, but it would be up to him to reach out...

I have one. But I actually can't fit anything over 10 ounces under the measurer - there isn't enough relief. 10 ounces works fine but 50 wouldn't fit. I didn't buy the wand attachment thing. Sorry!

 

[oldgunner]

You wouldn't want to sell at $40, maybe at $100. When your Uber driver is recommending buying silver, it's time to sell.

You'll see $40 in 2-3 years I think. Maybe sooner.

There's no top end to how high gold and silver can go. remember, the metal isn't worth any more today then it was yesterday, the dollar is worth less. That's why PMs should be viewed as a store of wealth, not an investment which expects a profit

 

[richc]

Actually the US Dollar has been strengthening against other currencies. Which makes this increase in gold prices unusual.

There's no top end to how high gold and silver can go. remember, the metal isn't worth any more today then it was yesterday, the dollar is worth less. That's why PMs should be viewed as a store of wealth, not an investment which expects a profit

 

[enbloc]

I think the Uncertainty of 2020 and CoronaVirus are having a slight effect...

 

[DJBrad]

I bought below $1100 for sure

As it has been said, this is my hedge against inflation.

 

[Varmint]

There's no top end to how high gold and silver can go. remember, the metal isn't worth any more today then it was yesterday, the dollar is worth less. That's why PMs should be viewed as a store of wealth, not an investment which expects a profit

while true in theory, gold follows supply and demand like other investments, so it can diverge greatly from its fundamentals, just like Tesla or Facebook, as momentum investors pile into a rising investment with limited supply. Throw in the fact that central banks are buying up physical gold, and the fact the dollar is far more expensive than it should be, and you have almost unlimited upside for gold.

paladium is a good illustration of how high demand and insufficient supply can break the commodity futures exchanges' control of pricing and the precious metal price goes ballistic. Same could happen to gold, if physical demand is so strong that the commodity banks can't keep the digital price down or risk breaking the link between physical and futures prices.

this is also why the banks can't always come in and drive gold down in price, like tinfoilers are always saying. When the same happens to silver, watch out- the price of silver could explode. One reason silver hasn't gone up a multiple of gold is it's an industrial metal so the virus is reducing industrial demand. It usually lags gold in bull markets and then plays catchup and far outperforms gold.

 

[Varmint]

I bought below $1100 for sure

As it has been said, this is my hedge against inflation.

gold has gone up from $1100 to $1650 in 4 years as inflation was very low. Gold is no longer an inflation hedge, it's really a hedge against central bank easy money. It's kind of the same thing - the inflation is just happening in assets like stocks, bonds, real estate, not traditional inflation.

 

[Varmint]

Actually the US Dollar has been strengthening against other currencies. Which makes this increase in gold prices unusual.

View attachment 333293

It's not unusual if you ignore inflation and look at only central banks policy. the virus has central banks ready to cut rates and dump liquidity on the markets - China even started more QE a week ago. Bonds, stocks, dollar and gold are all going up together. Even Apple warnings don't hurt the stock market cause it means easier Fed policy.

the big question is can Fed printing save stocks from a global pandemic?

 

[richc]

Historically there are three drivers of stock market performance:

Earnings/PE ratio
Interest rates
Emotions

The four most dangerous words in the English language are "It's different this time". Of course the market can remain irrational longer than you can remain solvent.

Everything is cyclical. This mania too shall pass. Everything returns to the mean at some point.

OK, enough clichés for one day... but it occurs to me that clichés were the predecessor to memes.

 

[Varmint]

Historically there are three drivers of stock market performance:

Earnings/PE ratio
Interest rates
Emotions

The four most dangerous words in the English language are "It's different this time". Of course the market can remain irrational longer than you can remain solvent.

Everything is cyclical. This mania too shall pass. Everything returns to the mean at some point.

OK, enough clichés for one day... but it occurs to me that clichés were the predecessor to memes.

I'm starting to doubt this. The market isn't a market anymore, its a casino table that the players know is fixed so they keep betting. Either it goes up and they make money, or it goes down and the Fed pumps more money in.

At some point the dollar may start losing value faster than the market can go up, but until then you may not see a traditional crash. The Fed won't allow more than 3-4% of a correction, and their tolerance for corrections keeps getting lower.

I no longer recommend people get out of stocks and Treasury bonds, but do get out of corporate junk bonds. I just recommend PMs and mining stocks, real estate, and any hard assets or collectibles. I have some poker chips I paid $0.80 a chip for like 10 years ago and they're worth $3/chip now.

