What is going on with Gold price?

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artking99
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What is going on with Gold price?

Post by artking99 »

Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
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Re: What is going on with Gold price?

Post by jebmke »

maybe it simply doesn't work (inflation hedge).
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Re: What is going on with Gold price?

Post by Abe »

It's just like the stock market or interest rates; you can't predict where it's going.
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Re: What is going on with Gold price?

Post by MarkRoulo »

artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
From 1970 to 1980 the price of gold went from something like $36/oz to $600/oz -- up about 16x.
Inflation (CPI-U) from 1970 to the end of 1980 was about 130% -- so prices were up about 2.3x.

We've currently seen about one year of ~8.5% inflation (not ten years). Did you expect gold to go up in lockstep with inflation?
SeasOfCheese
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Re: What is going on with Gold price?

Post by SeasOfCheese »

Nobody wants gold. Everyone wants ARKK. Strange day, today.

We'll see what tomorrow brings.
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Re: What is going on with Gold price?

Post by exodusNH »

artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
Gold is only useful at timescales that exceed a typical investor's life. At shorter timescales, its behavior it too volatile to draw any conclusions.

Ben Felix has a quick, well-researched video on it: https://youtu.be/ulgqlQWlPbo
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Re: What is going on with Gold price?

Post by jebmke »

SeasOfCheese wrote: Tue Jul 05, 2022 5:32 pm Nobody wants gold. Everyone wants ARKK. Strange day, today.

We'll see what tomorrow brings.
Once you buy gold you can't sell it. I tried; my wife wouldn't give up her necklace.
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BogleFan510
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Re: What is going on with Gold price?

Post by BogleFan510 »

Gold prices are based on supply and demand. There is no guarantee of inflation protection, just like other assets. Its doing better than crypto recently.
rockstar
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Re: What is going on with Gold price?

Post by rockstar »

Trying to wrap my head around the drop today. So many moving parts.

The USD keeps getting stronger. But the 10 year has really dropped its yield over the last month.

I totally get the move to growth. With inflation you need to buy companies that can provide an after tax profit after inflation. There aren’t many.

We are probably already in a recession. We just have to wait for the data points.
Last edited by rockstar on Tue Jul 05, 2022 8:36 pm, edited 1 time in total.
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arcticpineapplecorp.
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Re: What is going on with Gold price?

Post by arcticpineapplecorp. »

artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
maybe it wasn't the inflation hedge you thought it was?

the only real inflation hedging is:
1. I-Bonds,
2. TIPS in the case of unexpected inflation, and
3. commodities.

maybe you should look at those.

of course, if the fed controls inflation or there are other factors that affect inflation such as : 1. easing supply chain issues (already happening) and/or 2. a recession (which either in actuality but also in expectation of) can cause people to slow down spending/increase savings, then it's possible those three assets above won't be much help to you just because they might have been over the past 6 months.

a hedge is a small bet, right? It's not going to save your portfolio when all other assets (or major ones where most of your money is) goes down. Even investing in gold is a small bet (5% or 10% at most of your portfolio). How much is that going to offset losses to stocks/bonds?
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Re: What is going on with Gold price?

Post by zaboomafoozarg »

jebmke wrote: Tue Jul 05, 2022 5:40 pmOnce you buy gold you can't sell it. I tried; my wife wouldn't give up her necklace.
The same thing happened with my coins, I enjoy those things too much and wouldn't be able to sell them to rebalance!

Maybe I'll consider some physical and/or ETF gold when I get closer to retirement. But right now the amount I save dwarfs any little things I do with my asset allocation.
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Re: What is going on with Gold price?

Post by kd2008 »

My mother-in-law had gold and silver certificates from 1988. The company had been sold many times and the new owners purposely evaded informing the certificate holders. Every few years it was google game in finding out who owns it now. But after my father-in-law passed away and it went unclaimed, the new owners contacted her (she still lives at the same address 60 years and counting) under state law. She was like, my DH husband said to keep these, they will go up in value. I sweetly told her they were up indeed up in value (only in nominal terms). She cashed them. The new company was super easy to deal with. They honored spot price minus the commission listed. We sold them at March 2022 high. Lucky timing. Now only if I can convince her to invest in I-bonds. She doesn't do internet. She is 79 yrs old. Her 83 year old friend is iphone fanatic and has threatened to cut her off if she doesn't learn to use a smartphone. I have a good chuckle. 😂😂😂
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Re: What is going on with Gold price?

