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Under the collateralised lending model. the 'danger' fretted about is both.

http://www.telegraph.co.uk/finance/comment...d-unravels.html Citigroup says gold could rise above $2,000 next year as world unravels Gold is poised for a dramatic surge and could blast through $2,000 an ounce by the end of next year as central banks flood the world's monetary system with liquidity, according to an internal client note from the US bank Citigroup.

I think that is a great idea. EDIT: By the way DOW tanking - down c.670 points - c.8%

Can I make a humble suggestion? All I hear is that gold is a long term investment and is the ultimate store of value...it does not change value - things only change value against it. Or that the fiat system will blow up and gold is an effective insurance policy - hence physical. But people are forever fretting about its price in dollars, or Sterling if dollars don't work, or even houses as they are now going down and makes it look good. So - bearing that in mind, why not try just not looking at the price of gold for say a year. People sound too desperate trying to bolster their own 'investment' decisions by looking for agreement with others. It really doesn't matter - just look at some of Goldfinger's long term graphs, lay it down like a good wine and forget it. Or just treat it as the ultimate form of insurance. The rest is noise. Unless, of course, you really think of it as a form of investment? EDIT: By the way was that girl in the ad trying to make a deposit in the Envirolet compost toilet?

Thankyou. I chose it to match.

Looking at the behaviour of gold over the last day, do you think the markets are: 1. Frightened the bailout won't go ahead. 2. Frightened the bailout won't work. 3. Relieved the bailout may not go ahead.

This is the key cgnao, goldfinger point I believe. "It's baked in the cake". The massive lending that went into housing is about to be visited on us. Ordinarily that credit creation would be destroyed by default as house prices go down. But by bailing the banks, they effectively 'monetise' that past inflation and rather than flowing back into housing where it fails to get measured - it flows into other assets driving inflation. And if the government can't afford the bailout from its resources, well, printing merely adds to the problem.

Good point. You can't look at the injections of money without understanding what it is they're trying to replace. And with a number of organisations either out of business, nationalised or merged with others, will those companies be lending as much as before?

The video ....(very moving - I often think of it in terms of what we have been witnessing). http://www.atomicarchive.com/Movies/Movie8.shtml

Depositor worries in Ireland. (Mention of gold near end of short audio piece). http://dynamic.rte.ie/av/230-2424303-320-180.smil

From the article... Potential upfront costs to the government of maintaining financial stability could reach 24 percent of gross domestic product in the case of a "deep and prolonged recession," the S&P report said. On Wednesday, Chambers compared the U.S. rating to a lobster cooking in a pot of cold water. "The lobster is still in the 'AAA' pot and still moving," Chambers said. "The heat is turning up, but the water is still 'AAA' stable."

I haven't seen it on here - apologies if I've missed. Channel 4 news stated that one of the credit rating agencies is threatening to review the US Government's AAA rating. I think this has been part of the flight to quality. Secondly - if they do get downgraded, presumably that affects things like AIG - see what I'm getting at?

FT Alphaville on gold and its safe haven status in recent days. http://ftalphaville.ft.com/blog/2008/09/16...s-cash-round-i/

It does but the Daily View for yesterday was surprised at how small the move was... http://www.ft.com/cms/8787ae00-2a26-11dc-9...mp;fromSearch=n

Gold/silver didn't have a great history either with successive debasements of the coinage throughout history. Basically governments want to spend more than they have - especially at times of war when anything goes.

1. Excellent point. 2. I assume you are referring to the European currency snake and the later ERM exit? These 'earthquakes' were a function of their fixed structure. In terms of value, you could argue that the latest episode for Sterling has been the third. And even starker if you consider oil as a currency of sorts (it has been behaving as one) as opposed to the $.

As I said earlier, I agree with Dr Bubb's view that there is really strong support for oil coming in at $100 and this could, as he says, provide the platform for a bounce. However, we need to be aware of the risks too... Crude hasn't really moved that much today (currently 100.26) esp. since Hurricane Ike is about to hit. Also the dollar could strengthen if the Lehman issue is resolved this weekend. I think there is a reasonably high risk that oil could drop sharply through the $100 mark next week (poss. as early as Monday).

I thought that made gold cheaper to buy which is a 'good thing'.

I have to agree with Dr Bubb. There seems to be extraordinary resistance at $100 oil (although Brent trading at c.$98/$99 right now). I think this is the most important support to gold right now. I have to say I think going into the OPEC meeting the Saudis were looking for a settlement at about $80 per barrel as fair value and no explicit cuts in production - but may have come out with an agreement to target $100 alongside the announced cuts. Poss. they are trying to manage an orderly transition to a new price level - one that would optimise revenues by not leading to excessive demand destruction.

The biggest influence on future price is expectations driven by current prices. Prices do have a certain amount of inertia (some markets more than others) and require changes in supply/demand to effect price changes. Consequently a short term manipulation can have effects over and above an alteration of the supply/demand equation. It can effect long term expectations of price levels.

Looking at that chart, it seems to me you tend to get more bangs for your buck on the upside if you invest in oil.

Classic.

Good point. John Authers with an interesting graphic re fuel prices and Republican support. http://www.ft.com/cms/bfba2c48-5588-11dc-b...mp;fromSearch=n

Welcome Doh.