About gold, page-3

morning all, hi sabine,


a couple of points -

a. lets clear this one up factually first

"This seems at odds with your press story of companies snapping up all the gold mines ."

arrh, that's more than a tad of overstatement there - I put up two posts - one was a single buy by NCM of gold in ground at very high prices. -

that's not quite how I would describe "companies snapping up all the gold mines"

When the M&A show in gold companies gets going - we will be left in no doubt that the action is decidedly 'on'.


the other post - I can't remember - but, could have inferred that a strong rising POG was expected.


b. re. the bulk of your post --

I don't see why it's at odds with it really -

it seems to me that there is a lot of cash around and bonds are strongly on the nose - so, money has to go somewhere besides being held as money itself (cash).

The high rate of rise for art, wine, cars etc. - might be a giveaway -- it could point to several reasons

remembering that this is all about HWI (high wealth individuals) - and, not all society -

so, why would they be putting money into things that are traditionally pretty poor return investments -- art, wine etc.?

a. they could have more cash than they know what to do with
b. they might think that other areas are risky - eg. property, stocks etc. and that cash itself - may also have some sort of currency risks - or have a danger of falling over - or just have poor returns - who knows, there are arguments for all of those.


Bearing in mind that they are awash with cash (see another article at bottom this morning) -

a closer look at the table in the first article shows something interesting - look at the highest 3 rates of increase in investment (in Australasia) -

1. 53% Alternative investments

2. 47% Cash

3. 41% Private equity

only then comes property at 35%


Now the noticeable thing is that the top 2 ---- 1. and 2. are portable.

Private equity I am a bit up in the air on - but, that could be 'risk on' because Cash returns are so low -- but, then, one could argue that for gold as well.


I don't really think that we can hang our hats on anything that is certain atm -- which is why I said we might want to watch this stuff out of interest - because - all of it is painting a picture - which is not clear atm - but, could well effect a coming gold producer.


The article below tells us a bit more to ponder --- if it's true that interest rates are going to rise ---- AND, if it's true that asset prices will fall because of that - then, which assets?

Property? Stocks? Gold?

I would think that property is a clear one - and, stocks, yes - highly likely - but, would gold go with them - or the other way?

If the heat comes off property which is a huge slice of wealth and stocks sell off, which are also a huge slice, then we have the bond washout -- where is the money going to go? - all into cash?

Some, but, not all - and any HWI knows that cash comes with more than one risk - and, one of the biggest risks of all is currency risk - no matter which currency you are in.

Gold stands above that - so, yes, it can sell off too - but, equally, would people be able to cash in a block of gold easier than a Picasso ? --well, you can't go into Collins street and turn your Picasso into cash in 5 minutes -- whereas you can with a block of gold.

Will all or any of this effect us at Breaker?

Yep -- we are effected every day by all of it - just some of us don't realise it.

Now beyond all of the above - there stands one really important point -

there are costs to produce Gold that one just can't get away from - diesel, labor, machines, etc. etc. -

in other words - you just can't whip out the back and make an ounce of gold for 20 bucks -- not possible.

But, you can print a million dollars worth of dollars for a few bucks -- it's a bit of paper and ink - or even less now - just a few taps on a keyboard.

Ditto - a great artist can churn out a painting now - this week - for a cost of say a few hundred bucks - if he lives on bread and water and a bit of grog - his only other costs are his paint and canvas -

now, that painting might sell for say $1 million dollars --- for an outlay of say $200 to $500 bucks -

how much would it cost to produce $1 million in gold today? - that's about 770 Ounces of gold??

I hazard a guess that the cost of that would be more than $500 bucks

So - overriding almost all else is that if costs go up - then, the cost of gold production goes up ---- which means that either the POG must rise ---------- OR, production stops - there aren't any other options there (in the case of continual cost rise).

And, if production did stop -- well, I leave it to others to think about just how long before a supply and demand equation came in to severely kick some butt there.


https://www.theage.com.au/business/...e-warning-for-households-20180320-p4z5bj.html


here is another article that is worth a ponder -- and, one has to remember that none of this stuff is gospel -- more often than not -- the 'prices' of commodities just go somewhere we don't expect them to go - and, it often takes years of history rushing under the bridge to work out why

http://www.businessinsider.com/relationship-between-gold-and-inflation-2016-11?IR=T



have a great day all