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> OK guys, let's just all simmer down. the point is that there is now a
> tremendous story unfolding in precious metals. Let's try to seek ways to
> profit from it, instead of arguing.
>
Good idea, since the cafe crowd seems to be so bullish, let's look at the
other side of the coin.
1. If you read the announcement from the European governments closely, I
believe you'll find that they said there would be no more gold sales OTHER
THAN THE ONES ALREADY ANNOUNCED. By my recollection, a large amount of
announced sales have not been completed yet. One could argue that these
sales are already priced into the market, but considering the move in gold
prices over the past few days, I think it's safe to say a lot of the
impending sales have now been "priced out."
2. The world's largest owner of gold, the US, did not agree to this sale
moratorium, and could jump into the selling game at any time. I personally
think it would be the smartest thing we ever did. Having most of one's
reserves in the form of just gold is like having all of your personal
portfolio in a single stock. Most central banks have finally accepted the
fact that gold is expensive to store, and (in the long run) earns virtually
no interest. They have thus begun to sell gold and diversify their
portfolio by buying various foreign debt instruments (which have essentially
zero carrying costs and at least earn some interest). It's only a matter of
time before the US joins the game.
3. Another large gold holder, the World Bank, was recently floating the
idea of selling gold to use to pay off the foreign debt of several
impoverished countries. The idea was tabled because of the low price of
gold, but will now almost undoubtedly be examined again.
4. Many of the gold bugs are not aware of the simple fact that the cost of
extraction and production of gold has fallen dramatically. Mines that were
unprofitable at $300 gold just a few years ago are now substantially in the
black at that price. At current prices, closed mines are going to be
re-opened in droves.
Bruce
(the guy trying to take the punch bowl away at the party)
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