The Blog Forum

Will Gold Break Through The Psychological Benchmark?

Moderator — Wed, 16 Sep 2009 13:56:54 +0000

Today the gold price reached a top of $1005/oz. The last high that was reached was in March of 09 and the instance preceding that was in March 08. The gold price has been trending upwards in what seems like a continuation pattern since March with support points at $880/oz in April and $930/oz in June. If the price clears the $1033/oz mark then it is anyone’s guess from where it will go to next. But a triple top could be forming with the fall in gold prices for the immediate term to below $900/oz.

If inflation is an indicator where the price will go there is enough reason to believe that gold will fall for the immediate term, as inflation currently stands at -1.89%, to at least $900/oz before another run up. Many have indicated that the gold buying season in India that the biggest gold consumer in the world is entering into, may push the price past this psychological barrier but recent reports have proven that with the high prices imports of gold have fallen by almost 31% and buyers are reverting to domestic scrap gold or holding out for cheaper prices.

This however this will not be the long term trend. As bailout funds starts to trickle down the markets, this excess cash will counter the deflationary effects of the slow down due to falling prices. When the economy does start to improve relative to where it has been, inflation will start to pick up aided by low interest rates. As one market commentator said on ABC a few weeks ago “there is too much money floating around at the moment”. This in turn will cause the increase in gold prices for the longer term. Many are forecasting that gold prices will hit at least 2,000 per ounce.

For the long term bulls of gold it may be prudent to keep in mind that Russia and China have been calling for an international currency to replace the US dollar. The head of China’s foreign exchange agency stated that China’s gold reserves had risen 75.67% to 1,054 tons since 2003. This is in addition to China following India and the world second largest buyer of gold with domestic demand increasing to 176% to 25 tons.

Gold will break through the psychological benchmark but not for the immediate future. Federal Reserve Chairman Ben Bernanke has indicated that the stimulus has not yet been spent or added to the economy. The M2 money supply has not yet shown dramatic increase in the economy but rest assured it will.

The possible explanation for the current price of gold testing its previous highs would be due to an anticipation of inflation or traders/speculators driving up prices. As it stands the fundamentals of the global economy would not support the rise of gold above the $1000/oz mark but those who have been patient could be well rewarded.

The moderator/writer is not a financial adviser and does not offer financial or investment advice. Materiel published on this site is solely for informational purposes and should not be misconstrued as solicitation to buy or sell any financial products. Please seek independent financial advice that addresses your specific needs and situation.

The Difference Between Gambling And Investing!

Moderator — Thu, 30 Jul 2009 12:38:16 +0000

Readers this has been a point of contention for me for many years. At around 18 years of age when I made my first foray in to the exciting world of investing to just over a year ago, I have constantly been asked but have never been able to come to a conclusion about the difference between gambling and investing. Many people have asked me and I have replied with something to the effect that investing is buying a business which is not gambling, gambling was chance and they would say well investing is also chance because you never know the end result; an explanation I knew to fall short of what the true difference was

About a year ago, I attended a seminar. I usually try to do this to update myself on what mainstream investors were engaged in or to expose myself to the various investment styles or methodology out there. During the course of the seminar that night. My long held question was answered. I was a very great moment. Here it is:

The difference between investing and gambling is productivity!!

Did you get that? It is productivity. A answer that I knew through analysis but never understood through articulation. It is productivity. I want to share this with my readers. Let me explain. …

When you invest you are buying a company, whether it be corporate bonds, shares or even commodities. Unless you are a trader or speculator you would probably be classified as an investor. When I buy a company it means that I have done my research into that company. After doing this I would come to a conclusion if the company in question would be good value for money.

If, for arguments sake, I figured that it was a great company then I would invest. In doing this, this is the statement I would be making. I would be saying Mr CEO I think you’re doing a great job, I think you have great talent around you, you have the ability, you have the courage(even), you have the experience, you have great foresight to bring forward the team and company you head. Aside from the managerial aspect, I may also look at the fundamentals inherent to the company and believe that its low debt, great assets and high profit margins would provide greater value, or look at the industry as a whole and view the companies position to capitalise on opportunities to grow and expand. This, readers is productivity. I am investing in productivity. I would have invested time and effort to invest in someone else’s time and effort and this would be productive. Gambling without mentioning the obvious reasons is totally different to investing.

A New Global Currency

Moderator — Wed, 01 Jul 2009 10:32:03 +0000

For many weeks now in my navigation through the articles and commentaries concerning economics and international politics I have come across a trend. A consistent call for a new currency to be adopted for the use of global trade and exchange. It has been a call mainly from China and Russia and India as they themselves try to manage the effects of the financial crisis on their own respective economies.

The dollar is going to decline as I have mentioned in the past. From China’s point of view this is rarely surprising as they hold more than $1.95 trillion of US currency and as the US continues to print more money under the guise of quantitative easing this is going to continue to devalue the paper and debt holdings of China as well as for Japan. Please view the video below.

“To avoid the inherent deficiencies of using sovereign currencies for reserves, there’s a need to create an international reserve currency that’s delinked from sovereign nations,” the People’s Bank of China. Proposal between Brazil and China have been initiated to move away from the dollar and use yuan and reais to settle trade instead. There are also indications that China is purchasing more gold and commodities to push it currency to international status or reserve currency. I personally don’t see this happening but what I do see as more plausible is some sort of currency established by the IMF like the Special Drawing Rights (SDR) which is not vulnerable to the fluctuations and economic policy of any single nation.

It is only a matter of time till the changes come in. Watch the news and study the developments. One could see the preeminence of a currency that is not reliant on one economy and a currency that is not sovereign that will become dominant and assume its role internationally.

What Could Gold Do Next?

