Gold down, treasuries up in the sovereign debt troubles... universal store of value?

[halik]

I know this place has a ton of gold nuts, so i figured I'd ask the question:

How come the dollar is appreciating, gold is down and treasuries are gaining? If gold is the universal store of value and the safest place to put your money into, why are people putting it into "risky" treasuries?

 

[RyanPaulShaffer]

I know this place has a ton of gold nuts, so i figured I'd ask the question:

How come the dollar is appreciating, gold is down and treasuries are gaining? If gold is the universal store of value and the safest place to put your money into, why are people putting it into "risky" treasuries?

Gold could skyrocket as high as $9000 a pound! BUY GOLD NOW!

Sorry, I couldn't resist.

 

[StageLeft]

Bulletin! 9:15 AM, the US mint releases 50,000 un-circulated 1 ounce Buffalo Gold coins!

Get your Buffalo Gold-plated coin for $19.95. Maximum 5 per customer! These coins are plated with .9999--that's four 9's--percent pure. With gold prices on the rise secure your wealth for you and your family with these authentic Buffalo Gold-plated replica coins!

EDIT: Found the ad: https://www.50dollarbuffalo.com/?mid=663752#order

Anyway to answer OP I suppose gold going in the opposite direction from the dollar is because people are scared of Europe and, as always, severe deviations from the trend must be corrected. The dollar has lost far too much value recently. I know nothing (almost) but even knew that a while ago and now it's happening.

 

[RyanPaulShaffer]

Bulletin! 9:15 AM, the US mint releases 50,000 un-circulated 1 ounce Buffalo Gold coins!

Get your Buffalo Gold-plated coin for $19.95. Maximum 5 per customer! These coins are plated with .9999--that's four 9's--percent pure. With gold prices on the rise secure your wealth for you and your family with these authentic Buffalo Gold-plated replica coins!

Sweet! What's the promo code?!

As for the OP, the gold standard is not the safest or best way to back a currency. It is simply one of many, and there are positives and negatives to a gold standard, just like any other method.

 

[juiio]

Gold could skyrocket as high as $9000 a pound! BUY GOLD NOW!

Sorry, I couldn't resist.

$9000 a pound would a huge discount off today's prices

 

[RyanPaulShaffer]

$9000 a pound would a huge discount off today's prices

Really? Then why are Glenn Beck and Neal Boortz telling me to sell it for the "amazing price" of $100 a pound?

 

[BoberFett]

I know this place has a ton of gold nuts, so i figured I'd ask the question:

How come the dollar is appreciating, gold is down and treasuries are gaining? If gold is the universal store of value and the safest place to put your money into, why are people putting it into "risky" treasuries?

Are you acting stupid intentionally? Does gold always go down? Do currencies always go up? Do you always advocate a buy high, sell low strategy?

 

[juiio]

Regarding the original question...

- There are Gold is still coupled with equities. Eventually they will decouple and people will stop viewing gold as a risk asset.
- Even gold bugs will sell gold short term if they see decent enough drops in prices coming, or will buy inflato bucks for the short-term if they think they can turn a profit on them.
- Depending on what you believe, naked gold short contracts at COMEX and LBMA
- Probably other things that I didn't pick up on while staying at a Holiday Inn Express last night.

 

[juiio]

Really? Then why are Glenn Beck and Neal Boortz telling me to sell it for the "amazing price" of $100 a pound?

I haven't hear anything they've said, but I'm guessing they said ounce not pound

 

[RyanPaulShaffer]

I haven't hear anything they've said, but I'm guessing they said ounce not pound

I don't know what exactly they said...I was just poking fun at all the BUY GOLD! ads on talk radio down here every commercial break. I know that Glenn is big on BUY GOLD! promos during his show. The few times I've listened to it, he invariably did the BUY GOLD! plug at some point. Promo code GLENN!

 

[Blackjack200]

Are you acting stupid intentionally? Does gold always go down? Do currencies always go up? Do you always advocate a buy high, sell low strategy?

Strictly speaking, this is true. Just because gold moves in one direction or the dollar in another in the short term doesn't mean much. But it does bring up an interesting point. For all the doom and gloom around here, treasury yields have remained narrow. Clearly the professional money managers have a different view of the creditworthiness of this country than the policical pundits do.

Now, that being said, I'll add my personal opinion that if Treasury prices ever do fall, it won't be gradual at all. The first sign that insiders have begun to lose faith in the USG will spur a head for the exits that could destroy the world economy. We're talking Germany circa 1930 on a worldwide scale.

In that situation, gold is probably one of the few things that wouldn't lose value. Of course at that point there will probably be rioting in the streets, so maybe it's better to invest in firearms and body armor if you think this is a real possability.

 

[CallMeJoe]

In that situation, gold is probably one of the few things that wouldn't lose value. Of course at that point there will probably be rioting in the streets, so maybe it's better to invest in firearms and body armor if you think this is a real possability.

In the ultimate SHTF situation, copper-jacketed lead will appreciate faster than any other real asset...

 

[Moonbeam]

Bulletin! 9:15 AM, the US mint releases 50,000 un-circulated 1 ounce Buffalo Gold coins!

Get your Buffalo Gold-plated coin for $19.95. Maximum 5 per customer! These coins are plated with .9999--that's four 9's--percent pure. With gold prices on the rise secure your wealth for you and your family with these authentic Buffalo Gold-plated replica coins!

EDIT: Found the ad: https://www.50dollarbuffalo.com/?mid=663752#order

Anyway to answer OP I suppose gold going in the opposite direction from the dollar is because people are scared of Europe and, as always, severe deviations from the trend must be corrected. The dollar has lost far too much value recently. I know nothing (almost) but even knew that a while ago and now it's happening.

Moonbeam-proofing your posts, I see.

