Gold: Past, Present, and Future

quiettrucker12 said:And then you realize a bull market will always hunt for an excuse. It’ll find any reason to do what it was going to do anyway. There's no debate here: Federal Reserve "liquidity" will eventually flow into stocks, Commodities, and even gold, but gold isn't really an (anti)inflation tool anymore.

We're looking at a commodity bull run, which includes a gold bull within it.

Since 2001, Commodities (CRB) have grown by a factor of 1.5.

Gold, meanwhile, has shot up 6.8 times since 2000.

Sure, we'll see commodity inflation again in the next period, and it's tied to the gold bull, but gold is singing its own tune.

gold/crb:

the ratio of gold to the commodity index

The ratio of the gold price to the CRB commodity index went from 1.1 back in 2000/2001 to today's 5.8 (we even touched over 6 recently).

If what the Federal Reserve is doing right now isn't the perfect excuse for the gold bull to keep climbing, I don't know what is.

Liquidity finds a way into everything. Their biggest headache is oil prices; they couldn't care less about gold. There isn't any massive manipulation happening, just the usual occasional trader activity you see everywhere else.

If gold were being manipulated, the ratio between Commodities and gold wouldn't have swung over 5x in favor of gold over the last 12 years.

If you want to look for manipulation, look at other Commodities—specifically oil—in the coming period.

People use those tired old theories about gold being manipulated downward as a convenient excuse for when their predictions fail miserably. Watch out for those folks.

This warrants a discussion...
In my view, the fact that the price grew over 5-6 times since 2000 isn't proof that there's no manipulation; rather, it suggests gold was severely undervalued. It's a logical conclusion because from the early 80s through 2000—say, 1982 to 2000—gold was practically flat. In both 1982 and 2000, the price sat around $300. During that same window, cumulative inflation was roughly 80%, which this calculator demonstrates clearly:

http://inflationdata.com/inflation/I...alculator.aspx

During that same stretch, the Federal Reserve's monetary base expanded from $200 billion to approximately $600 billion...

http://www.google.com/url?sa=t&rct=j&...EBSQXL-jEswXQA

So, gold essentially stood still while the Dollar lost massive amounts of purchasing power. In other words, gold became incredibly cheap...
By the way, I think you make an excellent point regarding Commodities. The fact that they’ve lost so much ground against gold suggests that, given the expansion of the monetary base—which will likely trigger a true bull run in Commodities—we’ve barely scratched the surface. We are nowhere near the peak.
It is also worth noting the following statement made not by just anyone, but by Alan Greenspan Federal Reserve back in 1998:
"Central Banks should lend increasing amounts of gold if its price rises."

http://www.google.com/url?sa=t&rct=j&...nOaxq3iBtgj9VA

The very same Greenspan who stated the following in 1966:

http://www.google.com/url?sa=t&rct=j&...x34N_ToweZ_wkA

One has to wonder why anyone would bother lending gold if prices rise, effectively driving the price down in the process. Why? To me, it looks like a blatant attempt to suppress the price. It is worth reading the full text on gold leasing.
Look, I don't have hard evidence of manipulation, but plenty of indicators point toward it.
Who knows how many times the price of gold, or even other Commodities, would have surged further if capital wasn't constantly being diverted into paper assets, as described in that link about gold leasing.
The fact that gold outpaced other Commodities suggests, in my view, that gold was significantly undervalued until 2000, and even compared to Commodities. That is worth further investigation, but it doesn't change the fundamental reality regarding the price of gold.

Benjamin King2 said:Of course they aren't going to hike interest rates—that would just make the government's new borrowing way more expensive, and honestly, it would only drive their deficit even deeper into the red. 😁

The real issue with today’s banking system isn't risk—it's leverage—or if we're being honest, just straight-up greed. And before anyone tries to drag Volcker into this, let me stop you right there—he has absolutely nothing to do with it.

As one Federal Reserve official—I believe his name is Fisher—once put it:

The Federal Reserve is currently stuck in a "Hotel California" phase of monetary policy...😬

"You can check-out any time you like,
But you can never leave!" 😁

-> Honestly—the idea of the Federal Reserve actually hiking interest rates right now feels completely out of the question to me... I suspect we'll have to wait until public inflation hits some staggering 10% mark before that becomes politically viable...

