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On gold prices and hysteria

Ah it was just a few months ago when the pundits were all screaming
$2000/oz gold, $4000/oz platinum, $50/oz silver. It’s going to just
keep going up and up and up!! Ha! $700 and falling for gold, $775 and
falling for platinum, $9 and falling for silver. Where did all those
hysteria driven people go? What are they predicting now? Perhaps
$35/oz gold again???

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC

Friday’s gold London PM fix was $712.50 and at around 11 AM eastern
time platinum was trading at $767. Wow. Platinum trading at just
barely over $50 of gold? If you really want to know how much fear
there is in the market, there’s your proof. Gold should be selling
for under $400 and maybe even below $375. Even with hedge funds and
mutual funds selling gold to meet daily cash needs, gold is still
maintaining a pretty high value.

I’m glad that white is so popular. Just about everything I’ve done
lately has been in platinum, the price just seems to good to be
true. I think if the fear factor gets resolved, gold will plummet
again and then platinum and palladium won’t look quite as cheap. From
what I’ve read, platinum group metals will keep falling as long as
auto manufacturing is in trouble. Fortunately I sold my platinum
scrap when it was still well over $1,000. I’m trying to decide if I
should send in my gold, even though I really don’t have a lot of it
right now.

Just stunned,

The markets are irrational. Hang tough. I’ll keep buying silver at
anything less than $20/oz and gold at anything less than $800.

If I guess right, I made a deal, but if not I just have to not sell
low. At least these metals have an intrinsic value…unlike our


Market timing is tough stuff. Which is why cost averaging is
attractive. Had you thought 1200 platinum was terrific and loaded up,
well you know what you’d feel like now. But if you buy as you need
you’d see your cost go doneon each new order and overall you’d be in
a better situation. Your overall cost on a descending market would be
higher than if you buy only at the bottom but can you reliably
predict what the bottom is?

If one is making a line, to be completed before hitting the road,
for final pricing I’d average your cost of materials for the whole
line rather than price each piece based on the materials purchased
for THAT piece. Because you need some consistency and buyer
predictability. If costs continue down you have the option of
lowering prices or standing pat.

If one is doing one-offs on a made to order basis, you price based
on what you paid for THAT piece.

I find it puzzling that metals are tumbling during an uncertain
time. You’d expect that with people fleeing stocks they’d park their
money in gold, the traditional store of value. But like I mentioned
somewhere else this is like no other recession we’ve seen.

On gold scrap buying OTC…its starting to make me feel bad. I’m
hearing more hard luck stories.

Maybe it’s just me, but I am seeing a something really interesting in
the state of the global markets right now, and it is not what I

When the US government decided to bail out the banks with almost a
trillion dollars made of hope and change, the first thing I expected
was for the dollar to immediately decline in value. The second thing
was a small uptick in credit availability and stock prices, followed
by a steep crash.

What has happened so far seems to be that credit availability has
tightened considerably, but interest rates have not changed much,
yet. This is not to say that anyone with a sufficiently sincere
pumpkin patch can get a loan, but the loans that do go through are
still closing with decent terms, as far as I know.

The stock market has not crashed. It has declined almost 50 percent
since this time last year, but most of that decline was an
accomplished fact before the banking crisis became public knowledge.
Almost all of the losses incurred in the past six weeks has been due
to panic selling on Wall Street, since the actual values and profit
positions of the underlying companies have not changed noticeably. I
think we can expect further declines over the next month or so, and I
believe that what happens beyond November will depend on the results
of the next election more than anything else.

The most surprising thing that has happened in recent weeks is that
the US dollar has become stronger. Yes, I know that sounds
ridiculous, but the proof is in the price of gold, and the price of
the Euro in US dollars. If the dollar had devalued as I expected,
gold would be passing $1500 per ounce by now, but it has dropped
well below $700 per ounce instead. That means that the dollar can buy
more gold than before the “banking crisis,” and has therefore gained
in value. I am assured by many financial experts that the price of
gold is directly associated with the value of a currency. The fact
that one Euro peaked at around $1.80 last year, and has dropped to
about $1.25 now, also supports the rising strength of the dollar.

What all this suggests to me is that, panic aside, the US economy is
in pretty good shape to weather the current financial difficulties.
All things remaining equal, I would expect to see discretionary
spending reduced somewhat due to limited credit, but I also expect to
see stock market prices increasing again early next year due to the
end of panic and the continued profitability of American businesses.
I already saw one newspaper article proclaiming that housing sales
were at an all-time high last month. That alone is not quite a
promise of happy days being here again, but the news isn’t all bad,

For what it is worth,

Gems Evermore

Market timing is tough stuff. Which is why cost averaging is

If you are finding Gold and Platinum prices intresting… check out
Rhodium prices. In june of this year rhodium was selling for
$10,010.00 a ounce. August $6150.00, September $4330.00 and on
October 21/2008 it bottomed at $1610.00 a ounce. In conjunction with
the Rhodium coversation going on here at Orchid, this is the best
time in (3) three years to buy Rohidum plating solution.

Happy Plating
Bruce Burgess

Ah it was just a few months ago when the pundits were all
screaming $2000/oz gold, $4000/oz platinum, $50/oz silver. It's
going to just keep going up and up and up!! Ha! 

