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TMFAleph1 (95.32)

2 More Reasons the Gold Trade Is Dead

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May 17, 2013 – Comments (29) | RELATED TICKERS: AUY , GLD , SLV

2 More Reasons the Gold Trade Is Dead

29 Comments – Post Your Own

#1) On May 17, 2013 at 6:23 PM, ChrisGraley (29.74) wrote:

Headline should just read "I'm a liberal cheerleader!" 

No facts, just the party line. 

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#2) On May 17, 2013 at 10:19 PM, MoneyWorksforMe (< 20) wrote:

This guy, Alex (I think) is completely oblivious. This market is wonderful with all of these ignorant people running around thinking they are right for all the wrong reasons. It's okay for now, but the problem is, they don't know why they're right, so when that unkown changes, they will be completely blindsided. I bookmark these posts to look back in retrospect--that should quite enjoyable.

Below is all you need to know. A succinct description of what is happening.

 http://www.paulcraigroberts.org/

 Credibility?

 http://en.wikipedia.org/wiki/Paul_Craig_Roberts

Q.E.D

 

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#3) On May 17, 2013 at 11:37 PM, awallejr (77.67) wrote:

Well I wouldn't say QED off a wikipedia link.  Personally I suspect Alex just tries to drum up controversy to get activity on this site, although he has made some silly arguments in the past.

I don't really care what gold does during my life.  I buy the coins with no intention to ever really sell.  So what its value is at the time of my death is an issue for my heirs and executor to deal with. As I have argued, it is an "insurance" policy, lower the cost and I buy more. Unlike Peter Schiff, I don't sell gold. I buy.

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#4) On May 17, 2013 at 11:46 PM, MoneyWorksforMe (< 20) wrote:

Gold and silver all-in mining costs: $1300/ounce and $23/ounce respectively. Manipulation? Nahhh. London Gold Pool, Libor...No wayyyy...Most mining companies are currently operating at a loss at these prices. This is unsustainable.

 http://silverdoctors.com/2011-complete-cost-for-mining-silver/ 

 http://seekingalpha.com/article/1418171-true-cost-of-production-complete-silver-industry-list 

 http://seekingalpha.com/article/1340961-what-it-really-costs-to-mine-gold-the-newmont-mining-edition  

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#5) On May 18, 2013 at 3:44 AM, TMFAleph1 (95.32) wrote:

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#6) On May 18, 2013 at 10:38 AM, dragonLZ (99.33) wrote:

#2) On May 17, 2013 at 10:19 PM, MoneyWorksforMe (< 20) wrote:

This guy, Alex (I think) is completely oblivious. This market is wonderful with all of these ignorant people running around thinking they are right for all the wrong reasons. It's okay for now, but the problem is, they don't know why they're right, so when that unkown changes, they will be completely blindsided. I bookmark these posts to look back in retrospect--that should quite enjoyable.

 

Says a person who's down approx. 70-80 points (that's like a lot) on all of his gold and silver related picks. Most of them picked in 2010 and 2011.

So, a person who was wrong for the last 2-3 years, thinks he needs to teach people why they are right for the wrong reasons?

Nice.

(I'm pretty sure this comment is getting bookmarked...)

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#7) On May 18, 2013 at 10:45 AM, dragonLZ (99.33) wrote:

#1) On May 17, 2013 at 6:23 PM, ChrisGraley (31.45) wrote:

Headline should just read "I'm a liberal cheerleader!" 

No facts, just the party line. 

 

You probably prefer the posts filled with facts as to why gold is going to $5,000 by year 2012, thus reaching 1:1 ratio with Dow (yes, old posts that proved to be wrong, but why do you care?).

Facts being "Jim Sinclair said..." and "Peter Schiff said..." 

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#8) On May 18, 2013 at 11:02 AM, MoneyWorksforMe (< 20) wrote:

Above is 2 more reasons TMF CAPS  is on its death bed.

Add that to this post:

 http://caps.fool.com/Blogs/what-happened-to-caps-blogs/812845

Maybe eventually you'll figure all this out DragonLZ. I know this is puzzling to a stock market genius like yourself...You'll have to actually critically think things through. 

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#9) On May 18, 2013 at 11:20 AM, MoneyWorksforMe (< 20) wrote:

I am not going to try and defend my CAPS score. All that I will say is that I don't actively participate in the game. I actually work for a living, which I know is quite rare in America today, and as such I don't have the time or ambition to analyze individual companies as many of the top CAPS players (no, not you Dragon) do. My calls are more macro based than anything and as such I see large moves in my score in both directions. I don't even remember when my last pick was---I suppose I could look that up, but I don't care. I'm here for the CAPS posts only. My activity even in this respect has fallen quite preciptiously, much like my score.