Robert Vaughn10 said:This warrants a discussion...
In my view, the fact that the price grew over 5-6 times since 2000 isn't proof that there's no manipulation; rather, it suggests gold was severely undervalued. It's a logical conclusion because from the early 80s through 2000—say, 1982 to 2000—gold was practically flat. In both 1982 and 2000, the price sat around $300. During that same window, cumulative inflation was roughly 80%, which this calculator demonstrates clearly:

http://inflationdata.com/inflation/I...alculator.aspx

During that same stretch, the Federal Reserve's monetary base expanded from $200 billion to approximately $600 billion...

http://www.google.com/url?sa=t&rct=j&...EBSQXL-jEswXQA

So, gold essentially stood still while the Dollar lost massive amounts of purchasing power. In other words, gold became incredibly cheap...
By the way, I think you make an excellent point regarding Commodities. The fact that they’ve lost so much ground against gold suggests that, given the expansion of the monetary base—which will likely trigger a true bull run in Commodities—we’ve barely scratched the surface. We are nowhere near the peak.
It is also worth noting the following statement made not by just anyone, but by Alan Greenspan Federal Reserve back in 1998:
"Central Banks should lend increasing amounts of gold if its price rises."

http://www.google.com/url?sa=t&rct=j&...nOaxq3iBtgj9VA

The very same Greenspan who stated the following in 1966:

http://www.google.com/url?sa=t&rct=j&...x34N_ToweZ_wkA

One has to wonder why anyone would bother lending gold if prices rise, effectively driving the price down in the process. Why? To me, it looks like a blatant attempt to suppress the price. It is worth reading the full text on gold leasing.
Look, I don't have hard evidence of manipulation, but plenty of indicators point toward it.
Who knows how many times the price of gold, or even other Commodities, would have surged further if capital wasn't constantly being diverted into paper assets, as described in that link about gold leasing.
The fact that gold outpaced other Commodities suggests, in my view, that gold was significantly undervalued until 2000, and even compared to Commodities. That is worth further investigation, but it doesn't change the fundamental reality regarding the price of gold.

Of course it was undervalued, just like stocks will be in a few years. When a parabolic move happens—like dropping from 850 down to 300—people develop a long memory and they start to "hate" the asset. My point wasn't that the 6.8x growth against the Dollar disproves manipulation. My point is that it grew over 5 times compared to Commodities (even with gold and silver making up about 15% of the commodity index). Commodities aren't fiat; they are physical goods too. Gold has been in a massive bull market this whole time. From a trader's perspective regarding the USD, I don't see how it could grow significantly faster without the bull market ending prematurely or the economy breaking down—unless you want everyone holding paper to start complaining loudly.

Robert Vaughn10 said:This warrants a discussion...
In my view, the fact that the price grew over 5-6 times since 2000 isn't proof that there's no manipulation; rather, it suggests gold was severely undervalued. It's a logical conclusion because from the early 80s through 2000—say, 1982 to 2000—gold was practically flat. In both 1982 and 2000, the price sat around $300. During that same window, cumulative inflation was roughly 80%, which this calculator demonstrates clearly:

http://inflationdata.com/inflation/I...alculator.aspx

During that same stretch, the Federal Reserve's monetary base expanded from $200 billion to approximately $600 billion...

http://www.google.com/url?sa=t&rct=j&...EBSQXL-jEswXQA

So, gold essentially stood still while the Dollar lost massive amounts of purchasing power. In other words, gold became incredibly cheap...
By the way, I think you make an excellent point regarding Commodities. The fact that they’ve lost so much ground against gold suggests that, given the expansion of the monetary base—which will likely trigger a true bull run in Commodities—we’ve barely scratched the surface. We are nowhere near the peak.
It is also worth noting the following statement made not by just anyone, but by Alan Greenspan Federal Reserve back in 1998:
"Central Banks should lend increasing amounts of gold if its price rises."

