Gold Passes 1,000

Where is MMAfia? Would like him to buy the next round with all of his gold profits.........

U.D.
Markets are forward looking. We've increased our debt and the dollars in circulation. If you were a Saudi or a German or the Chinese, would you hold dollars? The price of Gold and the currency markets are saying something very powerful. We can't just hand out money to citizens to buy cars, referigerators and houses or to corporations to bail them out(hello G..M. Citibank, AIG) and not expect future inflation. Every inflation is different. We'll pay more for foreign goods commodities and pay more to attract foreign money to finance our debt(since we don't have any here)

http://www.washingtonsblog.com/2009/09/3-signs-that-china-is-moving-out-of.html

4 Signs that China is Moving Out of the Dollar

There are 3 recent signs that China is moving out of the dollar.

First, in June, China was a net seller of U.S. Treasury bonds (and shorter term notes) for the first time ever. As Mike Larson writes:

A few days ago, the U.S. Treasury Department revealed that China actually REDUCED its note and bond holdings by $25 billion in June. Although China did NOT sell shorter-term Treasury bills — and isn’t expected to — it’s still the largest amount of Treasuries China has ever sold in a single month.
Second, China will issue a non-Dollar denominated Renminbi bond sale on September 28th (6 Billion Renminbi worth).

Third, China has agreed to purchase $5o billion dollars worth of IMF bonds (denominated in the IMF Special Drawing Rights currency).

And fourth, the former vice-chairman of China's Politburo Standing Committee (the highest and most powerful decision-making body in China) - Cheng Siwei - recently said:

We will diversify incremental reserves into euros, yen, and other currencies. Gold is definitely an alternative, but when we buy, the price goes up. We have to do it carefully so as not to stimulate the markets.

As Edward Harrison correctly notes:

To be sure, there are other voices in Chinese officialdom that are striking a less alarmist tone. One cannot rely on the words of one Chinese official to represent policy makers in China. And Cheng never said the Chinese are now actively diversifying away from the U.S. dollar. Nevertheless, Chinese officials have been talking along this dollar bearish line for months now and I tend to believe their words will lead to action.

That is, at a minimum, bullish for Gold and bearish for the U.S. Dollar.

Speaking of gold, does anybody have a recommendation for a safe store in Manhattan? I've been buying tubes of 20 x 1 oz gold American Eagles and "monster boxes" of silver American Eagles (500 x 1oz damn they are heavy) over the last year and want something more secure to store them in (not a safe deposit box, not safe from the government).

I want an upscale looking luxury safe, to store my gold and other stuff for when the revolution comes, something like this:

http://www.brownsafe.com/gallery/EstateSeries/BSM_Estate_7256_Black_loaded02-lg.jpg

http://www.telegraph.co.uk/finance/economics/6146957/China-alarmed-by-US-money-printing.html

Anyone doubting this article, needs to just consider the high profile trips Geithner and others recently took to China....

Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing".

"We hope there will be a change in monetary policy as soon as they have positive growth again," he said at the Ambrosetti Workshop, a policy gathering on Lake Como.

"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies," he said.

China's reserves are more than – $2 trillion, the world's largest.

Seperate note. Everyone keeps talking about how Fed & Treasury are taking steps to avoid a repeat of the Depression, but this crisis really looks more like 1908 to me. Anyone agree?

Interesting that on a board which was born to discuss the housing bubble and now its aftermath, that so many are on the gold train, when it is so clearly demonstrating bubble characteristics, whether vs. the dollar/pound or silver.
A quadrupling in the past 4 yrs, doubling the past 3, multiples of its historical ratio vs. silver. But I'm sure this time its different. No doubt I should buy today or be priced out forever.

"it is so clearly demonstrating bubble characteristics"
what you listed does not meet characteristics of a bubble (not yet). there's no widespread public speculation and professional investors are still very split on deflation vs inflation. gold IS in a bull market which MAY go parabolic at some point but it hasn't yet.

http://www.kitco.com/scripts/hist_charts/yearly_graphs.plx

this isn't parabolic? a 4x rise in 10yrs, 2x in 3yrs (similar to real estate in the most extreme bubble areas, and to NASDAQ during the tech boom)? no widespread public speculation - have you turned on the radio in the past 2 yrs - seemingly every other ad on XM is some gold buying plan.

I actually own a little FCX so I'm happy to see the metals rise, but it is so high vs. historical levels that I can't see how it isn't a bubble. Obviously you and many others don't, but remember, this is what people buying RE from 2002-2005 in Las Vegas were thinking too.

no it's not parabolic, pls look up articles on what constitutes a bubble. also note that 50% of a gain when a financial asset goes exponential is in the last 5% of the move -- hence the inability of individuals (including you) to predict a 'top'. and while it's 'obvious' to you what i think, i do not 'know' nor am i 'sure' that gold will continue it's advance as many las vegas investors thought. i do think that given the dollar debasement, the probability that it will be higher several years from now is more than 50%.

empire safe company. I am not sold on gold -- when people relax from economic fears, the rush out of gold will be severe ---

manhattanfox, don't you think that s&p rally of 55% qualifies as 'relaxing from fears'? if so, back to original UD post, what does the fact that gold is higher now than on 3/6 telling us?

never said we are at a top in gold - i agree that tops in bubbles are impossible to predict. in fact i would guess that we go higher over the short term from here - but that's pure speculation.
$ debasement only accounts for a double or so in gold over the past 10yrs, not the quadrupling we have seen, so either there is some other fundamental that accounts for the price movement, or a lot of the speculated future debasement is already priced in.

If we're in a commodity cycle the fun hasn't yet begun!