What Happens to Gold When r Rises?

[argent_pur]

(Official) inflation is low ATM, according to the new CPI figures that came out last week. And its the official figures that the broader market uses to calculate the real interest rate(r), sooooooo here's my question: We all know eventually the Fed will have to push the nominal target interest rate up, and assuming inflation stays where it is in the short run, could this not push the gold price down at that time?

And when I say down, I mean down...of course, with QE2 (sort of a misnomer, but still) in effect, there's a great possibility of higher inflation down the road, but there's a time lag. The reason I'm mentioning this is because my ultimate goal is actually to acquire gold playing the GSR and I have all silver and no gold. As all of you are aware, silver has gained tremendously relative to gold over the last several months, closing today at something like 50.5 or so. I bought all my silver when the ratio was 60 or 61. I want to get as much gold for my silver as possible, obviously, and more than if I had just purchased gold to begin with. Does my reasoning make sense? Help a guy out

Jim

[RxForPain]

The reality is that things are going to get worst before they get any better. Make your move as soon as possible and hold on!

[Sheikh_yer_Bu'Tay]

I would love to give you advice you could take to the golden bank, ... buuuut my crystal ball is in the shop!

I understand you want to aquire gold, so do I, but to sell your silver for it.... now?

Frankly, I am too ignorant to give you advise on that. I will let others make that call.

The last big dip in 2008 was not that great a deal in my home town. Dealers said they had no silver or gold to sell. That was only partially true. They really meant they had no PM's for sale at the then current spot price. They were holding out for the price to go back up. It's "funny" how the spot price is so very important to them when it is rising, but meaningless when it goes down. The point I am trying to make is if you sell your silver today... who is going to sell silver back to you tomorrow??? If you are confident you can buy back silver at a lower price in the future... then, let your conscience be your guide.

Allow me to offer some alternatives to selling your silver:
Got a real fancy ride? Sell it and buy a real cheap car... buy gold with the difference. You can buy a better car later.
Got a fancy boat? Sell it. Boats will be dirt cheap when unemployment hits 25%. Buy gold.
Is you house paid for? Do you have an adjustible rate on the mortgage? Deal with that, too.
Do you have any unwanted real estate? Sell now. Buy gold.
Is there any other fancy do-dads you have that you could sell today, buy gold, and then buy another do-dad a few years from now with your au/ag profits?
You get the picture.

If you want to get completely out of silver and permantly into gold. Oh yeah, sell, sell, sell!

[Rodebaugh]

multiple is still shrinking today... we will touch and may close below the 50.

I am board with your plan but I am hanging tight for a better multiple. For now silver is the lane I want to be in.