How Do You Think The Next Round of Quantitative Easing Will Effect Precious Metals?

Historically every time another round of Quantitative Easing goes into effect, the price of precious metals goes up.

With this next round of Quantitative Easing (QE3) do you think the precious market will follow it's historical routes and go up again?

If so, what do you plan to invest in, Gold, Silver or another metal?

Your questions in order:
1. Don't know
2. Not necessarily
3. Not saying

Welcome!:wave:

Hi Trevor and welcome aboard

your questions sound like an opener for you to supply a need.
Not a problem for me if you are honest and above board about it.

We are aware of a clear correlation between officially stated printing and the price of gold but what we dont know is how much printing, steralised or otherwise, is really happening. It is clear that markets are manipulated but again we dont really know by how much.

I doubt if theres anyone here who doesnt believe pm's can only go up in paper terms, as paper is so obviously being diluted.

The discussion regarding which metal to hold while the storm passes ( not quite the same as 'investing in' ) is much harder to answer.
Silver seems to be much more volatile than gold and potentially could pop a lot higher in relative terms. Great if you can 'cash out' and convert to property, not so great if you are a long term holder and see its cash value going as fast as it arrived.
And if you think its all gonna go 'mad max' then silver coin makes a lot of sense.

From '05 to '08 i struggled to make sense of everything, just knew things couldnt continue as they were. i read shitloads and tried to pick up every opinion. When i found FOFOA i knew his in depth work, based on the genius of people we would never normally have access to, was as good as i was going to get.
As intellectually challenging as i could cope with. He fried my brain but it was worth it.

So if i hadnt already converted every penny of savings into gold with a silver play for entertainment, i would say gold is the real treasure that i would buy.

Ok, turning the discussion around, what are you selling most of, in $ terms ?

This question gets discussed frequently. There are a few good threads on the subject already:

http://www.pmbug.com/forum/f13/how-select-metal-buy-sell-703/

http://www.pmbug.com/forum/f13/gold-silver-ratio-1103/

http://www.pmbug.com/forum/f13/todays-prices-would-you-buy-silver-over-gold-1353/

I say it depends upon how much of those excess reserves get piled in to PM shorts.

I agree with ancona, I think it is unlikely that the money masters would let it just go up proportionally to the amount of new debt being issued in the following rounds of QEs and whatnots, without putting up huge fight. I'd rather expect heavy weight attack(s) on Gold/Silver, possibly even significant drop in spot price (temporary).

No matter. The lower it goes, the better for me (dollar costs averaging). Eventually, and pretty soon anyway, the game will be up.

That being said, I am not a market pro in any sense - I just like to think about myself as a rather clever guy, with a good strategic vision, intuition, and a gift to be able to anticipate strategic moves of my "opponent" (that being Central Banks playing games with economies).

Im with DCFusor on this one.

The correlation between printing and the POG has been close enough to believe it will continue. ( hopefully DCF will repost the relevant chart )

Yeah for sure there will be manipulations as well, cos thats how they fleece anyone daft enough to trade.

Thanks for the warm welcome.

I'm not here just to supply a need. However, if that happens in the meantime, you won't hear me complaining. Other than links to my site in my profile, you will rarely, if ever see me post links to my site. I definitely won't be trying to "sell" any forums members on my services.

But I'm here to learn more from other investors, and find out what others are up to, and their thoughts on the markets. Seems like every day that passes, the market gets more volatile, and investors are changing their strategies.

You made some really great points. While the government said they will be printing 40 Billion a month indefinitely, the actual $ amount could definitely be much more than that. If I have learned anything from this countries government, it's that you can trust this countries government.

Gold is definitely a "Safe Haven" as they call it. But my eyes are definitely on Silver to make some big moves over the next 5 - 10 years.

With more then 80% of all mined Silver already used, the law of supply and demand will undoubtedly start to kick in sooner or later. And being that electronics use a fair amount of that silver up, and technology taking over more and more of our lifestyles, i can't see it going any way other than up.

And to answer your question, we seem to sell more Gold than anything in terms of quantity, and overall $ amount. However over the last year we have seen Silver sales gain substantial growth, and I don't see it slowing down anytime soon.

rblong2us said:

Hi Trevor and welcome aboard

your questions sound like an opener for you to supply a need.
Not a problem for me if you are honest and above board about it.

We are aware of a clear correlation between officially stated printing and the price of gold but what we dont know is how much printing, steralised or otherwise, is really happening. It is clear that markets are manipulated but again we dont really know by how much.

I doubt if theres anyone here who doesnt believe pm's can only go up in paper terms, as paper is so obviously being diluted.

The discussion regarding which metal to hold while the storm passes ( not quite the same as 'investing in' ) is much harder to answer.
Silver seems to be much more volatile than gold and potentially could pop a lot higher in relative terms. Great if you can 'cash out' and convert to property, not so great if you are a long term holder and see its cash value going as fast as it arrived.
And if you think its all gonna go 'mad max' then silver coin makes a lot of sense.

From '05 to '08 i struggled to make sense of everything, just knew things couldnt continue as they were. i read shitloads and tried to pick up every opinion. When i found FOFOA i knew his in depth work, based on the genius of people we would never normally have access to, was as good as i was going to get.
As intellectually challenging as i could cope with. He fried my brain but it was worth it.

So if i hadnt already converted every penny of savings into gold with a silver play for entertainment, i would say gold is the real treasure that i would buy.

Ok, turning the discussion around, what are you selling most of, in $ terms ?

