posted on Apr, 7 2009 @ 02:19 AM
Hello...new to posting, though have been reading a long time and finally joined. Have been impressed by the diversity and knowledge on here by so
My take on the current 'drop' in gold is that it should be welcomed, and taken for what it is - a buying opportunity. Anyone in the business of
selling or buying gold, however, knows the golden rule of not announcing your intentions (particularly if you are trading in large portions, such as
403 tonnes!) of buying or selling.
I wouldn't be surprised that in fact the IMF (or more likely one of its cronies) is wanting to buy big, not sell. Or, the closed-door deals behind
the scenes at the G20 is that one or two countries or organizations are in the market big-time for gold right now, so what better way to sweeten the
deal for them (which is often part of negotiations) and get the most for your fiat than a lower gold price.
How do you do this? Announce a flood of gold on to the market. Attempt to depress the price by all means, in order to get a good entry point. If the
IMF truly wanted to get top dollar for their gold, why would they announce a huge sale months beforehand which logic dictates will bring the price
down BEFORE they sell?
As for anyone thinking gold, in this environment, is going to tank below $400, that is probably the most absurb thing I have heard in a while. First,
there is huge pent-up demand for gold from India, which stopped buying in the $920+ region. From recent market movements though, Indians are willing
to get back in in the $800-850 range...so look for a move up in gold in the next day or two.
Second, as others have said, gold has a proven historical record over thousands of years as being a currency, and this will remain. It is scarce,
takes significant cost and effort to attain/produce, and currently the production cost for each ounce of gold is around $500-680, moreso the upper
range according to most analysts. If gold drops to even this much, it will put many producers around the world out of business; less supply means the
prices will rise.
Third, every central bank holds gold, and central bank sales over the past 8 years have all but dried up with each passing year - so much so the past
year or two they were ridiculously low, if not non-existent. If those big holders of gold 'know' gold is currently over-valued or topping, they'd
be chomping at the bit to get out at the top of the market. But this is not the case, they are holding, as they know what lies ahead.
Fourth, yes, China does want to increase its gold reserves, but any claims as to wanting to buy "4000tonnes" etc have proven to be false, mere
speculation and Chinese whispers emenating from a dodgy newspaper article many months ago. There is no way in the world China will remotely admit to
wanting "x" amount of tonnes, as this is going to send the spot price skyward. It is true though that if anyone is going to buy the relatively
minor 400 tonnes being sold by the IMF, China will jump at the chance as the cost is a pittance for them. So again, these IMF smoke and mirror
'intentions' of gold sales (which have been going on for years) will have little impact on the price of gold, even if it does get to market.
Make of it what you will, but if you put all your faith and trust in paper money, which can be, and now IS, printed at will and now in unprecedented
volume, go for it. That paper, interestingly, was once backed by, and redeemable for gold - but then Nixon removed the USD from the gold standard in
'71. Now it is just paper.
Or...you could have a little bit more faith in a proven currency, gold, which has been in existence for thousands of years. History has shown every
single paper currency implodes and has been ultimately destroyed. And if gold is highly sought after by the wealthy elite, by EVERY single central
bank in the world, and has always been part of the 'booty' or spoils for the victors in war...ignore obtaining some at your own peril.