goldheaven.com

"I hope gold falls to $1000 an ounce," writes one Gold Mining stock analyst…

AS A SELF-PROFESSED gold bug, why would I possibly want my favorite investment to fall in value? asks Jeff Clark, senior editor of Doug Casey’s Gold & Resource Report.

Have the long hours finally caught up with me? Au contraire; my near-constant devotion to all things gold has only served to crystallize one of the things I really want out of this.

Here’s a hint…

I had lunch with a reader at a conference recently, and while talking about one of my favorite subjects – Gold Mining stocks – I asked why he was invested so heavily in them.

"Greed," he said bluntly and with little hesitation. I appreciated the honesty.

Let’s be frank: I’m here to make money, and so are you. And that’s why I hope gold falls to $1000 again.

Let’s say Bob has taken our advice and has been storing cash. I’ll use $1000 as an example. If Bob buys Yamana Gold now, he’d get about 93 shares as I write (at $10.73 per share).

Now, let’s say gold drops to $1000…about a 10% fall from here, and due to its leverage, AUY sells off by a 2-to-1 margin, meaning 20%. So with that same $1000, Frank, who’s waited for the downturn, buys 116 shares at around $8.58. Thus, instead of owning 93 shares at $10.73, he owns 116 shares at $8.58.

When Frank sells, he doesn’t just make the difference between $8.58 and $10.73 (an extra 25%), he also makes 125% on the extra 23 shares he owns if Yamana doubles in a couple years, which I expect it to. So two years from now, Bob would have $2000, but Frank would have $2500 because he bought more shares and at a lower price.

Frank makes 25% more than Bob on the same Dollar investment simply by buying when gold and Gold Mining stocks fall in price.

Got $5000 saved up? Multiply the profit by five. And with larger amounts, you can see we’re talking serious money.

I don’t know if we’ll see $1000 gold again or not, or if Yamana will fall that low, but I would point out that corrections in the Gold Price can range as high as 20% (2008 notwithstanding), so a further sell-off in price would not be out of the ordinary. A 20% correction from gold’s peak at $1,212.50 on December 2 would equal $970. That’s not necessarily a prediction, but it shows you that price is certainly possible.

Don’t like my wish? Remember, it’s called a bull market for a reason; it’s not a cow market or a puppy market. It’s going to try and buck you off. But a correction to $1000 or even lower can give you the chance to buy more, cheaper. Don’t view sell-offs as a bad thing but rather as an opportunity.

Bring on $1000 gold!

How best to Buy Gold today? "If there’s an easier way, I’ve yet to find it," says one BullionVault user…

Source:Why I Hope Gold Falls

Another small social pleasure done to death by the socialists…

WHAT BETTER WAY to mark New Labour’s last budget in power than by granting a tax cut on bingo…?

Muddled and messy beyond all hope of purpose, Alistair Darling cut the duty on bingo from 22% to 20% on Wednesday. But that undid less than a third of his own bingo-tax hike from just two years before. And of course, Britain’s own "Crisis Chancellor" (as Institutional Investor’s front-page calls him this week, not spotting the joke) did nothing to rescind New Labour’s smoking ban.

(The Fabians thought working-types only smoked when they drank, not when they gambled. Who’d have guessed it…?)

Bingo stocks may have jumped on the news today, but No.1 operator Rank says UK bingo-hall revenues are shrinking by one-fifth per year. So along with having a pint in your local, whatever small pleasure bingo afforded the plebs is just another social vice regulated by socialists into history’s fortnightly bin collection.

Noblesse oblige this week; presumption of innocence two weeks from now. Please dump running your neighbours’ children to school on the first Friday of each month; dispose of saving for the future the third.

"It is the Tontine Act [of 1693] which should be taken to mark the origin of the national debt," reports a late historian.

Deriving its name from the Italian inventor, who first took it to France, "The tontine is an interesting mixture of group annuity, group life insurance, and lottery," says a paper at the NBER.

Scourge of Lehman Brothers, 2009 gold bug and now Tokyo bond bear David Einhorn recently said Japan might consider reviving the system. But whoever squeaks home in next year’s UK election, the tontine route to raising funds will appeal most to London’s government. Because gambling and cheap finance are just what we need. Preferably at home, so we can keep smoking too.

A way of raising money without having to pay it all back, the tontine as applied by the English state in the late 17th century offered lottery prizes of between £10 and £1,000 per year to the lucky holders of 2,500 tickets out of 100,000 sold. These annuities ended with the life of the holder, which back then made a fair bet for the state.

Gilt holders beware. Already paying less than inflation, today’s tontine successors might soon become an out-and-out lottery. The Bank of England has monetized the entire fiscal deficit for 2009 to date. That sound you can hear, above the din of money creation grinding out 14% of GDP, is foreign creditors and the City grumbling about the UK state’s credit rating.

Eyes down for an empty bingo hall – and vanished tax duty!

Ready to Buy Gold…?

Source:All Shall Have Prizes

Buy it for the gold bug in your life this Christmas…

STOCK-MARKET BULLS never read history, as in anything from the day before yesterday, and least of all the pink pages’ price/earnings table today.