 

[wwswimming]

4 tools the US has to prop up FRN-brand toilet paper (FRN = Federal Reserve Note) -

* currency swaps. US trades England $50 Billion $US for 30 Billion Pounds (or whatever the exchange rate is) ... etc.

when the currency swap expires, the reverse swap occurs. but the whole point was - these swaps were to help other countries' economies. so what is the chance they might have ... spent a little bit ?

long story short, all of the currency swaps created in 2008 at the height of the credit crisis expired Feb. 01 - this Monday.

* stock market decline.

* renewed Euro credit crisis fears.

* raising interest rates.

well, we're 3 for 4 this week.

keep in mind that China has about $1 Trillion in FRN's. which they know are toilet paper ... scratchy toilet paper. last year it caused quite a brouhaha when India bought a mere $7 billion worth of gold (200 tons).

on a day when gold falls to $1060, what do you think the Chinese are doing with their FRN's ?

side note - i think the Fed will be making an announcement soon about printing more money, like the one they made last year, March 18. with a $1.4+ Trillion 2010 deficit & $2+ Trillion in debt to re-finance ... that's a lot of borrowing for one year.

 

[halik]

Are you acting stupid intentionally? Does gold always go down? Do currencies always go up? Do you always advocate a buy high, sell low strategy?

Yes, i have absolutely no idea what i'm talking about.

I only find it interesting that flight to safety translates to flight to U.S. treasuries rather than that precious yellow metal.

 

[halik]

4 tools the US has to prop up FRN-brand toilet paper (FRN = Federal Reserve Note) -

* currency swaps. US trades England $50 Billion $US for 30 Billion Pounds (or whatever the exchange rate is) ... etc.

when the currency swap expires, the reverse swap occurs. but the whole point was - these swaps were to help other countries' economies. so what is the chance they might have ... spent a little bit ?

long story short, all of the currency swaps created in 2008 at the height of the credit crisis expired Feb. 01 - this Monday.

* stock market decline.

* renewed Euro credit crisis fears.

* raising interest rates.

well, we're 3 for 4 this week.

keep in mind that China has about $1 Trillion in FRN's. which they know are toilet paper ... scratchy toilet paper. last year it caused quite a brouhaha when India bought a mere $7 billion worth of gold (200 tons).

on a day when gold falls to $1060, what do you think the Chinese are doing with their FRN's ?

side note - i think the Fed will be making an announcement soon about printing more money, like the one they made last year, March 18. with a $1.4+ Trillion 2010 deficit & $2+ Trillion in debt to re-finance ... that's a lot of borrowing for one year.

WAT?

Stock market is a big conspiracy by FED to take our money? Euro sovereign debt fears are created by the US gov't?

Edit to address some of the FX swap nonsense:

Swaps by the virtue of what they do CANNOT impact FX rates.

Here's some knowledge for ya: NPV of swap at initiation is zero. That is, both legs of the swap are worth the same exact amount of money and you price the swap so the counterparty is neutral between entering the swap and buying/selling forward themselves. The notion that the FED uses swaps for FX maintenance is ridiculous, wrong and shows a complete lack of understanding of the instrument.

 

[StageLeft]

Moonbeam-proofing your posts, I see.

Is it working? If I make grand predictions and damning statements with these small caveats do I get a pass?

 

[BoberFett]

Yes, i have absolutely no idea what i'm talking about.

I only find it interesting that flight to safety translates to flight to U.S. treasuries rather than that precious yellow metal.

The stock market is down 30% from it's peak too. I guess nobody should ever put money into that either?

 

[halik]

The stock market is down 30% from it's peak too. I guess nobody should ever put money into that either?

I don't think anyone has made the argument that the stock market is the best store of value / safest place to protect your money...

 

[JS80]

Yes, i have absolutely no idea what i'm talking about.

I only find it interesting that flight to safety translates to flight to U.S. treasuries rather than that precious yellow metal.

Cmon man, why are you trolling? Gold bugs don't claim gold is for flying to safety. Gold bugs only claim it's a fight against hyperinflation. I know you know this.

For the rest of you, to answer his question, Dollar is strengthening against Euro(trash) so gold is going down.

 

[BoberFett]

Cmon man, why are you trolling? Gold bugs don't claim gold is for flying to safety. Gold bugs only claim it's a fight against hyperinflation. I know you know this.

For the rest of you, to answer his question, Dollar is strengthening against Euro(trash) so gold is going down.

Maybe those people holding Euros wish they had gold instead.

 

[dmcowen674]

Buy into a refinery

There's tons of oil but all the refineries have shut down to levels not seen in over 30 years.

There won't be any gas, it will be $10 a gallon and lines around the block at every empty gas station.

Bend over baby and no lube for you.

 

[bfdd]

Gold could skyrocket as high as $9000 a pound! BUY GOLD NOW!

Sorry, I couldn't resist.

9000 a pound? it's already worth WAY more than that

btw gold really hasn't gone down... it's been on a rather steady incline over the last few years. watching a few days worth of chart movement really isn't good enough unless you're doing some day trading. look at the year, 5 year and 10 year charts.

 

[Moonbeam]

Is it working? If I make grand predictions and damning statements with these small caveats do I get a pass?

No, but you are making significant progress.

 

[halik]

Cmon man, why are you trolling? Gold bugs don't claim gold is for flying to safety. Gold bugs only claim it's a fight against hyperinflation. I know you know this.

For the rest of you, to answer his question, Dollar is strengthening against Euro(trash) so gold is going down.

That is NOT how they advertise or sell gold investment to common folk. Just about all the ads on cnbc bank on the "universal store of value" angle ... I watch CNBC all day long

You also get the "world is collapsing" angle from the nutjobs that claim that fiat money is useless and that gold is the only way to preserve your wealth.