Hi AllWhats Happening with Gold GuysSpot gold hits record above $1,050 * Gold seen staying strong while dollar remains weak * Slow scrap selling suggests traders waiting for price gains * SPDR Gold holdings inch up for 2nd day TOKYO, Oct 8 (Reuters) - Spot gold topped $1,050 per ounce to mark a record high for the third session in a row on Thursday as the dollar's continued struggle made the precious metal more attractive to investors. Bullion has gained about 20 percent this year, helped by the dollar's weakness and inflation worries after central banks and governments across the globe poured money into the financial system to help stimulate the economy. Gold rose as high as $1,054.20 per ounce as of 0533 GMT. The dollar is expected to continue to struggle, which is likely to mean more gains for gold. "Investors are turning towards gold as a hedge in dollar weakness," said Adrian Koh, an analyst at Phillip Futures in Singapore. Further gains could be on hold for the rest of the day, however, as investors await news that will provide clues to the state of the global economy. "Looking forward today, we have got a couple of key interest rate announcements from the BOE and the ECB and traders are likely to be cautious and will be keen to listen to what they have to say about their respective economies," Koh said. U.S. gold futures for December delivery were at $1,054.4 per ounce, up 1 percent. On the physical front, despite gold's rise to another record, sales of scrap were limited in Asia, suggesting that consumers were waiting for more gains in prices before cashing in. "People don't want to sell at these levels. There isn't much scrap coming in," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. He said there was talk bullion could reach as high as $1,600. "I think we are all bullish, but watch out for a correction." Dealers also noted light buying by main consumer India, keeping premiums for gold bars steady in the bullion trading centres of Singapore and Hong Kong. "Gold keeps testing new highs, so people have become more cautious. But if the price maintains ... these levels, then I think more scrap will enter the market," said a dealer in Singapore. "Don't be surprised, India is still buying," he said. India, which accounts for more than 20 percent of global demand for gold jewellery, is in the midst of the festival season, a period when jewellery is traditionally purchased. Gold's rally has boosted inflows into exchange-traded funds for two days in a row. The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust <GLD>, said its holdings stood at 1,109.314 tonnes as of Oct. 7, up 0.8 percent or 8.8 tonnes from the previous business day, when they also rose. The dollar was again on the defensive on Thursday, after Alcoa Inc posted a surprise profit, supporting overall bullishness about a global recovery. Strong oil prices also fanned worries about inflation, providing gold with additional fuel to help the rally. Oil prices rebounded above $70 per barrel on Thursday, recovering from the previous session when they fell after U.S. data showed a surge in fuel stocks last week

1. there really is a conspiracy - lead by Germany, France, Japan, Saudi Arabia, Brazil, Russia, Iran - to replace the USD by Gold in the trading of commodities and there will be (at least) a short-term supply shortage. Someone has inside information and is buying gold [Central Banks, Banks from those countries] It will be nice to know if this happens that the Central Banks and Banks of those countries are run by criminals/pundits that use privileged/inside information before other citizens/investors.or2. it's a huge bubble that will burst one day...or3. speculators (probably the same that were shorting US Banks on March09 during the nationalization talk) are trying to make a self fullfiling prophecy using the price of gold and rumors ($-related) to spread panic among investors and force the replacement of the $... Someone with deep pockets can be short the $, long gold and short US assets and hence is trying to profit using a speculative attack on the $ (short $, short $ assets, long GLD). If investors get scared and run away from US assets they will dry some liquidity from Wall Street/USA...

This is an interesting chart with events that impacted on the Gold price over the last 30 yearshttp://news.bbc.co.uk/1/hi/business/7284184.stmYou can see that gold prices peaked to over $800 in 1979 but what's interesting is that if you adjust for inflation, the $800 in 1979 would be over $2,000 in today's money. So does the $1,000 breakout of gold look so exceptional.

what would you expect when certain countries dramatically have increased their money supply to bail out big banks etc....I do not think there is a conspiracy, but if there is a conspiracy it is more likely to keep the price of gold down to avoid panic out of Fiat-currencies that are over-inflated...it is not that long ago (1960s) the central bank gold-pool tried to keep the price of gold down, but no one are larger than the market, not even a pool of central banks, eventually they lost the battle last time....however I do not think there is similar gold pool now...More fiat-money and there is flight to something that not can be increased just by typing some new numbers into computers... it is hard work to mine gold, and the amount of gold mined per year is minimal compared to what already above ground....Ramsey wrote "You can see that gold prices peaked to over $800 in 1979 but what's interesting is that if you adjust for inflation, the $800 in 1979 would be over $2,000 in today's money. So does the $1,000 breakout of gold look so exceptional."Good point!

QuoteOriginally posted by: Collectorwhat would you expect when certain countries dramatically have increased their money supply to bail out big banks etc....(...)More fiat-money and there is flight to something that not can be increased just by typing some new numbers into computers... it is hard work to mine gold, and the amount of gold mined per year is minimal compared to what already above ground....(...)1. The US will exit the Banks' bailout package with a profit for taxpayers (Goldman Sachs, JP Morgan, Bank of America, ...)2. Sustainable investment (good money) doesn't cause inflation. It creates wealth.3. Gold has no intrinsic value (furthermore, the "real" demand for gold is really low). I would ban the use of Gold as a monetary mechanism. I don't want to hold gold on any circumstances other than some tyranes (central banks) imposing me gold as a monetary currency4. If you really think that we live in such a world buy risky real assets that generate cash-flows (those who will have demand in the future)5. Why is everybody focusing on the USD? What about the JPY and the EUR? and so on? The inter-relations among the various pairs? The EU also bailed out their Banks... Will the Eurozone or Japan have more growth than the USA in the future? I doubt it! Will any inflation/deflation scenario be worse in the USA than in the Eurozone or Japan? I don't think so.If a country issues debt and there's demand there's nothing wrong... What's the credit spread on treasuries? 22 bps? Why? The credit market feels it's safe!Countries with excess reserves must invest it to create global growth and prosperity instead of parking it in Fort Knox.* This is the view of someone with a management background (and not macroeconomics)

Similar topic Basicly, since gold is only inflation hedge and used for the same things as before, I think 30+ years of inflation adjusted gold prices should reveal resonable future gold price distribution. And, the data is showing that gold may be overpriced.

