Liberty Posted September 23, 2011 Share Posted September 23, 2011 I was looking at the price of gold just for fun, and it has been falling quite a bit in recent days. Isn't it supposed to go up when there's panic and uncertainty and all that (according to the gold bugs)? Am I missing something? Link to comment Share on other sites More sharing options...
beerbaron Posted September 23, 2011 Share Posted September 23, 2011 Maybe inflation expectations went down. Link to comment Share on other sites More sharing options...
Santayana Posted September 23, 2011 Share Posted September 23, 2011 I'm not a gold bug. But what on earth does a short term price move have to do with anything? Link to comment Share on other sites More sharing options...
zarley Posted September 23, 2011 Share Posted September 23, 2011 I'd guess part of that is a reflection of the strengthening dollar. Link to comment Share on other sites More sharing options...
Packer16 Posted September 23, 2011 Share Posted September 23, 2011 Its tough to say that about something that has an intrinsic value only equal to what someone else is willing to pay. Packer Link to comment Share on other sites More sharing options...
Liberty Posted September 23, 2011 Author Share Posted September 23, 2011 I'm not a gold bug. But what on earth does a short term price move have to do with anything? Not much. But when it spikes up, I hear all about how gold is a refuge and a store of value and all that. But when it spikes down, I usually don't hear much. Link to comment Share on other sites More sharing options...
Santayana Posted September 23, 2011 Share Posted September 23, 2011 Ah, so you were just trolling ;D Link to comment Share on other sites More sharing options...
Valuebo Posted September 23, 2011 Share Posted September 23, 2011 I am waiting for that Zerohedge update... Nevermind: http://www.zerohedge.com/news/goldsilver-plunge-fest "Bottom line is, it is a self-fulfilling prophecy at this point and will continue until every last seller is out." The brilliant insight... Link to comment Share on other sites More sharing options...
tooskinneejs Posted September 23, 2011 Share Posted September 23, 2011 "Its tough to say that about something that has an intrinsic value only equal to what someone else is willing to pay." Which means it really only has extrinsic value. Link to comment Share on other sites More sharing options...
Liberty Posted September 23, 2011 Author Share Posted September 23, 2011 Ah, so you were just trolling ;D No, just wondering if there's an obvious explanation that I'm missing :) Link to comment Share on other sites More sharing options...
S2S Posted September 23, 2011 Share Posted September 23, 2011 Hedge funds, which have been ratcheting down their positions in gold futures since early August, were quickly named as the culprits in the latest sell-off. Some traders said that hedge funds were beginning to unwind, or close out, what has been a very popular and profitable trade for the last 18 months as they bet the dollar would fall and that gold would rise. In the last month alone, the euro has fallen nearly 4 percent against the dollar amid worries about the European debt crisis. http://nyti.ms/r51iWh Link to comment Share on other sites More sharing options...
Santayana Posted September 23, 2011 Share Posted September 23, 2011 Rumors that Paulson is liquidating his entire GLD position. Add some margin calls to that and down we go. The real action today is in silver! Link to comment Share on other sites More sharing options...
Shane Posted September 23, 2011 Share Posted September 23, 2011 I've been reading into this. The global flight to treasuries results in an increasing dollar, gold is priced in dollars. Also, apparently a number of large hedge funds are selling their shares in gold, this could be from forced selling to cover losses as this is likely a major source of positive gains. This pattern isn't unusual actually, Gold usually initially drops then recovers due to the aforementioned factors. In my mind gold is still not a short candidate. Link to comment Share on other sites More sharing options...
oec2000 Posted September 23, 2011 Share Posted September 23, 2011 Gold acted the same during the 2008 meltdown so this should not be surprising. A commonly given explanation is that people sell what they can (i.e. stuff you own that hasn't been hammered) when they get margin calls. Sounds plausible enough but who really knows. Link to comment Share on other sites More sharing options...
Liberty Posted September 23, 2011 Author Share Posted September 23, 2011 Yeah, margin calls make sense. A smaller version of this seems to have happened last month. Link to comment Share on other sites More sharing options...
