The ‘Gold Bubble’ In Perspective January 31, 2012 | Author Pater Tenebrarum


The Gold Price Compared to Various Yardsticks

Our friend Ronald Stoeferle from Erstebank in Vienna has sent us a few charts that we think are well worth considering (readers may recall his widely read and excellent series of reports entitled 'In Gold We Trust' – for those who have missed it, a pdf file of the most recent report can be downloaded at the bottom of this previous missive).

Many people insist on referring to the gold bull market as a 'bubble', to which we always retort, 'one day it may well become one, but it's not there yet'.

Most prominent among the gold bears who have been deriding the advance in vain over the past several years has been Nouriel Roubini, who has referred to the gold market as a bubble for quite some time, but there are many others who agree with his view. Roubini apparently simply hates gold, presumably because its rise stands as a constant reminder that the money printing and deficit spending policies he supports are seen in a rather dim light by the markets.




It is only natural though that people are worried about the possibility of a bubble having formed. After all, the gold price has now advanced a good bit from its lows 11 years ago and it has done so unwaveringly year after year. Since gold is difficult to evaluate, one must go about the exercise in roundabout ways. Gold is not consumed and the market treats it as a currency rather than a commodity, so it can not be analyzed by the supply-demand type analysis applied in e.g. analyzing industrial commodities prices. Since it has no yield it is also not possible to calculate its present value by discounting a future stream of earnings, such as one can e.g. do with stocks and bonds.

However, it is possible to compare gold to alternative investment assets as well as to various monetary aggregates.

For an in-depth discussion of the major fundamental drivers of the gold price, we refer you to a previous article, 'Precious Metals, An Update'. Although the article is slightly dated by now, the principles discussed in it remain of course valid.

More here

http://www.acting-man.com/?p=13883

For CIMB, Minimum subsequent Purchase/Sale is 5 grams and must be in multiple of 1 gram. That mean, you can purchase/sale 5,6,7,8,9,10,11 gram of gold at one time.

---

Added on February 2, 2012, 10:27 amUOB is the best in terms of the spread rate, the buy rate, and the selling rate. Look, it is not wise to say the location is far away from your house. Russia and China has invested oil & gas in Iran and Caspian Sea. Did Iran located about 5km from Russia and China? Of course not. Did Russia and China hunger to maximize their country's profit? Probably yes. Did Russia and China aims to increase their GDP growth through oil & gas investment? I bet they did. When you want to invest something, pour your heart into it and create a will/way to explore the best way to reach the location.

The RM800 is a rough estimation, as one need to make a subsequent purchase/sale in 5 grams and must be in multiple of 5 gram for UOB Bank. That mean, one can purchase/sale 5,10,15,20,25 gram UOB gold at one time.

This post has been edited by izzudrecoba: Feb 2 2012, 10:28 AM

well said, spoken like a visionary investor. Pour your heart out and make your own way, or else...

"Gold investment corner v4, Will gold price achieve USD2000 by 2012? "

Isn't this a stupid question?
Might as well ask what Toto number will come out the next draw.
Can be instant millionaire instead.

Hi Turion64,

Correct. The UOB gold rate after CNY was RM172/g from RM166/g. That's a ROI of almost 4% within 2 weeks bro.

The price of gold will goes up after CNY 2012 due to the following reasons:-


i. The United States Federal Reserve announced "near zero interest rates" policy until late 2014 result in investors and consumers pouring their money and savings into gold. Gold price rose sharply upon the announcement by the Federal Reserve Chairman.

ii. Aggressive gold demand by emerging countries such as China, India, Russia and Venezuela. Venezuela, the holder of Latin America’s biggest gold reserves, is now busy bringing back some 160 tonnes of gold – the bulk of its foreign bullion reserves – held at banks abroad, including the Bank of England. The Qatar Royal Family has invested $10 billion in gold investment. As demand soar, so does the price of gold.

iii. EU oil embargo for Iranian oil starting on 1st July 2012. Oil price rise in tandem with gold price. India and China is set to purchase Iranian's oil with gold to skip U.S. sanction.

iv. The rumors of war between US-Israel-Iran further exacerbate gold price in the long term.

v. U.S. budget deficit is at it's highest as compared to the Great Depression and World War I, will result in a spike of gold price.

vi. Upcoming quantitative easing (money-printing) from U.S. Federal Reserve will result in further U.S. dollar devaluation, and this will increase the value of gold to a record high. Central banks worldwide have rolled out an unprecedented $12 trillion worth of stimulus programs, with most of the money still to be spent.

vii. A Looming Currency Crisis: The “PIGS” – Portugal, Italy, Greece and Spain – aren’t in very good fiscal shape – and they aren’t alone. Iceland has already gone over the edge. The United States, the United Kingdom, and countless other economies are struggling. That reality has ignited a crisis of confidence about fiat currencies in the minds of many investors. Under such conditions, gold – the ultimate store of value, and the oldest existing form of money on earth – will soar as investors seek to protect their purchasing power.

Overall, 2012 will continue to be a year of turbulence. In these latter times, gold will continue to be one of the best performing investment for investors.


Warmest Regards,
Raja Noor Izzuddin a.k.a. izzudrecoba

Raja Noor Izzuddin is a consultant in Frost & Sullivan Asia Pacific. He holds an MBA in International Business from Universiti Putra Malaysia. He served PETRONAS and Maybank before pursuing his career in management consultant.