Gold has never ever worked as an inflation hedge. The reason people buy gold is because they haven't figured this out yet.The other reason is, as Collector pointed out, an erosion of trust in fiat currencies. All fiat currency systems in history have always ended in hyperinflation, always. This is the first time we have seen such a long period of stable paper money (since the end of Bretton Woods), but we did get very high inflation in the 1970s. This is a very important point: The current monetary system is an experiment...and if placed within the context of the history of money, it has not been around for long at all.Finally, people buy because the press is hyping it all up.It is not just gold though...all precious metals are advancing. The gold/silver ratio is actually trending down.

QuoteGold has never ever worked as an inflation hedge. The reason people buy gold is because they haven't figured this out yet.I too do believe that people buy gold because of habit...

I'm thinking of buying gold put options (strike, say 950) with April 2010 expiry on my personal account.I believe it's a bubble that will burst soon.Stupid?Will I get rich?Ideas?

Any Comments on Weak USD if we relate to Exports

QuoteOriginally posted by: AnthisQuoteGold has never ever worked as an inflation hedge. The reason people buy gold is because they haven't figured this out yet.I too do believe that people buy gold because of habit...Financial markets are full or behavioral biases.Gold has almost zero intrinsic value to me (I don't want to hold Gold for anything except if a tyrane imposes me it as fiat money. It's almost a zero worth asset to me)Gold has some reasonable intrinsic value to women (jewelry)Apparently Gold has lots of speculative value to Jim RogersGold is also fiat money. It has no intrinsic value like paper money but is declared by most governments as a currency reserve.People argue that gold is rare and hard to explore. Well, there are some marbles in my country that are very rare why not declare it has a fx reserve? Pack it in an ETF and let speculators buy. Anyway, aren't the US the biggest holders of gold reserves?

QuoteOriginally posted by: robbieI'm thinking of buying gold put options (strike, say 950) with April 2010 expiry on my personal account.I believe it's a bubble that will burst soon.Stupid?Will I get rich?Ideas?Let the momentum wane. Wait for a timing pattern to entry the trade: double top; island top; ... or/and fundamental news: US GDP growth...

QuoteOriginally posted by: OwaisAny Comments on Weak USD if we relate to ExportsA weak currency in a developed country like the USA can boost its economy. It depends on the firms and the pairs involved.1. They have high-tech, high-quality products that people want to buy2. They are efficient/profitable in production3. Example: A firm like Boeing will experience a boost in orders which will boost its market share vs. Airbus [they can jumpstart their orders book in a crisis and clients will be fidelized going forward even if the USD goes to equilibrium. Firms won't cancel their orders and can hedge for a dollar appreciation after purchasing from Boeing. Airbus can go bust...]4. But at a certain level it can scare investors and dry foreign investmentA strong EUR is good for Germany. They import energy/commodities at a the cheap price and since they export to the EU and Eastern Europe they don't suffer much from a strong EUR. But at a certain level they can suffer a lot if their internal market starts to shop in Amazon, Ebay, Boeing, and so on It's a two sided story.These fx wars are very dangerous. Fx rates should be stable and fluctuate to long-term equlibrium levels.PPP (AUG09) equilibrium spot rate:€ 1 = $ 1.24* using "Germany EUR"; for other EU countries the EUR is even more overvaluedMarkets really have different perspectives for growth and interest rate differentials going forward but I bet that we'll see some level reversion.

My conundrum:Forgetting the US$/€ talk for a while. Why is the $C so undervalued vs. the €? Canada is a commodities rich country... Why is it so punished vs. the €?The commodities talk is good for the Aussie $, China Yuan, Brazil Real, but not for Canadian $... Speculators kill the real economy... I think this is due to lots of institutional investors (speculators) trading currencies and trading it using a single ETF (USD Index).

QuoteOriginally posted by: OwaisAny Comments on Weak USD if we relate to ExportsWhen speculators devalue a leading world economic/political/military power with high-tech, high-quality products and leading intelectual property/patents like the USA you start getting this from its economy:...........International consumers start purchasing higher quality US products on the cheap instead of buying lowerquality products, more expensive after fx rate conversion, in their internal markets. Firms also get fx translation profits............Black-and-Decker-raises-its-3Q-earnings-forecastTOWSON, Md. (AP) -- Black & Decker Corp. boosted its third-quarter profit outlook Monday, citing operating margin and a lower tax rate.The power tool maker now expects earnings of about 91 cents per share, up significantly from its prior profit forecast of 35 cents to 45 cents per share. Black & Decker said the lower tax rate will likely add about 14 cents per share to its performance.Analysts predict third-quarter profit of 45 cents per share, according to a Thomson Reuters poll. Analysts' estimates normally exclude one-time items.Despite what Black & Decker called "better-than-expected sales," the company said it expects to report a sales decline of 23 percent for the quarter."Sales were modestly better than we had anticipated, due largely to earlier-than-expected shipments during the quarter of promotional items in the U.S. industrial power tools and accessories business, which were previously anticipated to occur in the fourth quarter," Chairman and CEO Nolan Archibald said in a statement. He said the company also benefited from favorable currency translation.Black & Decker plans to report results on Oct. 22.The company's shares rose $3.56, or 7.5 percent, to $50.80 in premarket trading.