ERICOPOLY Posted September 23, 2011 Share Posted September 23, 2011 When gold goes up, it's because everyone is increasingly realizing that it's the only true money. When gold goes down, it's because everyone is increasingly realizing that dollars are the only true money. There, I explained it for you. Link to comment Share on other sites More sharing options...
ubuy2wron Posted September 23, 2011 Share Posted September 23, 2011 Let me have a shot. It appears that Europe is going to have a hard landing the appearance is based upon the fact that no one is going to stand up and say follow me boys and girls this is the way to salvation. The plan right now seems to be every country for itself as far as saving banks are concerned and we will all chip in to save the ECB which is bancrupt as well. Some banks are going to fail but depositers will be made whole not so sure about shareholders and creditors however. In that scenario which we can describe as the heck no we ain't going to print our way out of this mess some dough gets destroyed and real losses are incurred. Some of the gold which is on nations balance sheets might start finding itself onto the market I think this is just some people front running the banks selling cuz some of these countries are only going to be able to raise dough by selling gold or gold backed securities. If this is in fact the path then some of the gold bugs are going to be disappointed because they have been daring Bernanke to do QE3 and expecting the Europeans to do their very own version of the same. I believe the gold Dow ratio reached the 2nd highest monthly level it has reached in the last 100 years or so and I have said here more than once we do not get a sustainable bull mkt in equities as long as we have a bull mkt in precious metals. I was not short gold or silver on this self off but I thought that was where the greatest risk was. There is also a huge amount of trend following dough in the precious metal trade and well, you do not need an advanced charting designation to see that the trend is no longer left to right and inexorably upward. Link to comment Share on other sites More sharing options...
merkhet Posted September 23, 2011 Share Posted September 23, 2011 When gold goes up, it's because everyone is increasingly realizing that it's the only true money. When gold goes down, it's because everyone is increasingly realizing that dollars are the only true money. There, I explained it for you. Haha, that sounds about right... Link to comment Share on other sites More sharing options...
ERICOPOLY Posted September 23, 2011 Share Posted September 23, 2011 Grantham bought into it saying he just couldn't stand to watch it go up any more. Perhaps that's the kind of situation that marks a top. However, it really would be my guess that people are just selling to meet redemptions and margin calls just like 2008. Link to comment Share on other sites More sharing options...
biaggio Posted September 23, 2011 Share Posted September 23, 2011 all the commodities have been going down? same reasons? +/- fear of recession/decrease in demand/fear of slow down in China Link to comment Share on other sites More sharing options...
original mungerville Posted September 23, 2011 Share Posted September 23, 2011 I think everybody's comments are right on this thread so far: could be defaults in Europe, US dollar strong, etc...but I don't think I would short precious metals here, I still think they should outperform other asset classes in this kind of environment and should begin to strengthen relative to the stock market. "When gold goes up, it's because everyone is increasingly realizing that it's the only true money. When gold goes down, it's because everyone is increasingly realizing that dollars are the only true money. There, I explained it for you." This is exactly it, and the question is which one will it be in the end? A strong dollar or high gold prices? I don't know the answer to that one. If someone knows for sure, let me in on the secret. In the meantime, I am betting both ways. Silver had its biggest 2 day drop since 1983 and biggest one day drop apparently since 1979 today according to a Bloomberg article. I decided that I should buy a bit more silver. Ultimately, I think governments are probably going to have to triple the price level to cut the debt by 2/3rds and gold and silver will triple fundamentally and then there will be a pile on effect and they may go up 4 to 5 fold. This may unfold in a very short period of time - say 12 months. Until then, its going to look like we are heading into deflation and debt destruction with increasing amounts of volatility in the markets and this could last for some time - years? I think one thing we can count on is significant volatility as this system seeks to work its way through to stability (ie stability meaning lower debt relative to GDP whether via debt destruction or massive inflation). Link to comment Share on other sites More sharing options...
original mungerville Posted September 23, 2011 Share Posted September 23, 2011 I would not pick Grantham as a guy that gets in at the top. I think he felt in his bones that gold would ultimately go higher but could not explain it so he bought some. I don't think the game is over on the precious metals front (at least relative to my hedge which is my short on the Russell 2000). Link to comment Share on other sites More sharing options...
Josh4580 Posted September 23, 2011 Share Posted September 23, 2011 Case Closed: CME Hikes Gold, Silver, Copper Margins http://www.zerohedge.com/news/case-closed-cme-hikes-gold-silver-copper-margins This was obviously leaked today which accounts for the major drop. I bought SLV options for Nov/Dec when SLV was at $30 today near the close. Link to comment Share on other sites More sharing options...
original mungerville Posted September 23, 2011 Share Posted September 23, 2011 I bought January 2014 calls at $35 on SLV today just before close Link to comment Share on other sites More sharing options...
alertmeipp Posted September 23, 2011 Share Posted September 23, 2011 if it's caused by margin, I don't expect that it to be clear in a day. Link to comment Share on other sites More sharing options...
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