Post by willthrill81 »

artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
Long before this, the data were very clear that gold's price has not moved in anything remotely lockstep with inflation. On its own, it's a highly volatile asset that moves in ways that aren't always understood well.

That said, even TIPS funds, which are explicitly inflation-adjusted, haven't done very well for the last 17 months. Vanguard's TIPS fund has lost 14% of its inflation-adjusted value since January, 2021.
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Re: What is going on with Gold price?

Post by willthrill81 »

arcticpineapplecorp. wrote: Tue Jul 05, 2022 8:23 pm the only real inflation hedging is:
1. I-Bonds,
2. TIPS in the case of unexpected inflation, and
3. commodities.
While I'm a much bigger fan of TIPS (and I bonds) than many here, I must point out that TIPS funds don't always behave as one might expect. Vanguard's TIPS fund has lost 14% of its inflation-adjusted value since January, 2021.
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Re: What is going on with Gold price?

Post by firebirdparts »

artking99 wrote: Tue Jul 05, 2022 5:13 pm Where is the anticipated "inflation hedging"?
The secret is not to anticipate anything. Gold is pretty unpredictable really, but it’s high and it should be high. It’s not “wrong”.

Blessed are they who expect nothing.
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rockstar
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Re: What is going on with Gold price?

Post by rockstar »

In theory gold should perform during recessions and not do much at all the rest of time. I’m fairly certain the inflation case has been disproven.
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Re: What is going on with Gold price?

Post by Mainlandjones »

:happy
willthrill81 wrote: Tue Jul 05, 2022 9:07 pm
arcticpineapplecorp. wrote: Tue Jul 05, 2022 8:23 pm the only real inflation hedging is:
1. I-Bonds,
2. TIPS in the case of unexpected inflation, and
3. commodities.
While I'm a much bigger fan of TIPS (and I bonds) than many here, I must point out that TIPS funds don't always behave as one might expect. Vanguard's TIPS fund has lost 14% of its inflation-adjusted value since January, 2021.
I would also point out, VTIP has done about 13% better than intermediate treasuries since January 2021. So while it hasn’t kept up with inflation, it’s done well relative to other bond funds.
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Re: What is going on with Gold price?

Post by Forester »

exodusNH wrote: Tue Jul 05, 2022 5:34 pm
artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
Gold is only useful at timescales that exceed a typical investor's life. At shorter timescales, its behavior it too volatile to draw any conclusions.

Ben Felix has a quick, well-researched video on it: https://youtu.be/ulgqlQWlPbo
Ironically, gold has (erratically) tracked inflation since that 3 year old video while bonds are down 20% in real terms.
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Re: What is going on with Gold price?

Post by JayB »

The US dollar has recently climbed in strength/value relative to other currencies, probably largely due to the Fed's interest rate increases. Gold usually does better when the dollar is relatively weak. Also, gold traditionally does better when short term interest rates are low and the opportunity cost is low (i.e., there aren't good safe alternatives for earning decent short-term returns). So with short-term rates currently going up, gold has increased competition. Also, inflation expectations are moderating somewhat (as evidenced by declining TIP/Treasury breakeven rates) as the prospects of recession increase, so there is perceived to be less urgency to hold gold as an inflation hedge going forward.
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Re: What is going on with Gold price?

Post by sunsetting101 »

I'm surprised the price hasn't gone down with the Uganda find. That should essentially double the total amount of gold found so far. But of course it'll take many years to process this find that was reported about 2-3 weeks ago.
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Re: What is going on with Gold price?

Post by exodusNH »

Forester wrote: Wed Jul 06, 2022 2:25 am
exodusNH wrote: Tue Jul 05, 2022 5:34 pm
artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
Gold is only useful at timescales that exceed a typical investor's life. At shorter timescales, its behavior it too volatile to draw any conclusions.