With that being said, I'll let the amount of recs speak for the quality of this prescient article. And you can keep trying to defend the indefensible.

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#10) On May 18, 2013 at 12:16 PM, dragonLZ (99.33) wrote:

MWM, nobody asked you to defend your score (as you said, don't try to defend indefensible - numbers are numbers, they don't care about opinions or excuses).

But show us where were you so right (about anything stock market or precious metal market related)  to have earned the right to go around telling people how you now "they are right for the wrong reasons".

If you can show us that you knew exactly what will happen (and that you played it correctly), I will gladly and humbly apologize to you for bringing up your score on precious metals related picks (have you noticed I never mentioned your CAPS rating or your score - I find those as not being relevant? But if you are going around posing as a "precious metal expert" and calling "wrong" everyone who doesn't believe in gold and silver, then at least show us what is it that you predicted correctly when it comes to precious metals). 

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#11) On May 18, 2013 at 12:25 PM, dragonLZ (99.33) wrote:

"Above is 2 more reasons TMF CAPS  is on its death bed."

 

Are you trying to say CAPS blogging is on its death bed because goldbugs are getting offended by the facts?

If that's the case, then I say you were very right about the direction of precious metal's (I'd rather not speak the truth than to see CAPS die). I hope you are much happier with me now.

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#12) On May 18, 2013 at 1:40 PM, MoneyWorksforMe (< 20) wrote:

Dragon are you Alex's lawyer? How did you get into this to begin with? 

Your comments are now filled with irrationallity and hyperbole--it's ridiculous. I must've struck a nerve.

I never pose as a precious metal expert. And I don't call everyone "wrong" who simply disagrees with me. I simply bring up logical counterarguments --you should learn to do the same. That's all I have to say regarding nonsense.

As for macro calls, the long term precious metal bulls have been spot on, regarding interest rates, an anemic global recovery and worsening fundamentals of the EU, an acceleration of money printing across the globe, and most importantly the physical demand story for precious metals. Aside from being an insider at the fed or owning a crystal ball there was NO WAY of knowing in advance, the enormous extent that the fed would go in an attempt to perpetuate the "wealth effect" and slow the loss of confidence in the USD. And for the record, I was never bearish US stocks due to the simple (almost mindless) analysis that stocks would continue to go up because a.) the fed wants them to go up. b.) there is very few other places to put your money to beat inflation and c.) Money printing would increase. All of this money will need to find a home somwhere, and much of it will go into stocks. So while the real economy continues to weaken, and circle the drain, equities continue to rise until something breaks. How profound? An eigth grader could have made this analysis and made money in this market. Fundamentals? Business prospects? Balance Sheets? It doesn't matter. So long as the fed is on your side. Now that's a free market...And who loses the most from all this? Our children and grandchildren.

Fundamentals are predictable, manipulation is NOT. Fundamentally I have been spot on with precious metals, as have many of the long term bulls. When the paper pricing mechanism breaks, the supply-demand equation will take over. At which point, you and Alex will be scrambling to get one ounce when it's all already disappeared. Maybe you can get one from that eigth grader if you're lucky.

So now that that's all out of the way--seriously, how much is Alex paying you? 

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#13) On May 18, 2013 at 3:52 PM, tomlongrpv (78.26) wrote:

Dragon,

You are challenging a religion by challenging the gold bugs.  They are not really investors, they are just collectors.  And their love of gold is based on faith.  They need their own website where they can worship gold and other "precious" metals.  They can also strive for the "good old days" of medieval economies where trade was based on things of "real value" as decided by the true believers.  They all need to huddle together in their bunkers with their gold bars, freeze dried food, and guns and ammo and wait for the Armageddon they are so sure will arrive shortly.

 tomlongrpv

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#14) On May 18, 2013 at 5:16 PM, awallejr (77.67) wrote:

Well I just bought an 1865 and 1882 20 lire Italian gold coin.

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#15) On May 18, 2013 at 8:43 PM, dragonLZ (99.33) wrote:

MWfM, let me just address a few points from your comment# 12:

"And I don't call everyone "wrong" who simply disagrees with me. I simply bring up logical counterarguments --you should learn to do the same."

No, you don't call them wrong, you call them ignorant (from your comment# 2: "This market is wonderful with all of these ignorant people running around thinking they are right for all the wrong reasons."

 

" Aside from being an insider at the fed or owning a crystal ball there was NO WAY of knowing in advance, the enormous extent that the fed would go in an attempt to perpetuate the "wealth effect" and slow the loss of confidence in the USD."