 

[richc]

The Fed may have the ability to postpone short term pain, when the SHTF or there's a serious Black Swan event the Fed is irrelevant.

Investor panic is a much greater force than the Fed. Sadly the Fed keeps kicking the can down the road which only increases the likely severity of the next big downturn.

Much better that investors suffer the consequences of a series of smaller events than a huge one that we all know will come.

I'm starting to doubt this. The market isn't a market anymore, its a casino table that the players know is fixed so they keep betting. Either it goes up and they make money, or it goes down and the Fed pumps more money in.

At some point the dollar may start losing value faster than the market can go up, but until then you may not see a traditional crash. The Fed won't allow more than 3-4% of a correction, and their tolerance for corrections keeps getting lower.

 

[Varmint]

The Fed may have the ability to postpone short term pain, when the SHTF or there's a serious Black Swan event the Fed is irrelevant.

Investor panic is a much greater force than the Fed. Sadly the Fed keeps kicking the can down the road which only increases the likely severity of the next big downturn.

Much better that investors suffer the consequences of a series of smaller events than a huge one that we all know will come.

agree on the last part but that window has passed.

I don't know if the first part is true. Suppose SHTF and Investor’s sell $2 trillion in stocks? That's a lot right? That's like every 401k owner selling everything.

well the Fed can buy every share sold, and then the stock market won't drop at all.

 

[Rob Boudrie]

If I were a B-school prof I would try to get a curve named after me (the sure route to fame in that field). B-school theory on what a stock is priced at is just plain wrong - it is NOT the discounted NPV of all future cash flows from the stock, but a bet based on a guess as to what others thing others will be willing to pay in the future. Like Valentine said it trading places, "I get it, you guys are bookies".

What few bother noticing, and no gold seller (that I have seen yet) is forthcoming enough to admit, is that PMs are treated as "collectibles". This means that all sales, no matter how long you held the asset, are taxed as ordinary income, not capital gains.

And the meaningful comparison to the four year return is not against the interest rate (beta=0), but against the S&P 500 (beta=dang close to 1).

The S&P over 4 years:

2016 - 9.54%​

2017 - 19.42%​

2018 - (6.24)%​

2019 - 28.88%​

For a gain of 58% for the S&P 500​

Going from $1100->$1600 is a gain of 45% for Gold (using the previous poster's gold prices)

Plus, your S&P 500 gain would be taxed as capital gains if held over a year (0% up to about $39K total annual income;15% up to about 434K in total annual income; 20% above that)

Gold does have some advantages:

• It is a disaster hedge as the backing of gold is as good as gold
• It is undocumented and not under government supervision (though you will get lower prices, and become a criminal if you try to liquidate a large amount in small quantities to every gold buyer in town)
• It is harder for Medicare/Nursing homes to find. (Keep in mind the earlier caveat about being a criminal, though dementia may make it hard to remember you have it, so be sure to store it where your kids will find it and not some future homeowner remodeling)
• Transferring to offspring is as easy as "Here, I have something for you", not IRS forms if above $15K (standard caveat incorporated by reference)

But, from an investment point of view, it is not as simple as claiming gold is a super-performer. That is not always the case

 

[Rob Boudrie]

I have some poker chips I paid $0.80 a chip for like 10 years ago and they're worth $3/chip now.

Be careful if these are casino chips. State laws (I know NV does this) has a provision for demonetizing chips after a certain notice period, though I assume you are talking collectibility as the face does not change.

Two sure-fire investments in which a long position will almost certainly outpace inflation:

- Forever postage stamps bought right before an announced price increase. Unlike the AG, the USPS does not make back room decisions as spring them as a trap to catch the unprepared.

- Pay per bag garbage bags before an announced price increase
They looked at me funny at the grocery store when I bought a full case for a bit over $500 and used a 5% off anything coupon. They had not heard the price was about to go up from $1.75/bag to $2.25/bag.

 

[Varmint]

Be careful if these are casino chips. State laws (I know NV does this) has a provision for demonetizing chips after a certain notice period, though I assume you are talking collectibility as the face does not change.

Two sure-fire investments in which a long position will almost certainly outpace inflation:

- Forever postage stamps bought right before an announced price increase. Unlike the AG, the USPS does not make back room decisions as spring them as a trap to catch the unprepared.