Ben Felix has a quick, well-researched video on it: https://youtu.be/ulgqlQWlPbo
Ironically, gold has (erratically) tracked inflation since that 3 year old video while bonds are down 20% in real terms.
3 years over 400 doesn't mean much. His research ties in with Campbell Harvey's, which indicates that gold is more for dynastic reasons than any sort of buffer for a single investor's horizon. But as an asset that has low correlation with others, luck is always a factor.

One does wonder whether the people who would have tended towards gold had funds tied up in another "asset" that has had recent terrible performance after quite a run. (An unscientific observation of mine is that the Venn diagram between those groups has more overlap than not.)
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Re: What is going on with Gold price?

Post by SeasOfCheese »

JayB wrote: Wed Jul 06, 2022 3:31 am The US dollar has recently climbed in strength/value relative to other currencies, probably largely due to the Fed's interest rate increases. Gold usually does better when the dollar is relatively weak.
A five year chart of gold vs Euro, or gold vs Yen, is much nicer.

A chart of gold vs the Argentine Peso is much, much, much, nicer.
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Re: What is going on with Gold price?

Post by Gaston »

exodusNH wrote: Tue Jul 05, 2022 5:34 pm Gold is only useful at timescales that exceed a typical investor's life. At shorter timescales, its behavior it too volatile to draw any conclusions.
Spot on.
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Re: What is going on with Gold price?

Post by Corsair »

EUR and JPN have YCC and ECB has turned EUR into an EM basically, so USD is at a 20 year high against the EUR and 24 year high against the Yen.
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Re: What is going on with Gold price?

Post by bberris »

sunsetting101 wrote: Wed Jul 06, 2022 3:38 am I'm surprised the price hasn't gone down with the Uganda find. That should essentially double the total amount of gold found so far. But of course it'll take many years to process this find that was reported about 2-3 weeks ago.
One wag thinks the Ugandan official confused ounces and tons. Also missing from the report is the cost of extracting it. Most gold deposits analyze in 1 to 10 g per ton. I don't know what this one is, but it might require moving heaven and (mostly) earth to get it out. And recovery is never 100 %.
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Re: What is going on with Gold price?

Post by JoeRetire »

artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
How much gold did you buy?
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Re: What is going on with Gold price?

Post by kabob »

What is going on with Gold price?..
Gold MiniSharesTrust are THE #1 Preforming SPDR for this Year - UP 93.12% per yesterdays close!
Out of 131(All SPDR's) #1 aint Bad, especially considering there's only 6 above Zero for the Whole Year.
Image
GoldMiniShares SPDR Fund Strategy
The investment seeks to reflect the performance of the price of gold bullion, less the expenses of operations. The Shares are designed for investors who want a cost-effective and convenient way to invest in gold. Advantages of investing in the Shares include ease and flexibility of investment and expenses.
Am sure those who have had a little Gold & Energy aren't complaining...

Edit!...
Wait a min here - There's somethin Wrong! the above's not Right - the data's sorta whacko, possibly a reverse Split???
Checkin it out, Resolution pending

Yes, scratch the above - my Err, my datasrc is not adjusted. On or about
GLDM 2022-02-23 00:00:00 37.77 37.97 37.75 37.95 50964 41677 18.49 18.08
GLDM 2022-02-22 00:00:00 18.90 18.95 18.82 18.88 130161 41182 18.08 17.98
Feb 22-23 the raw data indicates there must have been reverse split
My Err and all apologies extended...
GLDM is indeed down a bit YTD
Last edited by kabob on Wed Jul 06, 2022 9:36 am, edited 1 time in total.
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Re: What is going on with Gold price?

Post by HanSolo »

artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
Maybe the traders are acting according to what they think will happen in the future, not what's been happening lately.

Kind of like what stock traders do.

Some interesting responses upthread... has your question been fully answered?
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Re: What is going on with Gold price?

Post by kabob »

Correction...
GOLD: +1 - its behavior it too volatile to draw any conclusions.
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Re: What is going on with Gold price?