http://www.google.com/url?sa=t&rct=j&...nOaxq3iBtgj9VA

The very same Greenspan who stated the following in 1966:

http://www.google.com/url?sa=t&rct=j&...x34N_ToweZ_wkA

One has to wonder why anyone would bother lending gold if prices rise, effectively driving the price down in the process. Why? To me, it looks like a blatant attempt to suppress the price. It is worth reading the full text on gold leasing.
Look, I don't have hard evidence of manipulation, but plenty of indicators point toward it.
Who knows how many times the price of gold, or even other Commodities, would have surged further if capital wasn't constantly being diverted into paper assets, as described in that link about gold leasing.
The fact that gold outpaced other Commodities suggests, in my view, that gold was significantly undervalued until 2000, and even compared to Commodities. That is worth further investigation, but it doesn't change the fundamental reality regarding the price of gold.

I agree on commodities. In the next cycle, crude should blast past its previous peak. The only difference this time—unlike the last "mountain climb"—is that the Dollar might actually run into some trouble, though we aren't there yet.

Andrew Barrett4 said:If you're suggesting the main difference during that era was just an endless accumulation of debt—basically pure greed—once the gold standard was ditched, then I suppose the whole point of inflation is to erode or just downplay the weight of that debt 😁. Only after things get that far out of hand do interest rates spike, or at least you see some desperate attempts to rein it in, maybe with someone stepping in like a new Volcker.
Anyway, I can respect the disagreement.

Personally, I’m leaning more toward this scenario: http://thearchdruidreport.blogspot.c...ne-hubris.html

It’s fiction—though honestly, pretty damn realistic—spanning five parts. It's a fascinating read. 🙂

dustyheron5 said:As one Federal Reserve official—I believe his name is Fisher—once put it:

The Federal Reserve is currently stuck in a "Hotel California" phase of monetary policy...😬

Even the bottom-feeders have already checked out of the hotel.

Here’s some purely hypothetical math, dropped right when everyone is feeling extra bearish on gold:

Dow Jones Index

I don't see any issue with the Dow sliding down to 7,000 while gold climbs to 8,750, giving us a 1:1.25 ratio.

Think back to the 2014/2015 era. We hit $3,700, then a correction at 0.7 brings it to $2,600, followed by a final bubble—lasting about a year and a half leading up to 2017—multiplying by 3.4 to hit $8,750.

And all without the entire world actually collapsing.

If the Dow hits 6,000, we need $7,500 to maintain that 1:1.25 ratio... $3,150 x 0.7 = $2,200, then x 3.4 = $7,500.

The real question is how low the Dow can actually go before the world effectively "ends." :-)

quiettrucker12 As requested:
Of course it was undervalued, just as stocks will be considered undervalued a few years from now. When an asset crashes from $850 down to $300, people don't forget that kind of parabolic drop easily; they develop a permanent grudge against the asset. My point wasn't merely that gold has increased 6.8 times against the USD. My point was that relative to Commodities—even with gold and silver making up about 15% of the CRB Index—it has grown more than fivefold. Commodities aren't fiat currency; they are physical assets, just like gold. Gold has been in a massive bull market this entire time. From a trader's perspective regarding the USD, I don't see how it could significantly outpace its current growth rate without the bull market ending prematurely. For the economy to actually function and for those holding paper to not complain too loudly, this pace is necessary.

Essentially, the CRB was flat from 1982 through 2000. I don't have the exact figures on hand, but consider how much an index like this can shift just by changing the weight of a single component. I’m not sure which specific index you’re looking at, but the discrepancy could be significant.



It’s questionable whether a $2,000 spread on gold commodities is actually that significant. On the other hand, if you look back at the 1970–1980 period, the CRB Index didn't see nearly as much volatility as gold did.



Gold prices climbed from under $100 USD back in 1970 to roughly $850 USD by 1980—a more than tenfold increase. In that same window, the CRB Index only moved about 2.5 times.
That might just be the nature of gold as a currency. In my view, it tends to adjust to monetary base expansion regardless of whether there's actual manipulation involved. That’s exactly how gold behaved during the last commodities bull run, too. Still, that doesn't change the reality of the policies the Federal Reserve has pursued since 1998. You might want to take another look at Greenspan's statements regarding my claim about market manipulation.

