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keys
Penny Collector Member
383 Posts |
 Posted - 05/22/2009 : 13:47:20
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From time to time we have heard and will hear about the decline in the price of gold. Those who state that gold will go down in price seem to think, or try to argue, that the price will crash and crash hard and fast.
Historical data concerning the price of gold does not support this belief.
Courtesy of Kitco historical gold prices the price of gold was in the following ranges-
Year 1977 gold price $121-$167.95 average price $ 147.68
Year 1978 gold price $160.90-$242.60 average price $ 193.19
Year 1979 gold price $216.85-$512.00 average price $ 306.68
Year $1980 gold price $481.50-$850 (the peak for 20 years) average price $612.56
Year $1981 gold price $395-$599.25 average price $459.71
Year 1982 gold price $296.75-$481 average gold price $375.81
As you can see, the price of gold declined but it did not crash suddenly. If you ignore the price peak of January 18th and 21st of 1980, those who bought gold before 1980 and sold in December 1980 still made money on gold.
The gold price average for 1979 was $306.68 with the peak for the year of $512.
Considering the spike in gold in January of 1980,
an increase from $512 of Dec 28 1979
to $850 in January 18, 1980,
an increase in price of 166% in less than a month
That should have been a warning sign to gold investors everywhere.
An increase of $512 to $760 on Jan 16th 1980, an increase of 148.4 % in less than a month should have sounded alarms to gold investors everywhere.
Have we had a 140% spike in the gold price in a months time? Not as far as I can see.
Gold’s decline in price of 2008, when it lost 30% of its value, should not be looked at as a stand alone event. Everything but Everything declined and declined hard in 2008. Gold managed to regain almost all of its losses while many securities are still struggling to regain from the financial meltdown.
Research this for yourself at-
You must be logged in to see this link.
Click on yearly gold charts and click on view charts and data button
Are we at the peak of gold?
I have to say no.
The reasons-
No 140% spike in the gold price in less than a month (a key detail to keep note of. )
No one has tried to pull a Volker on interest rates to get inflation under control.
High interest rates are the enemy of gold, and we are not yet hearing one word from any bank or lending institution raising interest rates on depositors accounts (credit card interest is another story.)
The world’s financial system is still in a mess. Confidence in the system has gone from as rock solid as the rock of Gibraltar to the search for green shoots.
Gold will keep doing what it will always do, sit there and look pretty whether it is kept in a vault or a safe deposit box. It will allow restful sleep to those who own it, knowing its value will not disappear overnight, while the rest of the world suffers from insomnia as they worry about their stocks, 401K’s and the value of their bonds.
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I change with the times-
but like silver coins found in your change
I stay the same.
*****************
The United States of America started out as the new Republic of Rome.
Will The United States of America end up as the New Imperial Rome? |
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Neckro
1000+ Penny Miser Member
Saudi Arabia
2080 Posts |
Posted - 05/22/2009 : 14:17:59
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| Either way, gold is a fun item to have and collect. It just happens to be a costly item. |
Trolling is an art. |
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fb101
Administrator
USA
2856 Posts |
Posted - 05/22/2009 : 17:36:28
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Interesting argument. I don't think we'll ever have to worry about $800 gold again. (IMHO)
If we ever get a group of fiscal conservatives in office to pull the plug on the spending, I'll worry about gold falling.
Note I did NOT say republicans. |
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Country
1000+ Penny Miser Member
USA
3121 Posts |
Posted - 05/22/2009 : 18:47:45
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You have to remember the context of gold trading back in late 1979 to 1982. In those days, the fed funds rate spiked to 20.5%, 30-year treasuries at 15%, as gold was peaking. To participate, most investors bought gold stocks then; those who wanted physical gold bought Krugerrands and US Pre-1932 gold coins; those who wanted silver bought $1000 bags of silver junk coins. It was the gold refiners that bought and sold the gold commodity futures contracts for hedging purposes for longer term planning. There were only limited ways for average investors to participate.
Nowadays, anyone can deal in future contracts, options for future contacts; with leverage if you want. You can buy and sell GLD, and the other PM ETFs. There's a zillion ways to speculate in gold and PMs. If market makers go on a panic buy bacause of a rapid dollar depreciation, the price of gold will fly because investors worldwide can participate together in a big way. On the other hand, if the inflation trade disappears, due to a "worldwide" trend toward real fiscal conservatism (currently doubtful as many countries are trying to inflate with a torrent of fiat paper) or some other reason, the price of gold will nosedive.
