gold price falls, $20 lib spread rises

[metalman]

my friends here know i've been in the gold market since 2001 buying $20 usa libs and $20 1oz bullion coins.

for all these years checked the site pgcs.

i paid $290 for my gold bullion coins and $350 for my $20 libs, 20% spread over bullion. ever since then, a rise in the bullion/lib spread

for the past several months as gold prices increased to

look at this

the story is in the spread... now rising fast over bullion after no action form months even as the price recovered.

look up my previous posts on this.

the spread was 5% now 40% even as spot prices fall. what does that say?

i don't know. just pointing it out.

[cjppjc]

Re: gold price falls, $20 lib spread rises

Supply and demand.

[BiscayneSunrise]

Re: gold price falls, $20 lib spread rises

The market for physical gold is not as liquid as paper gold so it is not as subject to the same volatility. Hence, the spread gets wider when paper gold takes a dip.

[jaboe]

Re: gold price falls, $20 lib spread rises

This is a pretty interesting find. It could mean alot of things, one of which is that the market is pricing in the fact that there might be a gold confiscation as in the 1930's. I may be mistaken but I think the goverment would go after currency and not the collectibles (like libs) in this case. Therefore these types of coins are "safer". This is my first post and I might be way off but who knows. Oh and while I am posting thanks to everyone who contributes here especially EJ.

[cobben]

Re: gold price falls, $20 lib spread rises

Personally I believe the retail physical market lags the commercial ethereal.

There - I thought up a new & better term for the non-physical market: "ethereal".

Oh, and spreads widen in all markets when uncertainty increases.

[Jay]

Re: gold price falls, $20 lib spread rises

This is a pretty interesting find. It could mean alot of things, one of which is that the market is pricing in the fact that there might be a gold confiscation as in the 1930's. I may be mistaken but I think the goverment would go after currency and not the collectibles (like libs) in this case. Therefore these types of coins are "safer". This is my first post and I might be way off but who knows. Oh and while I am posting thanks to everyone who contributes here especially EJ.

I've thought about this as well.

[np]

Re: gold price falls, $20 lib spread rises

metalman,

I would say I am a novice when it comes to buying physical gold coins...my question to you is this....if you were to continue to buy gold would you still be buying these $20 Liberty Double Eagles at these juiced up premiums or would you be moving towards coins that have a lower premium like an American Eagle, Maple, Philharmonic or Kruggerand ? Under the present conditions you can probably buy 4 Philharmonics for less then it would cost you to buy 3 (almost uncirculated) $20 Liberty Double Eagles....your thoughts would be appreciated

[metalman]

Re: gold price falls, $20 lib spread rises

metalman,

if you were to continue to buy gold would you still be buying these $20 Liberty Double Eagles at these juiced up premiums or would you be moving towards coins that have a lower premium like an American Eagle, Maple, Philharmonic or Kruggerand ?

no, i would not and that's the reason for my post. enough people think the premium is worth it else, well... there'd not be a big premium.

i see the premium as an important sentiment indicator. that's how come i keep posting from the pcgs site. at some point it becomes 'ridiculous' and if there are other things happening may be saying... 'sell'... some day. worth keeping an eye on.

[Guest]

Re: gold price falls, $20 lib spread rises

and if there are other things happening may be saying... 'sell'... some day.

DOW/GOLD is rapidly closing in on 2/1 and 1/1. Better dust off your "some day" and start figuring out what you are going to do with your exotic gold stash when this ratio normalization lands at the target with a thud. Coming up soon at the current rate of descent. Try 3-4 more months of markets collapse at the current rate, and your defensive gold starts looking awfully lonely with a blasted out stock market sitting there ripe for the picking. Or what is anyone here imagining, that once the DOW/GOLD has hit 1/1 gold will keep right on soaring and the DOW will keep right on plunging?

That risks being a singularly flat-footed bet.

Remember - a lot of unsophisticated participants are piling into the high premium gold coins when everything else is collapsing, because "they are going up". When they see a blasted out stock market beginning to leap up 15% in a day in some segments after it's final washout, the coins start looking awfully pokey to some investors and they start edging for the door - and it is a -- T H I N -- market. The one thing the more high priced coins are NOT, is liquid in a weakening coin market. Not like gold bullion.

This market collapse has been the most compressed in history. That's not just a stat. It means the end of the current DOW/GOLD trend is rushing up FAST. Anyone sitting on gold semi-numismatic coins too complacently when gold bullion hits a 1/1 aspect to the DOW may be in for a few surprises (remember platinum's turn? How easy was that to anticipate?). Wherever the lemmings decide it's desirable to be, that's where the big bid will go. Their herding can move the markets, a lot.

[metalman]

Re: gold price falls, $20 lib spread rises

DOW/GOLD is rapidly closing in on 2/1 and 1/1. Better dust off your "some day" and start figuring out what you are going to do with your exotic gold stash when this ratio normalization lands at the target with a thud. Coming up soon at the current rate of descent. Try 3-4 more months of markets collapse at the current rate, and your defensive gold starts looking awfully lonely with a blasted out stock market sitting there ripe for the picking. Or what is anyone here imagining, that once the DOW/GOLD has hit 1/1 gold will keep right on soaring and the DOW will keep right on plunging?

That risks being a singularly flat-footed bet.

Remember - a lot of unsophisticated participants are piling into the high premium gold coins when everything else is collapsing, because "they are going up". When they see a blasted out stock market beginning to leap up 15% in a day in some segments after it's final washout, the coins start looking awfully pokey to some investors and they start edging for the door - and it is a -- T H I N -- market. The one thing the more high priced coins are NOT, is liquid in a weakening coin market. Not like gold bullion.