So the library shelves marked "332" under the Dewey Decimal system are typically left free for bears and gold investors to roam. And glancing at how long the stock-bull of 1982-2000 ran, you can see why.

Gold lost three-quarters of its purchasing power during that time. Only the grand sweep of history then proved that the glass was neither half-empty or full, but shattered…as the much-fabled history-loving "gold bug" believed all along.

"Gold has two interesting properties: it is cherished and it is indestructible. It is never cast away and it never diminishes, except by outright loss…"

So wrote Professor Roy Jastram in The Golden Constant (John Wiley & Sons, 1977). Alongside Peter Bernstein’s The Power of Gold and H.W.Brands’ The Age of Gold – but swapping their ripping yarns for dry, scholarly tables of grain prices from the 18th century – it’s one of the very few books to acknowledge what die-hard gold investors feel so sure to be true:

Gold is much more than mere metal. It’s history itself.

"[Gold] can be melted down, but it never changes its chemistry or weight in the process. The ring worn today may contain particles mined in the time of the Pharaohs. In this sense it is also a constant."

It’s not something you can say of many other investments. Atomic weight 79; melting point 1064°C at sea level; cooled density 19.25 grams per cubic centimetre…gold’s got everything a collateralized debt obligation has not. Time cannot dull or change it. Debt default can’t diminish its value (provided you own it, securely, outright of course). And as Jastram’s detailed study of four centuries shows, gold’s value, like its nature, also displays something of a constant – constant across the long term at least – as measured against wholesale prices.

Trouble is, as Marc Faber of the Gloom, Boom & Doom Report reminded us late in 2008 – just as gold was sinking alongside everything else – "Gold has kept its purchasing power over the course of history…[but] the problem is that the owners of the gold changed over time."

How long can you wait for your wealth-store to return to full value? Or as Faber put it, "When Timur sacked Aleppo and Damascus in 1400, it didn’t help to have your savings in gold. You lost your life and your gold."

Tamberlaine’s Mongol heirs soon enough lost that gold, too. But amid such cataclysms, Jastram saw instead what he called "The Attila Effect" – the plain fact that, as Jill Leyland explains in her additions to the new, re-issued and updated text of The Golden Constant, "Men and women have turned to gold in times of distress, whether political, economic or personal…"

"The Latifundia passed gold bars secretly to their heirs," wrote Jastram 32 years ago, "who thus survived barbarian invasions to become nobility under the Merovingian kings of the fourth century…Austrian refugees, escaping Hitler’s storm troopers, often owed their survival in a new country to the gold and jewels they could carry on their persons…The French peasant was astute when he buried his coins on the threat of invasion and pillage…"

Through such crises as the French and Bolshevik Revolutions, as well as Hungary’s post-war hyperinflation – worse even than Weimar Germany’s one trillion per cent on some accounts – gold retained its ability to raise cash, if not act as payment itself, for those lucky few who’d chosen to hoard it ahead of the need.

Nor does history require "extreme episodes", as Leyland writes in the new 2009 edition, "to demonstrate the value of gold in a crisis…"

Jastram’s study famously split the history of gold’s purchasing power into inflation, deflation, and the rest. Since gold was usually money during the first 350 years of his scope, it also acted quite oddly to our 21st century view:

Gold’s value rose during deflation, but fell during inflation. Whereas today, of course, everyone expects gold to rise when the cost of living increases, but fall when the threat of inflation recedes. Which may or may not be wrong, but the first post-Gold Standard inflation said otherwise, and it most likely won’t matter given the volume of faith this very modern idea now stores.

Hence Leyland’s labels for her post-Jastram charts (the thirty years from 1977), which first concur with but tweaking his framework ("High Inflation: 1970-1980"; "Disinflation: 1980-2000"). To fit non-money gold’s four-fold increase so far this decade, however, a whole new category’s needed – "2000-2007: Inflation fears revived".

And the future? Inflationary fears will be revived by the price of the new Golden Constant, costing $110 in the US, or a shocking £79.95 in the UK…equal to a Dollar exchange rate of just $1.37. Yet this is a scholarly tome, and even corduroy jackets aren’t cheap. Second-hand stores, meantime, are still charging $181 or more for the 1978 hardback (worse yet again in the UK, priced at £157.98 with a quarter-century-busting $1.14 on cable. How’s that for the grand sweep of history!).

If you or the gold bug in your life needs reassurance this winter that, in the long-run at least, gold’s constant purchasing power is as rare and precious as its substance, you could do much worse than treat him for Christmas.

Just don’t expect to see much of him (and let’s face it, it will be a him…) outside your library on Boxing Day.

Source:The Golden Constant

More small investors are acquiring physical gold amid apocalyptic panic over the financial system. But buying gold in this form is costly and presents unique risks.

Source:Catching The Gold Bug (WallStreet Journal via Yahoo! Finance)

Catching The Gold Bug Wall Street Journal Worried about a harrowing, inflation-ridden future, Scott Van Steyn has found the answer in a batch of glittering one-ounce gold coins. … The 2009 Gold RushForbes all 3 news articles »

Source:Catching The Gold Bug – Wall Street Journal