Decisions... decisions... if only Andy were here to advise us? Then again, maybe that's why the price has just slumped - he's sold his stash!

-- Y2KGardener (govegan@aloha.net), December 03, 1999

Answers

Bandwagon????

Its more like a disabled submarine....

-- Downstreamer (downstream@bigfoot.com), December 03, 1999.

Gold is being manipulated down. The reason for the latest decline is the auction of 25 tons by the Bank of England. They are selling most of thier gold in 25 ton increments every 3 months. The auction was only oversubscribed 2 to 1 this time but in September it was 8 to 1.

A mine bought 40% of the total. That tends to be a very bullish indicator for the future price. Ask yourself why a mine might buy gold instead of mine it? The answer is that it costs more to mine the gold than the current price. It also indicates that the mine has sold it's production forward as less desirable prices. This offers the mine a chance to make a profit if prices rise. Keep in mind, the mines know what the real demand for gold is.

The BOE gold sales amount to dumping and it depresses the price, the same is true of gold leasing. However, there will be no more gold leasing by the banks of the EC.

-- William R. Sullivan (wrs@wham.com), December 03, 1999.

William: How many more times will the Bank Of England have gold to sell? Won't their continuing sales depress the market for as long as they are selling each quarter?

Any idea of a time period until the price of gold starts to move up?

-- cody (cody@y2ksurvive.com), December 03, 1999.

The oversubscription figure is misleading. Bids below a certain minimum price were not included in the final count as they were in September's auction. Very interesting.

-- X (X@X.com), December 03, 1999.

Well, I've finally got to put in my two cents' worth. IF I had purchased (or did happen to purchase) some physical metal IT IS NOT BECAUSE OF ANY EXPECTATION that the price is going to triple on day "x." I might buy at $280 because over the event horizon I'm interested in I think the downside risk is lower for physical metal than for shares. Remember, no one has any money IN the stock market. It's all only perceptions of expectations. "An expectation is a premeditated resentment."

-- Magnolia (Magnooliaa@yahoo.com), December 03, 1999.

With the massive amount of new money being pumped into the economy by the Fed to head off any Y2K bank runs, a highly inflationary situation is being created for sometime in late 2000, if Y2K is trivial. Gold cannot be manipulated down in price indefinitely. If Y2K is nothing much, we're looking at major inflation next year and this will almost certainly be reflected in a dramatic rise in the price of gold.

If Y2K is a major disaster, as I think likely, the price of gold may still go up as people flee to it as a last refuge for their money. Either way, owning physical gold looks like the safest place to be for 2000.

-- cody (cody@y2ksurvive.com), December 03, 1999.

A point to consider is that should U.S. equities suffer any meaningfull decline one should also expect a decline in the US$ index. Adrop in the value of the dollar could prove to be a boon to any individual who purchased gold, gold equities or gold derivitives. In my own account I have yet to buy any. I am thinking though that late December may prove to be an opportune time

-- (iop@hotmail.com), December 03, 1999.

My opinion -- and it does not constitute investment advice -- is that a good time to buy gold will be the second week of January.

People will be fooled into thinking Y2K will be a BITR and no big deal. Some of those people who bought gold without knowing why, will dishoard their stash. Prices and premiiums for gold will go down.

In fact, one bullion dealer's web site is advising their clients that premiums on American Eagles and gold Maple Leafs will be significantly lower next month. I'll see if I can find the link.

-- DB (denelbeth@yahoo.com), December 03, 1999.

Either way, owning physical gold looks like the safest place to be for 2000.

Wrong, the safest place to be is owning physical items that people will NEED when TSHTF. This includes tools, clothing, other durable goods and supplies, and food and medicines. Pretty rocks are by no means a SAFE investment.

-- Tod (tod_berg@hotmail.com), December 03, 1999.

Tod has a good point, if Y2k turns out to be troublesome. Basic goods will be the items that are most in demand. Gold will have its place too, but as to when, I wish I could answer that one for all of us.

-- X (X@X.com), December 03, 1999.

If we are not on the gold standard, then what intrinsic value does gold have? I don't get it. Especially in a time of shortages, who cares about gold? Is it used somewhere other than in jewelry?

-- Amy Leone (leoneamy@aol.com), December 03, 1999.

FWIW, Dec Gold Futures chart analysis:

BE CAREFUL about buying gold right now. It has just broken below the low of a trading range (between $289 and $304/oz.) that it has been in for the last 24 days. Furthermore, the weekly chart just gave a major sell signal yesterday, when Dec. Gold traded below $288.80 taking out the weekly low set at the end of October.

This is potentially very bearish.

Dec. Gold is currently at 280.0, closing at the day's low (12/3/1999).