- Pay per bag garbage bags before an announced price increase
They looked at me funny at the grocery store when I bought a full case for a bit over $500 and used a 5% off anything coupon. They had not heard the price was about to go up from $1.75/bag to $2.25/bag.

so you mean say a $500 Caesar's chip after the Casino closes will eventually lose its value? Yeah they're home chips made by Paulson, a company who makes casino chips, and no longer sells for home use.

what's a pay per bag garbage bag? You mean a box of Glad trash bags?

this is true hyper inflation, when people buy up products cause they know the price will go up tomorrow. Hope you didn't start something!

 

[Varmint]

If I were a B-school prof I would try to get a curve named after me (the sure route to fame in that field). B-school theory on what a stock is priced at is just plain wrong - it is NOT the discounted NPV of all future cash flows from the stock, but a bet based on a guess as to what others thing others will be willing to pay in the future. Like Valentine said it trading places, "I get it, you guys are bookies".

What few bother noticing, and no gold seller (that I have seen yet) is forthcoming enough to admit, is that PMs are treated as "collectibles". This means that all sales, no matter how long you held the asset, are taxed as ordinary income, not capital gains.

And the meaningful comparison to the four year return is not against the interest rate (beta=0), but against the S&P 500 (beta=dang close to 1).

The S&P over 4 years:

2016 - 9.54%​

2017 - 19.42%​

2018 - (6.24)%​

2019 - 28.88%​

For a gain of 58% for the S&P 500​

Going from $1100->$1600 is a gain of 45% for Gold (using the previous poster's gold prices)

Plus, your S&P 500 gain would be taxed as capital gains if held over a year (0% up to about $39K total annual income;15% up to about 434K in total annual income; 20% above that)

Gold does have some advantages:

• It is a disaster hedge as the backing of gold is as good as gold
• It is undocumented and not under government supervision (though you will get lower prices, and become a criminal if you try to liquidate a large amount in small quantities to every gold buyer in town)
• It is harder for Medicare/Nursing homes to find. (Keep in mind the earlier caveat about being a criminal, though dementia may make it hard to remember you have it, so be sure to store it where your kids will find it and not some future homeowner remodeling)
• Transferring to offspring is as easy as "Here, I have something for you", not IRS forms if above $15K (standard caveat incorporated by reference)

But, from an investment point of view, it is not as simple as claiming gold is a super-performer. That is not always the case

not saying gold is a great investment just that it behaves like other investments and can go way above or below its fundamentals. I don't buy GLD I buy mining stocks which are taxed as stocks and have a big leverage to the gold price. If gold goes to $2000 a lot of miners will go up 10x.

a lot of gold investors are probably using IRAs too, to avoid the high tax rates.

 

[Rob Boudrie]

so you mean say a $500 Caesar's chip after the Casino closes will eventually lose its value? Yeah they're home chips made by Paulson, a company who makes casino chips, and no longer sells for home use.

what's a pay per bag garbage bag? You mean a box of Glad trash bags?

this is true hyper inflation, when people buy up products cause they know the price will go up tomorrow. Hope you didn't start something!

Casinos in NV can declare a chip "out of use". These are not acceptable for play for a period of time (I think a few years), but redeemable for new chips or cash. After the time period, with proper notice, the dead chips have no value and cannot be cashed - and it does not take the casino going out of business.

Pay per bag is a garbage fee system very popular in MA, since it allowed communities to end-run around prop 2 1/2 by charging for garbage separately from taxes. The system is specially printed town specific bags priced with the garbage collection fee incorporated into the bag price - for example, a pack of ten 33 gallon bags for $22.50.

>this is true hyper inflation, when people buy up products cause they know the price will go up tomorrow. Hope you didn't start something!
For the benefit to work, the product must have a long shelf life and be something you will eventually use as selling stamps or pay per throw garbage as a secondary vendor would require a discount.

 

[Varmint]

May be time to change the thread title.

the stock market has crossed the line in the sand - watch for the Fed to try to do something to stop the crash today. That could blow the roof off gold.

 

[richc]

Gold now at $1678. Silver = $18.61

Stock markets predicted to be open sharply lower.

 

[Varmint]

Gold now at $1678. Silver = $18.61

Stock markets predicted to be open sharply lower.

will be interesting to see if the Buy All Dips attitude in the stock market wins out today. I think it'll take some Fed comments for people to buy into this.