This market collapse has been the most compressed in history. That's not just a stat. It means the end of the current DOW/GOLD trend is rushing up FAST. Anyone sitting on gold semi-numismatic coins too complacently when gold bullion hits a 1/1 aspect to the DOW may be in for a few surprises (remember platinum's turn? How easy was that to anticipate?). Wherever the lemmings decide it's desirable to be, that's where the big bid will go. Their herding can move the markets, a lot.

wrong, sorry pal.

step away from you charts and listen....

stocks are the only asset to own.

stocks only go up in the long term.

buy and hold stocks.

long term cap gains on stocks = 15%.

stocks are good.

put them in your 401k.

smart, well adjusted people own stocks.

buy and hold.
buy and hold.
buy and hold.
buy and hold.
buy and hold.
buy and hold.
buy and hold.
buy and hold.
buy and hold.
buy and hold.

vs

gold sucks.

gold only goes down.

gold sucks.

never own gold.

pay 38% cap gains tax on gold.

gold is bad.

gold sucks.

angry stupid people own gold.

gold sucks.
gold sucks.
gold sucks.
gold sucks.
gold sucks.
gold sucks.
gold sucks.
gold sucks.

spend a few billion in marketing $$$ on these product sales messages for 25 years... and... guess what? everyone believes that they are true!

a wee spike in gold and crash in stocks does not reverse this.

bottom in stocks only after everyone brainwashed for 25 years per above marketing has utterly and completely and totally given up looking for a bottom... cnbc is off the air... no one follows the stock market at all. why bother? you 'know' it will be nowhere.

dow 2700 in 2026 is a fine guess.

then you have a bottom.

time to buy.

gold? separate but related... falling stocks don't push up gold. no, it's the factors that push stocks down that also push up gold.

questions;

what happened to maddoff? is he in prison?

why is no one going to prison?

what is wrong with our system?

it is totally and utterly and completely fucked and the 'buy and hold' brain dead masses have not yet figured that out or swallowed hard to understand what needs to be done to fix it. it's too ugly.

[Guest]

Re: gold price falls, $20 lib spread rises

No. Keep it really simple. DOW/GOLD ratio. Look at what it's done over 100 years. It does not "peak" or "crater" at 1/1 more than once in a long while. What are you going to do, in 3-4 months, if you see DOW/GOLD at 2/1 or 1/1? I don't have a clear idea if it will that soon, but if it does, all your other nattering is out the window. An ounce of gold just bought a DOW share. Ding!

[np]

Re: gold price falls, $20 lib spread rises

Gold has remained constant for 100 yrs.... but you cant say the same thing about the DJIA.... if you look at it's history companies come and go.... once a company sucks it gets dumped from the list ....

http://en.wikipedia.org/wiki/Histori...strial_Average

how serious can the dow/gold ratio be taken if it doesn't take this into account ?

[Guest]

Re: gold price falls, $20 lib spread rises

iTulip takes the dow/gold ratio quite seriously. It's not everything, but it's considered a significant macro-signal. Maybe gold/sp500 or gold/wilshire5000 would be better substitutes, but the core notion of a very large ratio swinging from one extreme to the other is nested in there somewhere. Also, to say gold has "remaind constant" for 100 years is a very large misdirection. It has danced around like a yo-yo for 100 years, in either inflation adjusted on non-inflation-adjusted terms.

Gold has remained constant for 100 yrs.... but you cant say the same thing about the DJIA.... if you look at it's history companies come and go.... once a company sucks it gets dumped from the list ....

http://en.wikipedia.org/wiki/Histori...strial_Average

how serious can the dow/gold ratio be taken if it doesn't take this into account ?

[raja]

Re: gold price falls, $20 lib spread rises

This is a pretty interesting find. It could mean alot of things, one of which is that the market is pricing in the fact that there might be a gold confiscation as in the 1930's. I may be mistaken but I think the goverment would go after currency and not the collectibles (like libs) in this case. Therefore these types of coins are "safer". This is my first post and I might be way off but who knows. Oh and while I am posting thanks to everyone who contributes here especially EJ.

Regards confiscation:

1) What would the government gain by confiscating gold?
As I understand it, FDR confiscated gold so he could take the dollar off the gold standard . . . but our dollar is already fiat.

2) What excuse could the government give to confiscate gold?
Gold owners are probably wealthier, more intelligent and more informed than the average person, and so would mount an effective protest against confiscation if the reason for confiscation was not legitimate.

I think more likely than confiscation would be a high profit tax on the sale of gold.

[rtchoke]

Re: gold price falls, $20 lib spread rises

No. Keep it really simple. DOW/GOLD ratio. Look at what it's done over 100 years. It does not "peak" or "crater" at 1/1 more than once in a long while. What are you going to do, in 3-4 months, if you see DOW/GOLD at 2/1 or 1/1? I don't have a clear idea if it will that soon, but if it does, all your other nattering is out the window. An ounce of gold just bought a DOW share. Ding!

Lukester,
I recall you were big into the precious metals, as well as commodities months back(?), (or maybe years now?).Mainly Silver I think it was you were going all in on. Are you still holding onto these or have you dumped?

The dow/gold ratio has been somewhat in the forefront of my thoughts lately. With the ratio quickly approaching 2/1, 1/1, this would be signaling a time to get back into the Dow in the near future, however, with EJ stating that he will be increasing his Gold share to 30%, I supposed that would imply that the 1/1 ratio, if quickly attained would last quite some time, or is it that the expectation is that the ratio will surpass 1/1 and maybe get to 1/3, 1/4?? Is that even a possibility?