IMVHO, unlike the early '80s, whichever trend gathers steam, the move in the spot price of gold and other PMs will be very fast. As before, I believe one should watch for the rapidly rising interest rate of US and other world bonds to give you an indication that the rapid appreciation of PMs is at hand. |
---> Come to the new and improved realcent: http://realcent.org
The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life.
– Theodore Roosevelt
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Edited by - Country on 05/23/2009 11:05:11 |
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darsemnos
Penny Sorter Member
96 Posts |
Posted - 05/22/2009 : 19:36:20
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quote:
Originally posted by keys
From time to time we have heard and will hear about the decline in the price of gold. Those who state that gold will go down in price seem to think, or try to argue, that the price will crash and crash hard and fast.
Historical data concerning the price of gold does not support this belief.
Courtesy of Kitco historical gold prices the price of gold was in the following ranges-
Year 1977 gold price $121-$167.95 average price $ 147.68
Year 1978 gold price $160.90-$242.60 average price $ 193.19
Year 1979 gold price $216.85-$512.00 average price $ 306.68
Year $1980 gold price $481.50-$850 (the peak for 20 years) average price $612.56
Year $1981 gold price $395-$599.25 average price $459.71
Year 1982 gold price $296.75-$481 average gold price $375.81
As you can see, the price of gold declined but it did not crash suddenly. If you ignore the price peak of January 18th and 21st of 1980, those who bought gold before 1980 and sold in December 1980 still made money on gold.
The gold price average for 1979 was $306.68 with the peak for the year of $512.
Considering the spike in gold in January of 1980,
an increase from $512 of Dec 28 1979
to $850 in January 18, 1980,
an increase in price of 166% in less than a month
That should have been a warning sign to gold investors everywhere.
An increase of $512 to $760 on Jan 16th 1980, an increase of 148.4 % in less than a month should have sounded alarms to gold investors everywhere.
Have we had a 140% spike in the gold price in a months time? Not as far as I can see.
Gold’s decline in price of 2008, when it lost 30% of its value, should not be looked at as a stand alone event. Everything but Everything declined and declined hard in 2008. Gold managed to regain almost all of its losses while many securities are still struggling to regain from the financial meltdown.
Research this for yourself at-
You must be logged in to see this link.
Click on yearly gold charts and click on view charts and data button
Are we at the peak of gold?
I have to say no.
The reasons-
No 140% spike in the gold price in less than a month (a key detail to keep note of. )
No one has tried to pull a Volker on interest rates to get inflation under control.
High interest rates are the enemy of gold, and we are not yet hearing one word from any bank or lending institution raising interest rates on depositors accounts (credit card interest is another story.)
The world’s financial system is still in a mess. Confidence in the system has gone from as rock solid as the rock of Gibraltar to the search for green shoots.
Gold will keep doing what it will always do, sit there and look pretty whether it is kept in a vault or a safe deposit box. It will allow restful sleep to those who own it, knowing its value will not disappear overnight, while the rest of the world suffers from insomnia as they worry about their stocks, 401K’s and the value of their bonds.
For the record, your percentages are way off. |
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theo
Penny Hoarding Member
USA
588 Posts |
Posted - 05/22/2009 : 19:57:54
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quote:
Originally posted by fb101
Interesting argument. I don't think we'll ever have to worry about $800 gold again. (IMHO)
If we ever get a group of fiscal conservatives in office to pull the plug on the spending, I'll worry about gold falling.
Note I did NOT say republicans.
Actually, I think that gold and silver are good plays no matter what happens. I believe that we are at least two years away from anything even resembling fiscal restraint. By that time time the dollar (along with other fiat currencies) will see some significant devaluation and it will likely be apparent that the crisis cannot be resolved within any fiat/Keynesian system. Any currency not backed gold, silver or perhaps a combination of hard assets will not be acceptable. In such a scenario gold could run to at least $3000 an ounce and silver to at least $75 an ounce. |
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keys
Penny Collector Member
383 Posts |
Posted - 05/22/2009 : 21:44:55
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Sorry my percentages are off, I did simple caculations-
$512 X 1.484 = $759.80
$512 X 1.66 = $849.92
My goal was to show how parabolic the price of gold had become in so short a timeframe. |
I change with the times-
but like silver coins found in your change
I stay the same.
*****************
The United States of America started out as the new Republic of Rome.
Will The United States of America end up as the New Imperial Rome? |
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The Price of Gold in Perspective
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