Moderator — Tue, 23 Jun 2009 14:16:01 +0000

As an keen observer of the gold markets, I believe that gold prices will fall in the near to medium term. Why is this important one may ask? Well, one reason is gold is a good reflection of inflation which affect our lives and the prices of good and services rendered. It is also a reflection of the psychology and thought process the buyers of gold at the moment, whether they be the Chinese government or individuals purchasing huge quantities of gold as evidenced by the sell out demand for gold coins and bullion by gold mints from the US, Canada, South Africa and Australia.

One of the reasons I believe this that gold prices will decline quite drastically, and you may soon hear this in the news, is that from a technical point of view (technical here refers to a way of trading the markets and in this case gold) there have been many resistance points (resistance points refer to the often psychological prices/barriers that an asset may seem hard to break past i.e. if gold was trading at $900-$980 an ounce the psychological barrier would be 1000) established around the $1000 per ounce mark.

As an investor however this will not be the trend long term as the excess bailout fund starts to flood the markets. I believe at the moment this excess cash will counter the deflationary effects of the slow down due to falling prices, locked up credit from banks, etc but when the economy does start to improve relative to where it has been, you will see inflation start to pick up aided by low interest rates. As one market commentator said on ABC a few weeks ago “there is too much money floating around at the moment”. This in turn will cause the increase in gold prices for the longer term. Many including are forecasting that gold prices will hit at least 2,000 per ounce. If this were to be the case it could happen within the next 2-4 years.

How does this affect me? Well, indirectly this could mean that prices generally will start increasing making daily living a lot dearer. If you are not the bread winner of the house you may like to ask the person who buys the daily groceries and they will tell you that it now cost a lot more just to maintain your family’s standard of living. The problem is if prices rise and your yearly income does not then family budgets will be affected.

So to cap it of I see gold prices dropping at most to $650 per ounce within the short term and as the economy picks I believe you could then see a rise in gold prices. Many would say that as it picks up that money will go back into the stock market as it has done historically because when the stock market does well people tend to flock to it for its greater returns and dividends, but I think it will be different because the stock market this time will be rising due to the excess cash in the economy not due to actual growth in GDP.

A Brief Hiatus

Moderator — Sun, 21 Jun 2009 05:08:18 +0000

Dear readers. As you may know and can see, I have not penned any thoughts or observations to TBF recently. I apologize for any confusion this may have caused. The reason for this I believe was due to a (the reason I am not to sure is because this was a few years back) change in lifestyle and I also got into business which is going well. You may ask why now. Well a week ago I was in conversation with one of my readers, a close friend of mine who mentioned that he did recently have a look at TBF again and queried if I was going to continue with my writings. At first I said no because business and trading currency took up much of my time but having given it greater thought I managed to draw on that passion which I first had when I started this blog. I was able to revisit that ideal, that feeling again of wanting to help in some way, and contribute to the greater understanding of current events as I saw them. To express my thoughts and observations as I continued to follow international developments and affairs. Thank you Tim Y.

There have been many international developments since my last article and there are many things I have learnt over the last 2 years of which I believe I can draw from and offer my opinions. Just humble opinions I might add as I realize the more I know the less I know but I’ve started and I am picking up where I left of.

Watch this space….

Domain Change

Moderator — Thu, 25 Oct 2007 10:44:37 +0000

Hello participants, due to certain technical difficulties I have decided to transfer the website to a diffrent host. The eventual address could possibly be: theforumonline.com I will keep you posted of further developments. Thank you.

November 24th, 2007

Moderator — Mon, 15 Oct 2007 11:58:53 +0000

Here it is participants, Prime Minister John Howard has announced the date for the next election! I find myself actually excited about what the outcome will be. I am sure many issues will be brought to bear in the media, ministerial promises made, all in an effort to woo public voters.

Following from our first post I would like to open this topic again of who our next Prime Minister could be but in a diffrent light. In the following weeks I will be posting many of the issues that will surface as the election campaigns rolls on. In addition to that I would like to, as is consistent with the purpose of theblogforum, ask all of you to submit and discuss the topics and issues that matter to you as well. I hope this further inform all of you as to which coalition could be our best choice for the next 3 years.

ABC SBS

News.com.au

Google Search

On A Light Fluffy “Croissant” Note, Bonjour France!

Moderator — Sun, 09 Sep 2007 06:32:09 +0000

Croissants are made of a leavened variant of puff pastry by layering yeast dough with butter and rolling and folding a few times in succession, then rolling. Making croissants by hand requires skill and patience; a batch of croissants can take several days to complete….. This innovation, along with the croissant’s versatility and distinctive shape, has made it the best-known type of French pastry in much of the world.-Wikipedia

Well thats what Wikipedia says a croissant is like. However theblogforum is “slightly” but only slightly more concerned with events of more significance….unless the ebola virus can somehow be spread through this french delicacy….!

As all of you sports and non-sports people are aware the Rugby World Cup is here again and alot can be said about it.

State your support for your favourite team and why you think they will win. Oh by the way this is the only time I will allow participants to beat down and smash to the ground the opinions of other participants… in support of your team.

My secret, I vote all Blacks to win. I dare you to challenge me!

Who would you vote as your next Prime Minister and why?

Moderator — Sun, 19 Aug 2007 06:03:16 +0000

Who do you think will be a better statesman for our nation? Who will be able to lead us as a nation into a global world where China is emerging as an economic and eventually political and military superpower? Which administration will better embody preservation of human rights and priviliges in terms of global poverty and international refugees?

Please reply to any of the posted questions including any other policies the labor or liberal party holds that may be of concern to you. All participants are welcome to debate and rebuff the opinions of your fellow participants.

As the first topic of the blog forum, I, the Compere, welcome all! May the forum begin.