Post by willthrill81 »

bberris wrote: Wed Jul 06, 2022 8:32 am
sunsetting101 wrote: Wed Jul 06, 2022 3:38 am I'm surprised the price hasn't gone down with the Uganda find. That should essentially double the total amount of gold found so far. But of course it'll take many years to process this find that was reported about 2-3 weeks ago.
One wag thinks the Ugandan official confused ounces and tons. Also missing from the report is the cost of extracting it. Most gold deposits analyze in 1 to 10 g per ton. I don't know what this one is, but it might require moving heaven and (mostly) earth to get it out. And recovery is never 100 %.
And even if the mine is capable of producing significant gold, supply and demand will likely prohibit them from extracting so much that it craters the price of gold. That's at least one reason why the idea of mining an asteroid for an immense quantity of gold is fatally flawed.

Gold miners have long known where to find a lot more gold, but the problem is the cost of extracting it is often higher than the price of the extracted gold.
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Re: What is going on with Gold price?

Post by Walkure »

willthrill81 wrote: Wed Jul 06, 2022 9:44 am Gold miners have long known where to find a lot more gold, but the problem is the cost of extracting it is often higher than the price of the extracted gold.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
So you're saying what the Ugandan official left out was that exploiting the deposit carried a risk of encountering Durin's Bane...
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Re: What is going on with Gold price?

Post by willthrill81 »

Walkure wrote: Wed Jul 06, 2022 9:50 am
willthrill81 wrote: Wed Jul 06, 2022 9:44 am Gold miners have long known where to find a lot more gold, but the problem is the cost of extracting it is often higher than the price of the extracted gold.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
So you're saying what the Ugandan official left out was that exploiting the deposit carried a risk of encountering Durin's Bane...
Quite possibly. If you don't have a wizard on your side, balrogs can be exceedingly difficult to deal with. Even then... :wink:
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Re: What is going on with Gold price?

Post by PoppyA »

arcticpineapplecorp. wrote: Tue Jul 05, 2022 8:23 pm
artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
maybe it wasn't the inflation hedge you thought it was?

the only real inflation hedging is:
1. I-Bonds,
2. TIPS in the case of unexpected inflation, and
3. commodities.

maybe you should look at those.

of course, if the fed controls inflation or there are other factors that affect inflation such as : 1. easing supply chain issues (already happening) and/or 2. a recession (which either in actuality but also in expectation of) can cause people to slow down spending/increase savings, then it's possible those three assets above won't be much help to you just because they might have been over the past 6 months.

a hedge is a small bet, right? It's not going to save your portfolio when all other assets (or major ones where most of your money is) goes down. Even investing in gold is a small bet (5% or 10% at most of your portfolio). How much is that going to offset losses to stocks/bonds?


Ummmm, gold is a commodity ….
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Re: What is going on with Gold price?

Post by willthrill81 »

PoppyA wrote: Wed Jul 06, 2022 9:59 am Ummmm, gold is a commodity ….
In the broadest sense of the word, yes, but in the financial sphere, it's nearly always differentiated from other commodities.
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Re: What is going on with Gold price?

Post by Jack FFR1846 »

What drives gold prices? Well, it doesn't produce anything. It sits like a pile of coal doing nothing. If people feel flush with cash, they might go out and buy a gold ring or necklace or gold Rolex or try to look like Mr. T. But there's plenty of fear of inflation and people are spending money on EVs to save gas cost and fixing up their present cars and paying for gas and fixing their houses. Why buy gold that's completely useless? I'm not surprised gold's down. Why would anyone want it?
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Re: What is going on with Gold price?

Post by andypanda »

Speaking of industrial usage...

"About 12% of gold supply goes to industrial uses. But due to silver's unique characteristics, a whopping 56% of its supply is used in industry."
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Re: What is going on with Gold price?

Post by abc132 »

willthrill81 wrote: Wed Jul 06, 2022 9:44 am
And even if the mine is capable of producing significant gold, supply and demand will likely prohibit them from extracting so much that it craters the price of gold. That's at least one reason why the idea of mining an asteroid for an immense quantity of gold is fatally flawed.

Gold miners have long known where to find a lot more gold, but the problem is the cost of extracting it is often higher than the price of the extracted gold.
Prices are set by supply and demand. If the cost to extract gold from space decreases over time, it makes complete sense for gold to be extracted at a rate that is profitable and reduces the price of gold over time. Time will tell when this becomes a good business venture and whether individuals or companies act rationally.