Click to expand...

Reposting some links. Probably most here haven't checked out this:

http://www.coultersmithing.com/forums/viewtopic.php?f=51&t=328&start=0

Where I post charts, links, funny stuff, political stuff, as it happens. This is one heck of a long thread.
The 7th page has the markets as priced in gold if that's what you were looking for.

Some of the links of course, came from here...Zh, BBerg, and so forth.

I seem to have lost the chart where debt ceiling vs price of gold was plotted. The correlation is in the high 90's, however, with only minor wiggles on the gold price vs the stairstep of the debt ceiling. It was most convincing...and I think it came from here, someplace, darnit. Too bad both forums are kind of hard to search for things like that.

I did find this one while looking, though (sick business humour):

But this is what you wanted reposted. This is one reason to have your own site - nothing disappears unless you make it so. And not to rag on DoChen (a friend) but your really own site - you know, the type you pay for and that can't go away or have its policies changed by some outfit in exchange for "it's free - but we own it". It's not that expensive.

Glad you followed up Trev, it was beginning to look like you were a single visit sort ......

And good to know my thinking is broadly similar to others who are buying from you -

Gold is the place to go, with silver the wild card that could be fun.

Like I said few times before, Gold has tremendous potential to the upside, when (note the absence of "if" ) reintroduced as a currency. Or even when the investments houses start to allocate at least a portion of their portfolio into gold. Big boys play.

Silver... well, it always was "poor man's gold" - anyone sees the upside potential here, when average Joe the sixpacks start trampling over each other, to get their hands on some hard currency, once the paper money collapse begun? Can they afford gold - expensive enough today, in paper terms - and how expensive it is going to be, before they realize what's going on?

Therefore, I believe in 50/50 allocation of the two, in dollar terms. Agree that silver has more potential, and is further away from being manipulated into death, once sheep recognizes it's worth. But it is also hard to estimate gold's potential to the upside, if/when financials start panicking, realizing that all their assets might get nice percentage returns, in dollar terms - the only problem is, that dollar will be going down even faster, in real terms. And today, gold part of the portfolios are just tiny, percentage-wise, comparing to paper (dollar-denominated) assets. AFAIR, I've seen estimates, that about 2% (total) portfolios consist of gold, on average. If we see, say, even just 5% of portfolios (globally) redirected into gold, supply/demand would dictate 2.5 times rise in gold prices. And it would be still TINY portion of portfolios, IMHO - so the sky is the limit, once things start to happen.

Thus, I just think 50/50 Gold/Silver, in dollar terms, and don't loose sleep over it anymore - one way or another, it will be one nice slingshot, eventually.

No, just got busy with other things, and this forum kind of slipped my mind.

I'm sure it won't be the last time i forget about it. Real life can be distracting sometimes.

I can see your point with Silver being a wild card based on the past numbers, especially when thinking about the Hunt brothers play to corner the market and manipulate the price of Silver in the 80's.

However, unless the electronics industry finds another substance that is as conductive as silver, and fairly priced, I can't see the price of Silver dropping in the long term at all.

Or... If another company or individual manipulates the pricing of Silver, and ends up failing, I can't see a major drop in Silver prices coming any time soon.

But just like everything else in the investing world, this is all at best, speculation.

rblong2us said:

Glad you followed up Trev, it was beginning to look like you were a single visit sort ......

And good to know my thinking is broadly similar to others who are buying from you -

Gold is the place to go, with silver the wild card that could be fun.

Click to expand...

Agreed, there is not yet a substitute for silver and its an awesome biocide -
Lots of things in hospitals are getting silver coatings, inc taps, door handles and wound dressings. The simplest and best way of stopping the superbugs from spreading.

Then theres my silver impregnated socks ..... good for grounding when used in conjunction with my copper wound flip flops and still not needing to be washed after 3 months (-;

So on a supply and demand basis, silver does look very interesting but if you want to back your currency, gold works better, partly because it is not used up in industrial process.
Gold is a different kind of bet, with a worst case for gold being that it simply buys the same amount of 'stuff' it always did.

I think that investment demand in today's world defines the price in much wider brackets, than any possible physical demand. Simply because the "monopoly money" (eg, the money existing in virtual, investment-only part of the economy) is, depending on estimates, one-two orders of magnitude bigger, than the money related to the "real" (goods & services) economy. So, simply put, even if the whole Earth industry was based off Silver (and it is not - it is based off the oil, BTW), and the whole Earth industry money was directed into Silver - it is still drop in a bucket, comparing to even 20% of world's INVESTMENT money.

And all that "monopoly money" is very liquid and can (and will) go into commodities/more conservative investment vehicles (PMs, land) in a heartbeat, as the problems deepens.

The other interesting question is, that industry deals with the REAL silver, but the spot price discovery, is defined by the PAPER silver markets... Seems to be just another example of a financial industry "tail" wagging a real economy "dog"...

The most significant difference between stock dilution and currency dilution is of course that publicly traded companies tend to use the funds raised through dilution to add value by investing those funds - whereas governments don't add value by diluting a currency. In this case, $900 billion will be diluted to purchase US treasuries so the primary benefactor of the quantitative easing will be the US federal government and the financial institutions selling that debt. However, capital flows can rarely be controlled and the newly created money will find its way into other markets and asset classes.The result will be a double digit real negative interest rate and a carry trade opportunity to sell treasuries and other US dollar secured paper at a cost of near 0 percent while accumulating real assets such as precious metals and other resources that cannot be diluted.