I read in the SF Chronicle that Russia is planning on dumping their gold reserves which will add to the glut of gold world wide. I've been sitting on the fence the past few weeks debating whether to buy, but I can't find any good reason to do it, is there one?

-- Bardou (bardou@baloney.com), August 31, 1998

Answers

With the market droping 540 points and gold going up just $ 1 the only reason I see to buy gold is if you like the color.

Fellow Fence Sitter

-- ac (atcline@earthlink.net), August 31, 1998.

It's very possible, in a crisis, that gold could skyrocket in a day. If this country would have to devalue the dollar, like did other countries, gold would skyrocket quickly. Already I heard that gold is strong in places like Canada, Australia, and of course, Asia now. Russia just last week allowed individual citizens to own gold, and I heard that over a metric ton was bought in ONE day. It may go down here in US even more, but can anyone be sure what the bottom will be? Hopefully there won't be a crisis, and it won't skyrocket overnight and all of the fence sitters can buy as it is gradually going up. If you plan to have some money in gold for security (cold hard cash) because of Y2K, then you'd just as well buy while it's at bargain basement prices. It may go down even more, but who knows what's around the corner?

-- Kay P. (Y2Kay@usa.net), September 01, 1998.

And, of course, there is one very astute analyst who is projecting gold to fall to about $100 an ounce, (and then recover) which would argue that Bardou should hold cash until that time. This is based on deflationary pressures felt on all commodities.

My own opinion is that he's right, that gold will continue falling. What I must do is track the supply and the price of 'useable' gold.....1/4 ounce coins, even 1 ounce coins......and silver used coins (pre1964) and buy when (if) they reach a low.

There is a difference between gold in 100 ounce bars that few can afford, and 1/4 ounce coins that are affordable.

So, the question is, "Are you buying gold because you expect gold to go up or to hold it's value, or are you buying an emergency or crisis supply of barter coins?" Big differeence.

-- rocky (rknolls@hotmail.com), September 01, 1998.

There is a running debate over whether we really ARE in a "new paradigm" financially where none of the old rules apply any more. Lots of people are putting their money where their mouth is on the issues involved, some betting on the stock market, fiat currencies etc. (i.e., paper) and some on hard assets (silver, gold, etc).

Several thousand years of recorded history, including a couple hundred years of American history, favor hard assets. Right now gold and silver are at 20- year lows, and near historical lows in real prices. Indeed they might go lower. Several pundits, including Robert Prechter, say they will.

You pays your money and you takes your choice. Hard asset insurance is at low premiums right now. It seems a good time to buy to me. I'm moving a percentage of assets into gold and silver.

LPL

-- Lee P. Lapin (lplapin@hotmail.com), September 01, 1998.

As the Russian economy continues its downward spiral, their hard asset - gold - will have to be sold off to maintain their military re-expansion which is inevitable. They need the Ukraine to feed their people as it is the breadbasket of Europe, and therefore control of it. They are continuing to build underground complexes and military technology is continuing. All this takes money, nevermind that some of the people are starving - it has happened before. So gold will flood the market and push the price lower, where we and Central Banks can take advantage. The Euro will be partially backed by gold and this is the opportunity for them to buy "cheap" gold for their vaults. We plan to buy, but not for a while.

-- Laurane (familyties@rttinc.com), September 01, 1998.

There is, nor there will be no glut of gold. Gold is a rare and precious commodity. "Gold glut" and "gold is dead" are terms used by people who perceive value to be based on paper currency. The US paper currency's value is now based on trust, as there is no longer gold to make it 100% reedeemable. The illusion of value lies in this problem. Gold will once again prevail in value, and very soon. The US dollar (value) will fade into history. Either exchange your cash for tangibles or purchase gold to retain the value of your assets.

The following is proof out of the horse's mouth that the price of gold is being manipulated.

Testimony of Chairman Alan Greenspan Before the Committee on Banking and Financial Services, U.S. House of Representatives July 24, 1998 "...To be sure, there are a limited number of OTC derivative contracts that apply to nonfinancial underlying assets. There is a significant business in oil-based derivatives, for example. But unlike farm crops, especially near the end of a crop season, private counterparties in oil contracts have virtually no ability to restrict the worldwide supply of this commodity. ( Even OPEC has been less than successful over the years. ) Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

Russia lost 100% of value on it's Ruble against the dollar at the end of last week. Japan is on the verge of massive banking defaults, most of Asia is already in the economic crapper.

-- K. Golden (kgolden@solar.stanford.edu), September 01, 1998.

K. Golden, For those of us financially challenged, please explain why (based on Greenspan's comments) you say gold is being manipulated. I didn't understand, break it down for me.

-- Human Kind (Human@madness.not), September 02, 1998.