What should be obvious is that a ready supply/reserve of gold in space would prevent gold from spiking in price by the magnitude it did in the past, as it would certainly be worth getting an amount of gold from space whenever prices increases enough to make it profitable.

I would not expect companies to extract so much gold that the price goes to zero, but there is a rational case for gold not to have a real return if the cost to obtain it becomes cheaper over time while the extractable supply is very large. When someone suggest a large supply of gold they are not suggesting all of it should be extracted at once. That would be an irrational base case. The difference between space and the ground is that the cost of extracting from space can only decrease over time, which is not the case for extracting from the ground.
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Re: What is going on with Gold price?

Post by alluringreality »

artking99 wrote: Tue Jul 05, 2022 5:13 pm Where is the anticipated "inflation hedging"?
One area where Paul Krugman's opinion seems fairly reasonable to me are his comments about gold in relation to inflation. Essentially he disagrees with the concept of gold being an inflation hedge, but honestly I cannot think of anyone that I've agreed with suggesting that gold might serve as a near-term inflation hedge. In 2022 real interest rates have been rising, which essentially does not correspond with his reasoning around why gold price might increase. Of course Gold price is up more than inflation since 2020 and real rates are higher, so I could understand if someone disagreed with recent events supporting his position, although the IBD/TIPP Economic Optimism Index for June was lower than 2020. As a generalization, I simply tend to think of his position as being less easily disputable than the idea of gold hedging inflation over limited periods of time.

"gold price isn't driven by inflation, but by real interest rates -- the return on alternative assets"
https://twitter.com/paulkrugman/status/ ... 39200?s=20

As examples of the intent, in 2020 he further commented:
"Gold is high because bond yields are so low"
"a plunge in yields, reflecting economic pessimism"
"rising gold prices without rising inflation expectations bc of falling yields"

https://twitter.com/paulkrugman/status/ ... 10273?s=20
Last edited by alluringreality on Wed Jul 06, 2022 11:48 am, edited 1 time in total.
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Re: What is going on with Gold price?

Post by abc132 »

Remember that the case for investing in gold is that it must provide better returns and a higher SWR whenever we go through a long enough period of poor stock and bond performance. We can safely ignore 6 months worth of performance, but gold will need to perform if we have an extended period of low stock/bond performance. If we have 3 down years in a row and gold doesn't perform, it's historical SWR benefits are likely to disappear. Something similar happened in 2008 when everyone recommended REITS as a diversifier and they didn't perform.

The lesson will inevitably be that there is no one asset that can always perform when stocks/bonds are down. Gold has a large speculative component and thus offers no guarantees. It is a reasonable part of a portfolio but it provides no guarantees.
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Re: What is going on with Gold price?

Post by Valuethinker »

abc132 wrote: Wed Jul 06, 2022 10:19 am
willthrill81 wrote: Wed Jul 06, 2022 9:44 am
And even if the mine is capable of producing significant gold, supply and demand will likely prohibit them from extracting so much that it craters the price of gold. That's at least one reason why the idea of mining an asteroid for an immense quantity of gold is fatally flawed.

Gold miners have long known where to find a lot more gold, but the problem is the cost of extracting it is often higher than the price of the extracted gold.
Prices are set by supply and demand. If the cost to extract gold from space decreases over time, it makes complete sense for gold to be extracted at a rate that is profitable and reduces the price of gold over time. Time will tell when this becomes a good business venture and whether individuals or companies act rationally.

What should be obvious is that a ready supply/reserve of gold in space would prevent gold from spiking in price by the magnitude it did in the past, as it would certainly be worth getting an amount of gold from space whenever prices increases enough to make it profitable.

I would not expect companies to extract so much gold that the price goes to zero, but there is a rational case for gold not to have a real return if the cost to obtain it becomes cheaper over time while the extractable supply is very large. When someone suggest a large supply of gold they are not suggesting all of it should be extracted at once. That would be an irrational base case. The difference between space and the ground is that the cost of extracting from space can only decrease over time, which is not the case for extracting from the ground.
The thing about gold as a commodity is that very little of it is consumed (net of recycling).

