GOLD
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Big Bad Barney
- Posts: 379
- Joined: Mon Feb 04, 2019 6:00 am
BUY BUY BUY!!!
Silver has had a nuts run too... at all time high and more than doubled this year. I don't look at the other metals because they aren't as shiny.
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Big Bad Barney
- Posts: 379
- Joined: Mon Feb 04, 2019 6:00 am
Check out silver!
In Australia, news reports massive lines at bullion dealers.
In Australia, news reports massive lines at bullion dealers.
A while back I learnt that in extreme situations gold and silver usually go down first as positions are liquidated. I asked Claude to explain it better:
It's not as counterintuitive as it first appears once you understand the mechanics at play.
The initial drop comes from a few converging forces:
Liquidity crunch. When war breaks out, panic hits all markets simultaneously. Investors and institutions need cash immediately — to meet margin calls, cover losses in crashing equity and bond markets, or simply hoard currency. Gold gets sold not because people don't want it, but because it's one of the few things they can sell quickly. It's liquid, so it gets liquidated. This is the same dynamic you saw in March 2020 — gold dropped sharply before rallying hard.
Government intervention. Historically, governments at war have actively suppressed or controlled gold markets. In both World Wars, major belligerents imposed gold export bans, fixed prices, or outright confiscated private holdings (FDR's Executive Order 6102 in 1933, for instance). This artificially caps the price and disrupts normal market function.
Dollar/sterling strength (paradoxically). Early in a major conflict, the dominant reserve currency can actually strengthen as global capital flows toward the war-making power's treasury for safety. If gold is priced in that currency, its nominal price gets pushed down.
Deflationary shock. The initial phase of a major war often triggers economic contraction — trade routes collapse, credit freezes, consumption drops. Deflation suppresses commodity prices broadly, including gold.
Then gold rises because the second-order effects kick in: governments print enormous amounts of money to finance the war, inflation accelerates, sovereign debt explodes, faith in fiat currencies erodes, and the fundamental case for gold as a store of value reasserts itself — usually with a vengeance.
So the pattern is essentially: short-term liquidity demand for cash beats long-term inflation hedging, until it doesn't.
I have got different support and trend lines for silver at $57, $54 but really hoping a deep below $47 at which point I am a buyer again. $40 is also doable (just need patience)
It's not as counterintuitive as it first appears once you understand the mechanics at play.
The initial drop comes from a few converging forces:
Liquidity crunch. When war breaks out, panic hits all markets simultaneously. Investors and institutions need cash immediately — to meet margin calls, cover losses in crashing equity and bond markets, or simply hoard currency. Gold gets sold not because people don't want it, but because it's one of the few things they can sell quickly. It's liquid, so it gets liquidated. This is the same dynamic you saw in March 2020 — gold dropped sharply before rallying hard.
Government intervention. Historically, governments at war have actively suppressed or controlled gold markets. In both World Wars, major belligerents imposed gold export bans, fixed prices, or outright confiscated private holdings (FDR's Executive Order 6102 in 1933, for instance). This artificially caps the price and disrupts normal market function.
Dollar/sterling strength (paradoxically). Early in a major conflict, the dominant reserve currency can actually strengthen as global capital flows toward the war-making power's treasury for safety. If gold is priced in that currency, its nominal price gets pushed down.
Deflationary shock. The initial phase of a major war often triggers economic contraction — trade routes collapse, credit freezes, consumption drops. Deflation suppresses commodity prices broadly, including gold.
Then gold rises because the second-order effects kick in: governments print enormous amounts of money to finance the war, inflation accelerates, sovereign debt explodes, faith in fiat currencies erodes, and the fundamental case for gold as a store of value reasserts itself — usually with a vengeance.
So the pattern is essentially: short-term liquidity demand for cash beats long-term inflation hedging, until it doesn't.
I have got different support and trend lines for silver at $57, $54 but really hoping a deep below $47 at which point I am a buyer again. $40 is also doable (just need patience)
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ForFolksSake
- Posts: 1073
- Joined: Sat May 11, 2024 2:51 pm