Bottom line: we are nowhere near a peak in gold or Commodities, especially since the monetary base will likely continue to expand. Real peaks are defined by sharp upward parabolas followed by steep corrections. We have the exact opposite here; gold has been sitting practically flat for over a year.

CRB down from 80 to 2000

Right now, the gold:CRB ratio is heavily favoring gold at 5.76/1.1 (which is > 5). Back in February 2011, it sat at 3.85/1.1 = 3.5. Either way, we're looking at massive numbers, even during what looks like a "favorable" moment for Commodities.

Gold vs. Oil—basically Gold vs. "Black Gold":

1971–2012:

From 1971 through today (let's say up to 12/2012), oil climbed from $3.56 to $86.73. That’s roughly a 25x increase.

Gold was about $40 in 1971; today it's $1,697. That’s a 42.4x jump.

So, since the U.S. ditched the gold standard in 1971, gold has outperformed oil by a factor of 1.7.

----------------------------

1971–2000:

Oil: $3.56 in 1971 to $25.74 in 2000—a 7.2x increase.

Gold: $40 in 1971 to $250 in 2000—a 6.25x increase.

The takeaway? Between 1971 and 2000, oil beat gold by a mere 15%, which is basically negligible. In 2000, gold was the absolute bottom-of-the-barrel play right before the bull market kicked in.

--------------
2000–12/2012:

Oil: $25.74 in 2000 to $86.73 in 12/2012—a 3.37x increase.

Gold: $250 in 2000 to $1,697 in 12/2012—a 6.8x increase.

The takeaway? Gold outpaced oil by about 2x.

-----------------------------------

I don't get why people obsess over manipulation schemes targeting gold—the one asset that actually grows and that the "powers that be" haven't cared about since 1971. From 1980 to 2000, even gold bugs weren't interested. Makes sense, though; they got burned at the top of the parabola. Some still haven't recovered and are too terrified to buy again. They'll jump back in once we start heading toward the peak.

It seems to me that after the gold standard ended, gold just became irrelevant to them, so there’s zero incentive to manipulate it. If someone were actually trying to suppress gold prices since 2000, I'd thank them, because it would have killed this bull market a long time ago. Instead, we’re seeing the steady progress you expect in a bull market, which means we're headed very high. If anyone really wanted to kill or shorten a bull market, they’d try to spike the price at the perfect moment—like when we were at 1900—to force a parabolic move that burns everyone out.

A good example is what happened with silver in 2011. I don't think it was intentional, but it shows you what happens when an asset hits a parabolic move, even a small one. It'll probably take about two years to crawl back to $50.