Gold inventories are much larger than gold production. 100s of times? Of which only a percentage is available for trade at any one time.

So the orthodox rules of supply & demand don't necessarily apply. There's an almost infinite supply out there - at some theoretically high enough price.
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Re: What is going on with Gold price?

Post by abc132 »

Valuethinker wrote: Wed Jul 06, 2022 11:01 am
abc132 wrote: Wed Jul 06, 2022 10:19 am
willthrill81 wrote: Wed Jul 06, 2022 9:44 am
And even if the mine is capable of producing significant gold, supply and demand will likely prohibit them from extracting so much that it craters the price of gold. That's at least one reason why the idea of mining an asteroid for an immense quantity of gold is fatally flawed.

Gold miners have long known where to find a lot more gold, but the problem is the cost of extracting it is often higher than the price of the extracted gold.
Prices are set by supply and demand. If the cost to extract gold from space decreases over time, it makes complete sense for gold to be extracted at a rate that is profitable and reduces the price of gold over time. Time will tell when this becomes a good business venture and whether individuals or companies act rationally.

What should be obvious is that a ready supply/reserve of gold in space would prevent gold from spiking in price by the magnitude it did in the past, as it would certainly be worth getting an amount of gold from space whenever prices increases enough to make it profitable.

I would not expect companies to extract so much gold that the price goes to zero, but there is a rational case for gold not to have a real return if the cost to obtain it becomes cheaper over time while the extractable supply is very large. When someone suggest a large supply of gold they are not suggesting all of it should be extracted at once. That would be an irrational base case. The difference between space and the ground is that the cost of extracting from space can only decrease over time, which is not the case for extracting from the ground.
The thing about gold as a commodity is that very little of it is consumed (net of recycling).

Gold inventories are much larger than gold production. 100s of times? Of which only a percentage is available for trade at any one time.

So the orthodox rules of supply & demand don't necessarily apply. There's an almost infinite supply out there - at some theoretically high enough price.
The rules of supply and demand still apply. That is how buy/sell prices are set.

If countries do not want to buy and they do not want to sell what they have in storage they do not contribute to the price other than through investors speculating on what they might do in the future.

Just like stocks it is the people actively trading gold that determine price.
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nisiprius
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Re: What is going on with Gold price?

Post by nisiprius »

The elephant in the room is 1915-1920.

The highest inflation in the history of the CPI occurred while the United States was on the gold standard. The CPI doubled in five years.

The United States was effectively using gold as money. The inflation of 1915-1920 inflation can't be blamed on a central bank "printing money," because the amount they could print was, at that time, restricted by the gold supply.

I can't agree that nothing before 1971 counts, and I don't accept the argument that it wasn't really "inflation" (even though a dollar still bought just as much gold as before).
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Re: What is going on with Gold price?

Post by rockstar »

Gold is really like a 20+ year holding period, whereas equities you know you’ll at least break even in 10 years.
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firebirdparts
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Re: What is going on with Gold price?

Post by firebirdparts »

I bet that has had an effect on it.

Here's a decent look at gold pre-Ugandan-announcement "in one chart"
https://www.visualcapitalist.com/sp/cha ... the-world/

Obviously it's pretty hard to "discover" 31 million tons of something in the ground, but they sent out geological surveyors throughout the country and tried to estimate the dispersed findings somehow. This is about equal to all the known gold in the world, mined + unmined. Hopefully they can do some good with it all. Plenty of opportunity there.
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Tanelorn
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Re: What is going on with Gold price?

Post by Tanelorn »

This sums up most of the reasons for gold price movements, just pick the appropriate market conditions ;)

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TomatoTomahto
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Re: What is going on with Gold price?

Post by TomatoTomahto »

I’m not moving, so don’t need gold. viewtopic.php?t=381277
I get the FI part but not the RE part of FIRE.
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Re: What is going on with Gold price?

