What's up with the price of gold?

[pscot]

I'm making a little money, but I'd like to know why. Should I get out? will it go up more? It seems to be going according to plan, but I don't think it's my plan.

[El Supremo]

1. When the dollar gets stronger, bail out.

I will.

[obliviously]

3. There aren't any

signs that the dollar will get stronger anytime soon. A lot of experts say it is not even close to a bottom. We are in the process of putting half of our savings into gold. Something is going down and I don't know or care whose fault it is I just know it is time to prepare!

[YOY]

2. In times of perceived turmoil gold goes up in value.

Key word being "perceived".

[tabatha]

4. I read somewhere that the price of gold is being manipulated to

not rise too much. I had gold coins which fluctuated up and down for a long time, and then sold them because I would rather have the cash if I was not going to make much money.

It seems to have gone up and down since I sold and is still under $1000.

But, who knows what is going to happen in the future?

[A HERETIC I AM]

5. Bloomberg article;

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=almG7Hn0gqOA

[customerserviceguy]

6. If inflation takes off

so will gold. Not that I have any other than a few souvenir pieces of gold from a Washington state placer mine that a friend gave me twenty years ago.

But I've kept my small 401K in interest-bearing investments, and if inflation takes off, they'll do OK, as well. It beats losing money.

[SlowDownFast]

7. Hong Kong recalls gold reserves, touts high-security vault

Sep 3, 2009

Hong Kong recalls gold reserves, touts high-security vault
In a challenge to London, Asian states invited to store bullion closer to home

By Chris Oliver, MarketWatch

HONG KONG (MarketWatch) -- Hong Kong is pulling all its physical gold holdings from depositories in London, transferring them to a high-security depository newly built at the city's airport, in a move that won praise from local traders Thursday.

The facility, industry professionals said, would support Hong Kong's emergence as a Swiss-style trading hub for bullion and would lessen London's status as a key settlement-and-storage center.

"Having a central government-sponsored vault would create a situation where you could conceivably look at Hong Kong as being a hub, where metal could be traded for the region," said Sunil Kashyap, managing director at Scotia Capital in Hong Kong, adding that the facility was the first with official government backing in the region.

The Hong Kong Monetary Authority, which functions as the territory's unofficial central bank, will transfer its gold reserves stored in other vaults to the depository later this year, the Hong Kong government said in an earlier statement.

The monetary authority reported $63 million in physical gold reserves as of July 31, according to its International Reserves and Foreign Currency Liquidity statement. The authority wouldn't disclose where the reserves are held, but local media reports cited gold traders as saying that London's the most likely location.

read more:
http://www.marketwatch.com/story/hong-kong-recalls-gold-reserves-from-london-2009-09-03

This quote from the Reader Response section of this story nails it, I think:

"I think a better way to phrase the sentiment of this news is "Hong Kong demands physical delivery."This is going to be one of those classic examples of what Buffett means when he says that when the tide goes out, you see who was swimming naked."

[pscot]

8. That's a tough crowd over at market watch

Cynical doesn't begin to describe them. It would be a real stunner if London couldn't produce the gold; a game changer.

[OllieLotte]

9. I agree. Yet I'm not 100% sure that some on these ETFs

actually have the gold/silver that they claim. A guy, who I've learned to respect, that posts on seakingalpha made a case that some of these guys didn't actually have the physical metal. He advised buying the mining stocks or getting your hands on the physical metal instead. His quote was "After browsing through their physical metal bars serial number lists, I became suspicious of these two ETFs."

[MellowOne]

13. Are you referring to the journalists

or the posters on the comments forum?

[pscot]

15. The posters

n/t

[dixiegrrrrl]

10. News, several weeks ago, that Germany was demanding USA return gold

which Germany had lent to us.
Other news stories about questions if Britain has all the gold it says it has, if fort Knox contains ANY gold, etc.
Many news stories and economic reports that gold price is being clamped down.

google for particulars..I read too much of this stuff to remember where I got it all.

[pa28]

11. That's a fairly small demand too.

I'm not sure how the custodianship is set up but if it's in a bank you just have to suspect they are writing contracts on and making settlements with gold in their vault. I doubt they'd be content just to collect fees.

If this is the start of a larger trend the results might be interesting. Like you say . . . we'll see what happens if the tide goes out.

[amandabeech]

12. The Chinese have been getting restive recently.

They announced that they would not be exporting rare earths anymore.

They've changed their treasury buying habits.

The most recent rumor is that three Chinese government sponsored companies will be defaulting on some derivatives contracts suspected to be oil price commodity hedges.

Now Hong Kong is jerking the British banking chain.

Others here have speculated that the Chinese are pissed off over the tanking of the Rio Tinto deal.

Personally, I wouldn't want any gold that I owned directly or indirectly held physically anywhere near the Chinese government right now.

[Warpy]

14. Gold is where it is because the dollar went splat

When the dollar recovers (if the dollar recovers), the price will slide back down.

What you do with your gold depends on what you think the economy will do. If you think we're headed for runaway inflation, keep it. If you think we're headed for uncontrollable deflation, sell it. Both are quite possible at this point.

[Dover]

16. Indicative of a building panic...

Less than two months ago, Gold was testing $900 and Silver was below $12.50. And the currency markets were relatively quiet, as bankers completed their summer holidays. So it wasn’t a case of the Dollar falling that gave a spark to Gold and Silver, as is usually the case. And stocks did not move that much either. Precious metals moved on their own, and that may be cause for concern in a mundane sense. Usually this kind of move in precious metals is related to a sense of a forthcoming crisis.

[Statistical]

17. Where are you getting this from?

In May gold was around 900. Now it is 1000. Gold has risen 11%.

Dollar Index (dollar vs the 6 major currencies) in May was 87 and now it is a 77 for a decline of 11%

If you overlay the spot price of gold with an inverse of the Dollar index they move also completely correlated.

To say the 11% rise in Gold has nothing to do with the 11% decline in the dollar over the same period is kinda a stretch.