I agree with most of your conclusions, though not all. My take is that it’s unlikely gold will see significant growth over the next year or two, regardless of how much the money supply expands. We are currently stuck in stagflation; wages are stagnant, and there is actually a serious deflationary threat looming. That doesn't change the fact that we have massive monetary inflation, and eventually, it will catch up. I suspect gold is being manipulated; otherwise, I can't make sense of Greenspan's statement. How do you interpret it? He was the head of the Federal Reserve; he knew exactly what he was saying.
My view is that fiat currencies are constantly being misrepresented to look stronger than they are, which is how wealth is being drained. Once that reaches its limit, a new cycle begins.
As long as annual inflation rates remain low, gold won't react, just as my 1982–2000 example demonstrated. You can successfully suppress prices like this for quite some time.
However, the current expansion of the money supply is enormous, and it will eventually hit gold, and silver even harder. As for silver, supplies are thinning out, and without it, we can't run robots or computers—we'd be back in the Stone Age 😉 So, anyone who can set funds aside and wait at least five, maybe ten to fifteen years, should be saving in silver. Given the heavy corrections, it's unlikely the price will go much lower than it is now. In my opinion, it can only go up.
Just because someone is manipulating gold to drive down the price doesn't mean they aren't long on it. They know where gold is headed in the long run. Besides, it's worth asking who their customers actually are, at least in part...
Ultimately, they can buy it through various channels using currency printed out of thin air, as long as the price remains relatively low.
That simply means they are siphoning off profits through paper assets because margins are higher and it makes gold temporarily less attractive. Gold still doesn't interest many people right now.
On the other hand, look at the bond market; despite everything, people are still pouring money into it. A bubble like that has to burst, whether anyone likes it or not.
By the way, did you notice how the new CRB Index is "structured" in the link I sent? It isn't just gold and silver; they are trying to make all Commodities look worse than they actually are. It's obvious how much they favor fiat and paper assets in general. It's hard to imagine them going any further than this. Who knows how many more years they can keep this up.
Despite all this squeezing, we are in a bull market. I agree that all these moves will ultimately serve as extra fuel for Commodities, gold, and silver.
But again, looking at a one-to-two-year horizon, I don't see much room for growth. I would argue we are still in an accumulation phase within the second stage of a gold bull market, which explains the stagnation. Just look at how few precious metal dealers are operational here, and it’s been similar elsewhere in the Western Hemisphere. Meanwhile, in India, they are promoting "immaterial gold." Things are starting to creak...
Still, I expect this situation and these buybacks to persist for a while. If our local situation is any indication, it reflects the broader reality. As long as fiat currencies can keep going, this will continue, with the side goal of buying as much as possible from ordinary people.
As for a sharper deflation, I highly doubt it. That would cause tax revenues to drop, widening the deficit and increasing the need to print even more. But you never know; we'll see.

Robert Vaughn10 said:I agree with most of your conclusions, though not all. My take is that it’s unlikely gold will see significant growth over the next year or two, regardless of how much the money supply expands. We are currently stuck in stagflation; wages are stagnant, and there is actually a serious deflationary threat looming. That doesn't change the fact that we have massive monetary inflation, and eventually, it will catch up. I suspect gold is being manipulated; otherwise, I can't make sense of Greenspan's statement. How do you interpret it? He was the head of the Federal Reserve; he knew exactly what he was saying.
My view is that fiat currencies are constantly being misrepresented to look stronger than they are, which is how wealth is being drained. Once that reaches its limit, a new cycle begins.
As long as annual inflation rates remain low, gold won't react, just as my 1982–2000 example demonstrated. You can successfully suppress prices like this for quite some time.
However, the current expansion of the money supply is enormous, and it will eventually hit gold, and silver even harder. As for silver, supplies are thinning out, and without it, we can't run robots or computers—we'd be back in the Stone Age 😉 So, anyone who can set funds aside and wait at least five, maybe ten to fifteen years, should be saving in silver. Given the heavy corrections, it's unlikely the price will go much lower than it is now. In my opinion, it can only go up.
Just because someone is manipulating gold to drive down the price doesn't mean they aren't long on it. They know where gold is headed in the long run. Besides, it's worth asking who their customers actually are, at least in part...
Ultimately, they can buy it through various channels using currency printed out of thin air, as long as the price remains relatively low.
That simply means they are siphoning off profits through paper assets because margins are higher and it makes gold temporarily less attractive. Gold still doesn't interest many people right now.
On the other hand, look at the bond market; despite everything, people are still pouring money into it. A bubble like that has to burst, whether anyone likes it or not.
By the way, did you notice how the new CRB Index is "structured" in the link I sent? It isn't just gold and silver; they are trying to make all Commodities look worse than they actually are. It's obvious how much they favor fiat and paper assets in general. It's hard to imagine them going any further than this. Who knows how many more years they can keep this up.
Despite all this squeezing, we are in a bull market. I agree that all these moves will ultimately serve as extra fuel for Commodities, gold, and silver.
But again, looking at a one-to-two-year horizon, I don't see much room for growth. I would argue we are still in an accumulation phase within the second stage of a gold bull market, which explains the stagnation. Just look at how few precious metal dealers are operational here, and it’s been similar elsewhere in the Western Hemisphere. Meanwhile, in India, they are promoting "immaterial gold." Things are starting to creak...
Still, I expect this situation and these buybacks to persist for a while. If our local situation is any indication, it reflects the broader reality. As long as fiat currencies can keep going, this will continue, with the side goal of buying as much as possible from ordinary people.
As for a sharper deflation, I highly doubt it. That would cause tax revenues to drop, widening the deficit and increasing the need to print even more. But you never know; we'll see.