Within the next couple of trading days, I would expect a rally back up to around $290/oz., where it will be "retesting" the low of the trading range it just broke out of (which is now resistance). At that point, the price action will give some hints as to what is likely to occur:

If the price fails to re-enter the trading range, and then starts heading down again, look out below. It's possible that Gold will head all the way back down to the $255/oz level.

On the other hand, if the price moves back into the trading range (above $290) that would indicate that traders were running stops at the bottom of the range and support has held. In that case, I would wait for a breakout through the top of the range to go long - (302.80 basis Dec Gold futures)

-- Clyde (clydeblalock@hotmail.com), December 03, 1999.

Amy -- gold has industrial, particularly electronics, uses. But probably less use than jewelry. But...

A stable, sound monetary system depends on a real world commodity for its basis. Theoretically, a fiat money like the U.S. dollar, Brit pound, Swiss franc, Deutschmark, Euro could serve as a stable, sound monetary system. Except for one thing, it has to be administered honestly by TPTB. This has NEVER happened. That's why TPTB love fiat money. Fiat money has been tried over and over again all through history, and ALWAYS WITH DISASTROUS RESULTS.

Gold or other commodities (like wheat, fur pelts, or giant round stones with holes in them) are not perfect as money. I doubt even a gold bug would claim that. Just MUCH better than fiat money, because gold cannot be created with the stroke of a pen or a tap on a keyboard. With fiat money, TPTB ALWAYS end up diddling with it, to their advantage. REAL money protects the average person to some extent.

This system is going to crash. It may be in a month, six months, or six years. Such systems always have. Since TPTB are really no smarter than TPTB of 2000 or 4000 or 6000 years ago, this one will crash, also. "Sophisicated" computer technology, even if it works perfectly, will make no difference. GIGO (a computer term -- "garbage in, garbage out").

This $280 price level is another buying opportunity. However, it could go lower. After the first, if there are no major glitches, there probably will be a gold sell-off, with lower prices. OTH other hand, as things crash through January and beyond, the price could rise.

I forsee possibly lower prices next week, a rise during the last two weeks of December, possibly (not assuredly) another drop the first two weeks in January, followed by a rise -- either slow or fast. My 2c.

And don't forget silber, platinum, palladium.

-- A (A@AisA.com), December 03, 1999.

I think that A has put forth excellent reasons in support for gold in general. In terms of Y2K preparation, I think that anyone who is worried about whether the dollar price goes up or down in 1999 is completely missing the boat.

Physigal possession of small weight gold (and silver) coins should be viewed as a way to protect your wealth in uncertain times, not "grow" it. You can't put the decision to own gold and silver in the same class as to whether to invest in the stock market or not; it's like comparing apples and oranges.

As A notes, fiat money systems are inherently flawed and are subject to failure. An event like Y2K could increase the chances of this happening, with direct disruptions to electronic promises-to-pay and indirect disruptions to paper promises-to-pay. It may very well be that, in such a scenario, gold would initially be useless (as would T-bills, stock market certificates, etc.). However, as bartering became the norm for exchanging goods and services, presumably gold and silver would once again prove their worth. (E.g., the trading of 5 gallons of diesel fuel plus a 1/10th ounce gold coin for a two days of labor.)

28 days.

Y2K CANNOT BE FIXED!

-- Jack (jsprat@eld.~net), December 03, 1999.

Correction to my reply above re Gold charts:

Prices were for Feb Gold, not December.

-- Clyde (clydeblalock@hotmail.com), December 04, 1999.

It may very well be that, in such a scenario, gold would initially be useless (as would T-bills, stock market certificates, etc.). However, as bartering became the norm for exchanging goods and services, presumably gold and silver would once again prove their worth. (E.g., the trading of 5 gallons of diesel fuel plus a 1/10th ounce gold coin for a two days of labor.)

"Presumably" they would, but not necessarily, which makes gold and silver a big risk when preparing for Y2K. If people decide to start using it again, then you'll be okay, but if they don't, then all you will have is a bunch of pretty rocks while you and your family starve to death.

-- Tod (tod_berg@hotmail.com), December 04, 1999.

Gawd, Tod!! I don't think that ANYONE is advocating having gold/siver/cash IN PLACE OF food and water. But if you have a choice between 20 years of stored food plus gold, OR 23 years of stored food, it would seem prudent to have both food and gold.

Diversify, man! It gives you options!!

-- King of Spain (madrid@aol.cum), December 04, 1999.

Gawd, Tod!! I don't think that ANYONE is advocating having gold/siver/ cash IN PLACE OF food and water. But if you have a choice between 20 years of stored food plus gold, OR 23 years of stored food, it would seem prudent to have both food and gold.

No, it would be prudent to have 23 years of stored food. If the disruption lasts for 21 years and you have only 20 years of stored food, then you will die.

Diversify, man! It gives you options!!

Yes, it gives you the option to die of starvation surrounded by some pretty rocks.

-- (tod_berg@hotmail.com), December 05, 1999.