So your excuse for being wrong is that you didn't have a crystal ball. So, how come then you have a crystal ball when you tell us you know exactly what is going to happen in the future: "When the paper pricing mechanism breaks, the supply-demand equation will take over. At which point, you and Alex will be scrambling to get one ounce when it's all already disappeared." 

When you are wrong (which can be proven with facts) you blame it on not having the crystal ball. When you discuss something that can't be proven or known (future events) you do have a crystal ball. How convenient.

That's exactly why I continue arguing with gold and silver bugs. They always have an excuse for being wrong (it's Fed's fault, gold and silver markets are being manipulated, etc.), then go around telling others >You have no idea how wrong you are because we know this and this will happen in the future.< 

 

 

"...seriously, how much is Alex paying you?"  

You got me with this one. I really don't know how to reply to this "logical counterargument". This counterargument is almost as clever as "gold is getting manipulated" conspiracy theory ...

 

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#16) On May 18, 2013 at 8:46 PM, dragonLZ (99.33) wrote:

tomlongrpv, Man, why did you have to so openly show you agree with me? Now you will be accused of being paid by me.

p.s.

Check is in the mail... :)

 

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#17) On May 18, 2013 at 10:17 PM, tomlongrpv (78.26) wrote:

The goldbugs have all forgotten history.  An "investment" in gold (and I use the term "investment" loosely here) yields no income and can produce gains only on the greater fool theory since its price is almost always in excess of its value as measured by its utility.  Buffet had this right in a Berkshire annual report when he pointed out that the market value of all the gold in the world (which would fill just one baseball infield) was more than all of the farmland in the USA as well as a number of companies.  But the latter investment produces real value in the form of annual cash income and grows in market value as well.  As they used to say, what real good is gold?  You can't eat it.  Well now you can.  See http://www.ediblegold.com/  But its place in our economy is not as important as it used to be.  And sticking with it as a measure of the monetary supply in times when the economy is growing faster than the supply of gold leads to the problems of deflation.  Something we do not really understand but was understood in Nineteenth Century America--hence William Jennings Bryan's "Cross of Gold" speech.

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#18) On May 19, 2013 at 1:05 AM, MoneyWorksforMe (< 20) wrote:

"Well I just bought an 1865 and 1882 20 lire Italian gold coin"

Nice awallejr.

I've been picking up metals on a biweekly/monthly basis since gold and silver fell below 1700/oz and 35/oz.and progressively more as the price came down.

I'm looking to pick up a gold mexican 50 pesos for my next purchase.

 

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#19) On May 20, 2013 at 1:15 AM, awallejr (77.67) wrote:

Snagged a couple more coins.  You see Alex doesn't understand gold, neither does, yes I dare say it, Buffett.  Buffett doesn't because he is a billionaire and old (tho I wish him forever health).

Gold is about owning, not as an investment.  I will never sell my gold coins.  Ever.  Why?  Because as a collector I just love holding these coins imagining the history behind them for one.  And second, the future is unknown.  Paper is printed and unlimited.  PM is finite.

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#20) On May 20, 2013 at 12:25 PM, dragonLZ (99.33) wrote:

Just because Buffett doesn't like gold as an investment doesn't mean he doesn't understand it. It is more likely that he doesn't like it as an investment because he understands it too well.

 Saying that Alex doesn't understand it is just another example of how people who like gold don't read or fail to understand what people with different views on gold are saying.

Alex did not say Gold Is Dead, just that the trade is dead (like in right now / current conditions). When gold trade was making sense he wasn't against it (I didn't know this until recently when he posted links to his old 2009 articles arguing gold trade was the best trade in town.

To me that's the same as accusing someone, (based on the premise that stock market always surpasses its previous all-time high) of not understanding the stock market because he told people to get out of the market in 2000 or 2006.  Yes, you do not lose anything if you don't sell and wait a few years (or decades), but what's wrong with getting out of a bubble and waiting for things to "adjust back to normal"?

I, for example, like gold (but don't own any) and think that it will eventually be over $2,000 / ounce. Because I don't have a crystal ball to tell me how long "eventually" is, I'm not interested in the gold trade right now.

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#21) On May 20, 2013 at 12:35 PM, dragonLZ (99.33) wrote:

For my friend (and I mean it) MoneyWorksForMe, here is a copy of my comment to the article The Arrogance of Investing in Gold) from 2011:

On July 31, 2011, at 12:34 PM, dragonLZ wrote:       

Maybe the title of this point should be: The arrogance of writing about Gold (without understanding how the world works). (+TMFBent should be a co-author).