Thanks for the correction. So, the CRB Index was modified back in 2005, but they kept tracking the old version under the name CCI Index. It makes sense why they slashed the weight of precious metals in the new index, but when you consider they jacked up the share of oil (basically "energy")—which they can actually influence and control—it looks totally biased. You end up with this massive gap between the CRB and the CCI. If we stick to the old CRB Index, which holds more precious metals (I think about 18% vs. the new 9%) and way less "oil," then gold has grown 2.34 times more than that old index since 2000, rather than the 5x multiple I mentioned earlier. On the flip side, if we stripped precious metals out of the index entirely, the numbers would swing even harder in gold's favor.

We'll have to wait and see how the market reacts once they finally resolve this fiscal cliff situation. I should probably add a disclaimer to my own outlook: if they actually decide to scrap the debt ceiling, gold might catch a bit of an upward trend. That said, I don't expect a massive spike in the short term—within the next few months to year, it's unlikely we'll see gold absolutely moon.

Robert Vaughn10 said:We'll have to wait and see how the market reacts once they finally resolve this fiscal cliff situation. I should probably add a disclaimer to my own outlook: if they actually decide to scrap the debt ceiling, gold might catch a bit of an upward trend. That said, I don't expect a massive spike in the short term—within the next few months to year, it's unlikely we'll see gold absolutely moon.

The debt ceiling is a non-issue. It’s all theater; the market has already priced it in.

A gold bubble?...

http://www.youtube.com/watch?v=ndshb...4h7-jA&index=9

quiettrucker12 said:The debt ceiling is a non-issue. It’s all theater; the market has already priced it in.

I’m not convinced the market has fully digested the possibility of lifting the debt ceiling. In a scenario where they lift it combined with practically infinite QE, any hope of austerity becomes a fantasy. Theoretically, that might send gold higher. If they only raise the limit by $2 or $3 trillion, it just creates an illusion of stability while they continue to pump the system. When I say "pump," I don't just mean increasing debt—I mean delaying the moment they finally show their hand. We still don't know that part of the equation. To me, it's crucial...
Have you ever heard of "Mad John"? Actually, "Mad John" is a very real possibility. Someone made a great comparison on this forum a few years back: "Sometimes I feel like I'm locked in the bilge of a ship full of lunatics, and you have no idea what they're going to do next."

The USD stalled today, even though it really should have kept sliding. We'll see what tomorrow brings, but this is a massive line in the sand for the Dollar.

Gold is still stuck in this consolidation phase—it bounced off the lower trendline today—but silver is actually showing some life. I wouldn't be surprised if the 100 DMA puts a floor under the slide; honestly, I don't see it dropping below that level if the USD keeps losing steam:

silver 100 dma

My main focus is gold. I’m watching to see if it can hold above the 75 WMA like I’m expecting. As long as it stays north of that, we're fine. If it slips below, things get messy, but let's hope it holds steady.

Mining stocks showed a bit of muscle today, if you can even call it that.
🤷😂.

And what’s your take on those "miners" mentioned in my previous link regarding the gold coin sale?😂

Robert Vaughn10 said:And what’s your take on those "miners" mentioned in my previous link regarding the gold coin sale?😂

😂

lonehawk5 said:Just knocked out my silver order, picked up another $32.26

Out at $32.44

quiettrucker12 said:The debt ceiling is a non-issue. It’s all theater; the market has already priced it in.

🤣

I have to disagree... while you're right to view it strictly as a negotiation tactic—which it is—the actual numbers behind tax hikes and spending cuts matter immensely to the markets.

The outcome depends heavily on steel prices, as well as broader market trends...😉

I’m just wondering if the Dollar index can hang out below this zone for a bit before sliding down toward 77 by February or March. If we get a bounce after that, it could head even lower, potentially pushing gold toward that 1870-1880 target.