Post by Logan Roy »

JayB wrote: Wed Jul 06, 2022 3:31 am The US dollar has recently climbed in strength/value relative to other currencies, probably largely due to the Fed's interest rate increases. Gold usually does better when the dollar is relatively weak. Also, gold traditionally does better when short term interest rates are low and the opportunity cost is low (i.e., there aren't good safe alternatives for earning decent short-term returns). So with short-term rates currently going up, gold has increased competition. Also, inflation expectations are moderating somewhat (as evidenced by declining TIP/Treasury breakeven rates) as the prospects of recession increase, so there is perceived to be less urgency to hold gold as an inflation hedge going forward.
As a UK investor, this is how it is for us. Gold's actually been a great thing to have in recent years. But dollar's also been good, due to rate hike expectations. And if we're measuring gold in dollars, it obscures how strong gold's been compared to many other currencies and asset classes.

My take on gold is it's a better store of value than something we can create an unlimited amount of. And it has these useful inverse relationships with things like USD, bank stocks and stock market prices.
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Re: What is going on with Gold price?

Post by exodusNH »

Logan Roy wrote: Wed Jul 06, 2022 1:30 pm
JayB wrote: Wed Jul 06, 2022 3:31 am The US dollar has recently climbed in strength/value relative to other currencies, probably largely due to the Fed's interest rate increases. Gold usually does better when the dollar is relatively weak. Also, gold traditionally does better when short term interest rates are low and the opportunity cost is low (i.e., there aren't good safe alternatives for earning decent short-term returns). So with short-term rates currently going up, gold has increased competition. Also, inflation expectations are moderating somewhat (as evidenced by declining TIP/Treasury breakeven rates) as the prospects of recession increase, so there is perceived to be less urgency to hold gold as an inflation hedge going forward.
As a UK investor, this is how it is for us. Gold's actually been a great thing to have in recent years. But dollar's also been good, due to rate hike expectations. And if we're measuring gold in dollars, it obscures how strong gold's been compared to many other currencies and asset classes.

My take on gold is it's a better store of value than something we can create an unlimited amount of. And it has these useful inverse relationships with things like USD, bank stocks and stock market prices.
Gold is uncorrelated, not negatively correlated. There's a big difference, as everyone who currently holds bonds has learned.
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Re: What is going on with Gold price?

Post by Logan Roy »

exodusNH wrote: Wed Jul 06, 2022 1:34 pm
Logan Roy wrote: Wed Jul 06, 2022 1:30 pm
JayB wrote: Wed Jul 06, 2022 3:31 am The US dollar has recently climbed in strength/value relative to other currencies, probably largely due to the Fed's interest rate increases. Gold usually does better when the dollar is relatively weak. Also, gold traditionally does better when short term interest rates are low and the opportunity cost is low (i.e., there aren't good safe alternatives for earning decent short-term returns). So with short-term rates currently going up, gold has increased competition. Also, inflation expectations are moderating somewhat (as evidenced by declining TIP/Treasury breakeven rates) as the prospects of recession increase, so there is perceived to be less urgency to hold gold as an inflation hedge going forward.
As a UK investor, this is how it is for us. Gold's actually been a great thing to have in recent years. But dollar's also been good, due to rate hike expectations. And if we're measuring gold in dollars, it obscures how strong gold's been compared to many other currencies and asset classes.

My take on gold is it's a better store of value than something we can create an unlimited amount of. And it has these useful inverse relationships with things like USD, bank stocks and stock market prices.
Gold is uncorrelated, not negatively correlated. There's a big difference, as everyone who currently holds bonds has learned.
Well I believe we would have to say gold has a negative correlation with the dollar, as gold is typically measured in dollars.

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By extension, gold should be expected to have a negative correlation with financials, because dollar strength usually indicates rates rising, which improves the carry trade, and impacts the opportunity cost of gold. With TSM, I think we can say it's situationally negative.

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Re: What is going on with Gold price?

Post by Booglie »

artking99 wrote: Tue Jul 05, 2022 5:13 pm Does anyone notice that Gold price has been flat YTD despite the crashing of stock and bond markets and high inflation? The question is WHY?? Where is the anticipated "inflation hedging"? Has Gold price been manipulated?
Something that should always be added: the price of PAPER gold (i.e, gold ETFs) is different from the price of physical gold. This means that it can not only be slightly off when compared to the real thing, but it can also move completely differently.

In general, the price of physical gold is less volatile, both up and down.
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