Some truths:

- Fear and Greed move the stock market, just as they do the gold market (fear moves them in opposite directions).

- Both markets crash from time to time and retail investors can (and did) lose fortunes in both. Mentioning last gold market crush without mentioning numerous stock market crashes is irresponsible (re: TMFBent).

- Both markets create bubbles (and both are undervalued) from time to time.

- Sometimes is better to invest in stocks vs. gold, and sometimes is better to invest in gold vs. stocks (and sometimes is best to invest in both).

- Gold has no fundamental value? Well, let me give you an example. If I offered you a Picasso's painting (with a certificate that is real) for $500, would you buy it? There is no way to value it (art is in the eye of the beholder), yet I bet you would buy it. Based on the historical prices, I'm sure you would think $500 is a great "value", right? By the way, Gold has 5,000 - 6,000 of historical prices behind it (showing that in the long run always goes up).

And some myths:

-------------------------------------------

"Benjamin Graham, Warren Buffett's mentor, said that the market is a voting machine in the short term, but a weighing machine in the long term. What he means is that, in the short term, stock prices are influenced by emotions and popularity, but in the long term, the market will price stocks based on their fundamental value".

----------------------------------------------------------

That might be true (yes, I'm that arrogant), but how much time do stocks spend at their fundametal values? About 33%, right. They are 33% of the time undervalued and 33% of the time overvalued (unfortunately, short term, we can never tell which one of the three it is).

----------------------------------------------------

"Fear -- of inflation, depreciating currency, political unrest, economic stagnation, or recession -- is a primary driver of retail-level investment in gold."

---------------------------------------------------------------

This is true, too, but will this ever change? Never. There will always be something to fear, and there will always be a reason people will (panicky or greedy) be buying gold.

p.s.

As a part of full disclosure:

I also challenged TMFSinchiruna on his opinion it was a bad idea to buy stocks in 2009. Just because gold is doing well doesn't mean stocks are doing poorly.

Good luck to all.

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#22) On May 20, 2013 at 12:45 PM, dragonLZ (99.33) wrote:

Or this:

My own blog from 2010 predicting that gold and Dow will continue to go up together for at least two years, or this comment here:

#17) On April 17, 2012 at 12:24 PM, dragonLZ (99.39) wrote:

 

Sorry, I forgot to comment on this:

"As for DOW/Gold being in step, you know that I generally agree with you on that."

I guess you missed the part where I said I'm not bullish on gold anymore. I don't expect them to move in step any longer. I expect Dow to go up, gold down (thus my 13500:1350 prediction for 2012). 

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#23) On May 20, 2013 at 2:22 PM, awallejr (77.67) wrote:

When asked about gold, Buffett said he doesn't like it "because it just sits there."  And from his station in life that viewpoint makes sense for him.  But from a collector's viewpoint holding these old coins is holding history.  It opens the mind to imagining what things were like when that coin was minted, etc.  Any true collector understands this viewpoint.

As for the "hedger" the future is obviously unknown.  Wars happen.  Calamaties happen.  Their view is to having something that will be an item for "barter" or protecting some of their wealth, hence why I call it "insurance."  Buffett doesn't need any form of insurance, although he sells it.

As for Alex, he is making a prediction.  Don't forget this link of his:

http://caps.fool.com/Blogs/gold-could-drop-to-500/827831

As for a "trade" the trade is ALWAYS there, it is just a question of puts or calls.  That was not his argument.  He has been clearly calling for gold to crash.  And while I think it might have some more downward pressure, watch it spike up if North Korea launch tests long range missiles.  Or if Iran gets close to making a nuclear weapon.

Additionally there will always be a floor price for gold where the emerging markets will gobble it up.  Personally I can't see it ever hitting $500, absent any new transmutation formula that can make gold from copper.

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#24) On May 20, 2013 at 7:27 PM, MoneyWorksforMe (< 20) wrote:

awallejr,

 "You see Alex doesn't understand gold, neither does, yes I dare say it, Buffett.  Buffett doesn't because he is a billionaire and old (tho I wish him forever health)."

 "Gold is about owning, not as an investment."

I agree very strongly with these statmenets, particularly the last one. I view my gold and silver as savings, not necesarilly as an investment. Throughout my life I have always been one to save. But why save in dollars when the fed is intentionally debasing them? Why save in dollars when you receive no interest? Why save in dollars when the nation has over $16 trillion in debt--the power of compound interest? Why save in dollars when is has lost over 80% of its value since 1980, and over 96% since 1913?