This post has been edited by izzudrecoba: Feb 2 2012, 04:52 PM

new here,dont want to disturb you guys or make you guys angry so i decided to read from page 1 to page 51(skip a few homeworks in between and dont really care about teacher scolding me XD) but clearly i dont understand a lot of things,you guys can call me Harris or anything you want lol,first of all sorry because of my english and my noob questions even though i read all the pages but,i got interested in gold.Is it illegal or somehting if i were to walk into a bank or something and buy myself physical gold at my age(15,16 this year),i dont have any money but 1 day i want to buy gold.my first choice is PAMP Suisse,and the only place that i know is uob bank,but the selling price of 1 gram gold is 332 and the buying price is 199(you can laugh all you want because 1 gram might sound hilarious to you guys but i think is affordable,but i actually got tempted with the big boys which is more then 100g but clearly there's no way i can afford it) ,i dont know why but i now i will regret it if i were to buy their PAMP Suisse at their selling price,second choice is public gold,but it is locally produce but the spread(i assume is the diff between the buying and selling)is really tempting.so is there another place where they sell PAMP Suisse with a really low spread?im not sure of the term spread is used correctly in my question,but i really want PAMP Suisse as my number 1(actually number 2 beacause i want a to buy a laptop for myself first) stuff i want to buy for myself.really hope that a kid like me didn't disturb you guys because im not trying to troll you guys or something.i hope you guys can answer my questions.so thank you and have a nice day,and sorry for my bad english,oh,1 more question,what if i tear of the plastic casing(if i own 1)and hold it in my hands(wow,that must be heaven or something),what will happen to my gold,like nobody in this world will buy it even if i sell it for 10% of the spot price(i hope i use the the term correctly,again,)so thank you and have a nice day

Hi Harris, welcome to the world of gold investment. It is impressive at your age you have already contemplating about investing in gold. You reminds me of Augustus Caesar, at such a young age, are so ambitious to build coalition with Rome's senators & middle class to be the emperor of Rome

To answer your question, if your physical gold is scratched, damaged, dented, then the bank will no longer purchase the gold. However, for certain gold like public gold, you are still eligible to sell the "not so perfect" gold to the bank/seller.

Guys,so I had decided to make an investment in gold,I am actually at the age of 16, I had actually planned to saved all my money and by 18yo,I will be having enough money for gold rolling.Since I saw what harris posted(lurking here for quite sometimes) .I had many thinks wondering in my mind,
Let's say,if I buy gold from either physical or paper? Do both require a minimum age of 18 or only the paper method?
2nd questions would most likely be ,So I buy some gold physically for a month and I had decided to sell it the next month,would bank accept it? as in 10g or 20g?..Thanks or either 5g?..You are very welcome to give me an answer Thankyou and is physical gold,how do I sell it?

This post has been edited by D-Frog: Feb 2 2012, 08:30 PM

unless you have alot money upfront, just stick with paper gold first.

Don't just get clouded by the $ when you sell your gold, there are other much more suitable stuff for yongsters to invest into.

Survey all around,forex,stock market and even selling phones,all told me I must be 18 above to be eligible,
...any good investment to recommend? Paper gold is fine with me,but I have to be above 18 ..

i think im sticking to prucash for now... dun like the idea of the price fluctuating. nanti i tak jadi makan tak lena teedor... the my studies FUBAR... =P

Maybank still buy back Kijang Emas even if it scratched.
I mean HAIRLINE scratch which don`t affect the purity & weight.

Public Gold always heavily stressed this misleading statement.
I think that is a cheap shot to shake the greenhorn investor.

How much is current paper gold per gram?

based on my
Powered by Galmarley (chart)

its 1759.57 USD / oz

If you are still keen on getting a paper gold account, can always use your parent's name to open the account. If use the PB online account, can even transact online. Who will know that you are below 18

wow. younger generation these days thinking about investing.
on my days, i was thinking about ps1 and tony hawk pro skaters 4. LOL

i just found out bout gold investment recently after failing my attempt to invest in properties line. just a small2 investor with paper gold in MGIA.
thumbs up to all these youngsters!!

thanks izzudrecoba for answering my question,is really-really helpful,search the whole internet about tearing the case for PAMP Suisse,but there still some questions that is not answered.like i said,i know i will regret buying PAMP Suisse from UOB because their selling price is much2 hire then their buying price.so is there any other place where the spread(i hope the term that i use is correct)is lower and more affordable,that is my first question.my second question,can a kid like me(16 years old this year)can legally own physical gold,or i cant own physical gold,even if i own it,do i have to pay zakat/tax.like i said,im not here to troll or prank anybody,so bye,than you everybody and have a nice day

My parents doesn't agree for me to do gold investment at this time of the age,he told me I should do what normal kids would do ...ANYWAY..Thanks ..I shall go ask them again ..

i played my whole form 4-5 with ps.. lucky still got into university...lol..

1) Tax is not imposed to precious metals, YET.
But, i heard goverment were considering a tax onto it.

2) Zakat only applicable if the owner buy gold with his/her 100% owned money.
If someone are buying with loan money (in any form), he/she doesn`t have to pay for zakat.