Human Kind,

Don't worry. Be happy. The dollar is sound. You will have no problems financially. The stock market will go up forever. The dollar is safe. Your 401k is secure. Don't worry about gold- it is a barbaric relic. Invest for the long haul. Mutual funds are like savings accounts. Your bank is stable, there will be NO RUNS on banks. There is plenty of currency to go around. Y2K is a hoax. Your new platinum card is on the way. You are qualified to borrow 125% of the value of your home. There are no currency crises. There is no Asian Contagion. Monday was just a correction. We don't use your tax money to manipulate Wall Street, and neither does any other government manipulate their bourse. Y2K is a hoax.This is a buying opportunity. Central bankers don't threaten sales of gold they don't have, to keep the price down. Gold IS NOT money. There is no truth to the story that 8000 tonnes of gold have been forward sold. Silver IS NOT money. There is no truth to the story that COMEX supplies of silver are at their lowest levels in two decades. Paper is money. Electrons are money. Mutual funds are not stocks. Y2K is a hoax. The stock market WILL NOT crash. We didn't use taxpayer money to prop up the yen. Inflation is under control. There is no threat of deflation or stagflation. What you are seeing is merely irrational exuberance. The stock market WILL NOT crash. Y2k is a hoax. We will not impose wage and price controls. There will be no inflation. There will be no economic collapse. The peso is not about to disintegrate again. The Canadian dollar is sound. You will have no financial problems. Don't listen to the morons who tell you to buy gold, or sell stocks and buy silver like that idiot Warren Buffett did. Oil will be cheap forever- there will be NO oil supply crisis again within two years. Your food supply is assured, just go to the grocery store every two or three days as always. Y2K is a hoax. There will be no turmoil in Russia- those nice people were standing in line because the Russian banks were offering free Beanie Babies to new customers. Gold is only a commodity. Silver is only a commodity. Electrons are money. Paper is money. Inflation is good. Don't worry about watching the news- there's a football game on the other channel. Bud-WISE-errr. Bud-WISE-errr.

GO BACK TO SLEEP NOW.

Keynes@econ.hell

-- Keynes (keynes@econ.hell), September 02, 1998.

"where central banks stand ready to lease gold in increasing quantities should the price rise"...this is the key sentence giving away the game. When central banks increase their amount of gold leasing, this gives way to a lower price in trading. Conversly, if banks tighten up on gold leasing, it causes gold market contraction, therefore raising the price.

Also, for your reading pleasure... http://www.gold-eagle.com/gold_digest/baron907.html http://www.gold-eagle.com/editorials_98/cohen072398.html http://www.gold-eagle.com/gold_digest/oracle624.html http://www.usnews.com/usnews/issue/980817/17mark.htm and all of John Kutyn's editorials: http://www.gold-eagle.com/research/kutynndx.html

To synopsize for you the "flavor" of the above editorials, essentially there is a lot of funny stuff going on, (ie manipulations) the US dollar is due to lose it's value, our economy is going to be affected tremendously due to international dealings and gold is going to become a safe haven for US fiat dollar assets.

-- K Golden (kgolden@solar.stanford.edu), September 02, 1998.

As of yesterday the PM supplies are starting to dry up. I have heard reports all over the place that dealers are running out of gold and silver. I have confirmed this on some websites that sell PM's. I went to my dealer yesterday and he informed me that He couldn't get *anything*. He offered his supplier 70 cents over spot for silver and his supplier refused to sell. He told me that a man that was leaving when I got there bought up over half of his supply of gold. All he had left was Krands and maple leaves and he was charging $10 over his normal premium for them. He was also charging a higher premium for silver. This started developing Friday. It will be interesting to see what happens after the holiday weekend.

-- Filer (notmyadd@nowhere.com), September 06, 1998.

I have noticed that the ratio of real price (adjusted for inflation) of gold and the real of oil have tracked very closely the past 90 years.

Both go up (or down) in synch. And did you notice the "oil prices won't go up" in the middle of the hypnosis trance above?

By the way, where is our government in all this? If China bought the last election, who pulling which strings? <...which zippers?>

-- Robert A. Cook, P.E. (cook.r@csaatl.com), September 06, 1998.

there is an old saying: "if one man has an ounce of gold and another man has a 45, one of them will end up with both..." gold is like everything else in this world...its worth what you can get for it.. if things get as bad as some are predicting....food and water are the only thing that will have any value....and if there is an ecomomic earthquake as some say the govt will step in...and tell us what is worth what and how we can spend it....one thing for sure...we are in for some interesting times....

-- thomas mayo (mayo@pixi.com), September 06, 1998.

My dad claims there is an ancient Chinese curse: "May you live in interesting times."

-- Robert A. Cook, P.E. (cook.r@csaatl.com), September 06, 1998.