The fact is gold and silver are money, and I right now, given the current economic context, I can sleep much better with my savings in this form as oppose to USD.

 "As for Alex, he is making a prediction.  Don't forget this link of his:"

http://caps.fool.com/Blogs/gold-could-drop-to-500/827831  

You're spot on with this as well. Alex has been beating this drum for a LONG time. I really wouldnt have such a problem with it either if he actually had some good arguments---he has none. He can't even explain why the price has fallen the way it has. In his artcile he brings up two things the investment world already knew about: inflation, or lack thereof and how the monetary base has expanded but credit creation (lending) remains subdued, to justify why "gold is now toast." Hmm...so gold investors had these "revelations" in April leading to a 20% decline in one month...Really? C'mon...Oh yea, and pigs fly and I have a bridge to sell you in Brooklyn...

 

 

  

 

 

 

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#25) On May 20, 2013 at 7:57 PM, MoneyWorksforMe (< 20) wrote:

dragonLZ ,

Surprisingly I agree with just about everything in comment #21, except for the part where you mentioned we were friends. Hah, I'm kidding...But seriously the jury is still out on that one.

Regarding comment #22: That was a pretty good call. But you did hedge it with: "... for another two years or so. Maybe even five."

The 13500:1350 call for 2012 was very good. 

But most importantly for both predictions, there's an analysis missing. How can I say these predictiona are more that sheer luck when there is nothing justifying them?

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#26) On May 21, 2013 at 12:01 PM, dragonLZ (99.33) wrote:

"As for a "trade" the trade is ALWAYS there, it is just a question of puts or calls.  That was not his argument.  He has been clearly calling for gold to crash.  And while I think it might have some more downward pressure, watch it spike up if North Korea launch tests long range missiles.  Or if Iran gets close to making a nuclear weapon.

Additionally there will always be a floor price for gold where the emerging markets will gobble it up.  Personally I can't see it ever hitting $500, absent any new transmutation formula that can make gold from copper."

I just think you need to keep in mind that markets can go "unreasonably far" in both directions.

Even if you (or most of the people, including emerging markets) think gold's floor price is $1300 (that's I think the price at which people say the miners will stop mining gold), who's to say that it won't drop all the way down to $800 (even if eventually stabilizes around $1300)? 

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#27) On May 21, 2013 at 12:29 PM, dragonLZ (99.33) wrote:

"Surprisingly I agree with just about everything in comment #21, except for the part where you mentioned we were friends. Hah, I'm kidding...But seriously the jury is still out on that one."

MWfM, I called you a friend of mine because I have a good feeling about you. You come across as a good, honest, and nice person.

Just because we have different views, that doesn't mean that we have to hate each other.

I really think you are honestly concerned about the people (this country, the world,...) and are just trying to help. Thus, I can't have hard feelings toward you.

Once again, I disagree with your views, but that's OK.

 

"But most importantly for both predictions, there's an analysis missing. How can I say these predictiona are more that sheer luck when there is nothing justifying them?"

I've seen some great analysis (with numbers, stats, charts, everything and anything you can think of) that turned out to be wrong (worthless), and I've seen some pretty good calls without much or any analysis (possibly just a hunch - most likely based on one's experience).

Which one do you prefer?

I know it's hard to put one's money behind a pure hunch, but I've also learned to be skeptical about "in-depth" analysis...   

p.s.

See my first ever post here on CAPS. I argued at that time (July 2009) that we are in a bull market (which I think is still a call that holds true), and my only analysis was "I know one (bull market) when I see one".

Lucky call? It's possible.

p.s.

This call from one of my stock pitches (also from July of 2009) that this will be the biggest bull market ever, still has to be proven as correct, but I think it was a pretty good call so far (I especially like the part about the trickiest bull market ever).

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#28) On May 21, 2013 at 12:31 PM, dragonLZ (99.33) wrote:

I apologize for the self promotion. I'll stop now...

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#29) On May 21, 2013 at 2:03 PM, awallejr (77.67) wrote:

I just think you need to keep in mind that markets can go "unreasonably far" in both directions.

Even if you (or most of the people, including emerging markets) think gold's floor price is $1300 (that's I think the price at which people say the miners will stop mining gold), who's to say that it won't drop all the way down to $800 (even if eventually stabilizes around $1300)?

Yes price swings often times can be wide in either direction.  While I didn't say 1300 is the floor, nevertheless there is one and it certainly isn't $500 as Alex has tried to argue absent the producing of massive quantities of the stuff.  We saw the massive buying of physical gold in April as it dropped.  Imagine the buying at say $1000, 900 or 800.

But since I buy gold to own, lower prices are always welcomed.

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