Do not fall into the typically American straight-line-thinking
trap-- “if it is going up, it will always go up. If it is going
down, it will always go down!” It is going down now, no telling
about tomorrow. Seriously, no matter what anyone claims, no one has
any idea at all.

Please note, I am personally making NO claims either-- Lord knows I
have no idea! But I do feel sure that the fact that it is dropping
tells us nothing about whether those predicters were right or wrong
except that it is not happening right now.


Where did all those hysteria driven people go? What are they
predicting now? Perhaps $35/oz gold again??? 

We wish! Even $350 gold would be wonderful. The price of gold is
hinged to the value of the US dollar against other currencies. It was
rising when the dollar was falling, but now it looks like the US is
not the only one holding the bag-- so is the rest of the world. That
makes their currency loose value against ours and the dollar go up.
Now, you don’t need as much dollar to buy the same amount of gold.
Price goes down.


I find it puzzling that metals are tumbling during an uncertain
time. You'd expect that with people fleeing stocks they'd park
their money in gold, the traditional store of value. 

I’m no financial wizard… Here’s my understanding of it,
gleaned from various sources.

Smart money is sitting tight, even smarter money is getting ready to
swoop in and buy, which is already happening in housing. People who
are afraid or just otherwise in distress are taking cash positions -
$100 bills in the mattress, and avoiding all volatility, of which
commodities are notorious. Some of Peter Lynch’s best advise - Don’t
watch your stocks. they’ll go up, they’ll go down, it will drive you
nuts. Since we are “investors”, ours is the long haul, and daily
gyrations don’t mean anything. That doesn’t directly apply to gold,
but it indirectly does. The fact that gold dips on a day means it’s
a good time to buy. That it dips on a day is not reason to panic and
read global meltdown into it - it goes up, it goes down, we are
investors, not speculators. That our stock of platinum is now worth
$2500 instead of the $5000 it was is of no meaning to us - it’s
still 3 ounces of platinum.

If you want to be in the jewelry business, then metals are raw
materials. If you want to get into the commodities market, then may
God have mercy on your soul… It’s not that I’m naive to the
financial forces, it’s that I’m in the jewelry business, not the
commodities business. Every morning a guy I know wants every detail
of metals - “Up $4, wow, it must be _____” Drives him nuts, and he
just can’t grasp that it takes $500K worth of metal to make money on
a $4 rise - he imagines himself “a player” with his 10 ounces…

We (The Donivan’s) have taken some pretty good paper losses, but we
don’t care. They are investments, we don’t need them to live, and
we’ll just let them recover along with the economy. Getting towards
a pretty good time to buy some more, in fact…Investment is wise.
Speculation is what got us into this mess.

One of the main reasons gold price is soft right now is due to large
quantities being sold on Comex by the large investors, hedge and
various other funds to cover their losses in the stock markets. Most
larger funds and investors keep a certain amount of their portfolio
in precious metals as a form of insurance, to cover their margins, in
case times like these occurr. PM is always a fast source of cash in
slippery markets, easily portable, never gone to zero, etc. But most
of the gold being sold right now is all ‘paper’ gold-not bullion.
When the big guys run out of their forced-sale ‘paper’ gold, then the
likelyhood of a bullish PM market will begin anew. Its all the paper
gold contracts- derivatives, etc, that are forcing price down even
though demand for bullion has pretty well exceeded supply.

He who already owns quantities of physical bullion will probably do
well in the next 6-18 months. But its darn near impossible to buy
any physical bullion -coins, bars, etc- right now. US mint has
temporarily suspended Eagle production, yet demand for bullion at
dealers has simply overwhelmed them. I have 1/2 dz people walk into
my shop every week right now asking if I know where to buy any gold
coins. Some of the big coin dealers are still taking bullion orders,
but actual delivery is an entirely different question.

Also due to currency changes, gold is very, very high in India right
now( I believe around 12,000 rupees), and India happens to be the
single largest importer of gold in the world right now. An annual
gold buying holiday begins tomorrow in India but reports are showing
that most dealers are staying to the sidelines since price is so high
right now for them.

Interestingly, scrap gold purchasing had really flattened out to
limited activity for a month or so, but has really jumped
dramatically during the last 7-10 days, now that market AND scrape
rate have dropped considerably. I was paying quite a bit more 3 -6
weeks ago compared to now. Yet the general public seems to be more
interested in selling at a lower market than they were during a
higher market. Maybe desperate now.

Further to my last post… just a small prediction… Gold price in
US$ will go up again as the ZAR recovers from the latest us economy
shock… (and should there be any further deterioration in the ZAR,
it will go down…) The above is just my opinion, don’t take it as
informed inside info please!!!

Further to diamondeddy’s reply, I am sitting in South africa and the
gold price in rand is still 15% higher today than it was six months
to a year ago! (this interestingly enough, is approx. aout current
inflation rate…) watching the trends on a daily basis shows that as
our currency (rand) falls against the US dollar, the gold price seems
mostly to drop proportionately keeping the gold price in rand terms
fairly constant on a day to day basis with a general trend of the
gold price STEADILY increasing in rand terms…There are obviously
the occasional drastic fluctuation with panic buying or selling but
it seems to be a consistant reflection of the true gold price rather
than a stock market reflection…Just my 2c…