bitbigt

China has played in important role in sucking fiat out of the Western economy for the last decade or more, and that has counteracted the inflationary pressure that would normally be expected given this increase in money supply. Additionally, as we all know, they've made cheap stuff, which also keeps inflation down. I am now starting to feel that these anti-inflationary pressures are far greater than I've given them credit for in the past. Add in the deflationary influence of a global slowdown, and it starts to look like it'll be quite some time until inflation really takes off in the West. In summary: I am sure we will have massive inflationary problems in the future, but that future may be quite a few years away, and not just a few months.

LOL :-) Sad thing is, this is EXACTLY how people are approaching their house sales

East side of Leicester, countryside

No - but been looking. People are still asking for prices they would ahve got 1-2 years ago. Reality will have to dawn on them in time, so I think we've got another years of price falls (at least) ...so not rushing into buying.

...phew! I was suspecting there'd be a 2nd day of US smackdown, as the US markets openned. If gold keeps refusing to go below the 880s these next several weeks I'll start to, maybe, think its not going to 750

Brace yourselves for...

A big drop, is my guess

Could work, or could not. If Iran or Pakistan finally blow up, all bets are off. Agreed - black swans could occur, but... - If I do get in dirt cheap it will work wonderfully - If I don't get a chance to get in at all, I've already doubled my significant original investment, so I'll not be shedding any tears If I were still holding, and didn't need the money, I'd probably just sit tight and be pi55ed off if/while the fall to USD 700 occurs, and happy as Larry as it rises again during the next decade. Unlike stocks, it will not fall to zero!

Hi All. Just got back to my 'puta after being away for the last week, and wanted to post some ramblings... Whilst away, I had no idea what had happened to the price, and imagined anything from USD 850 - 940. Having now found it to be in the lower half of this range, and from the chart pattern plus sentiment, I suspect we'll see a big drop next week or two - down to USD 800. Over next few months, I even suspect we may see USD 700 (or even lower). Longer term however (several years), I have never been more sure that we've got inflation and stagnation in the pipeline. I don't think there will be a new global reserve currency, or gold backing for any currency, until the dollar basically starts to collapse - perhaps 10 years from now. The world will refuse to accept the USA is bankrupt until they are forced to accept this reality by very painful economic evidence (inflationary based, and more disruptive than anything we've seen these last 2 years). Only then will the failure of fiat currencies be evident in the price of gold. So after selling up at start of March, I'm now quite happy to sit back, save some new fiat, and wait for the chance to buy back in to the market in 3-6 months time.

Excellent! Even with the artificially high USD price of gold during 2008 (due to the transiently weak dollar) a pattern emerges.. ...to see it, go to http://stockcharts.com/h-sc/ui on two webpages, view both as weekly periods and non-log scale, and set one page to $VIX and one to $GOLD In April 2007 and in October 2008 the VIX (a 'fear' scale) suddenly shot up (look at the RSI chart), and on both occasons this triggered the start of a major bull run in gold. Then, in May/June 2008 and also this last month or two the VIX has fallen, promting a steady sell off in gold. In short, in the recent past at least, gold's rise has been catalyzed by a spell of economic panick, and as that fear subsides gold starts to fall again. I personally think the main panick phases of the credit crunch are behind us, and its now just long and painful road to recovery, so gold will continue to ease from here. Frizzers seems to generally agree with this, in that he's just written for MoneyWeek saying gold is driven by collapsing government (which I take to mean a state of disaster emerging): http://www.moneyweek.com/investments/preci...over-14714.aspx But he goes on to claim that gold does not rise in response to consumer inflation. He's correct over short time periods and during mildly high inflation (e.g., autumn of 2008, when gold was falling even though high inflation was always in the news), but I'd strongly disagree with him about this relationship over longer time periods. For example, see here; http://www.sharelynx.com/chartstemp/FreeGoldSilverCPI.php So short term it is fear that drives gold up and down, but longer term gold holds its value against fiats depreciation (i.e., reacts to inflation). And so if we get the tidal wave of inflation many of us are expecting in the next 5-10 years, which will be accompanied by good deal of fear, then it should be a perfect storm for promoting the gold price skywards

Can someone please pull together a chart comarison of the VIX versus gold price in several currencies (I'm travelling and limited access to internet) I suspect it might tell us something interesting

...not really

Fully agree! This fall could be in the process of accelerating, and if so it would need to get down to below USD 700 (GBP 450) before I'd be prepared to step back in big time. But I'm perhaps an exception, in that my risk tolerance is very low as the money is needed for a house purchase in next year or so.

Or... ...gold mining stocks have simply started trading like any other stock these last few years, since ETFs now exist for those wanting liquid exposure to gold. Therefore, the recent rise in gold miners is just reflecting the recent rise in stocks generally

They will be outflanked by a collapsing economy and a crashing stock market. Control? It is has got beyond that... think fingers/dams. If the economic world is coming to an end, then you're right. But if we're all still alive, working, spending, saving, investing, eating, and posting on GEI in 5-10 years time, then perhaps they'll be quite able to suppress the gold price for as long as they need to

...on this point I fully agree, but... ...are we sure about this? The money required to manipulate the gold market is small compared to amount the PPT has at its disposal for such manipulations! All they have to do is keep the price of gold under control until the worst of the recession is past. After that, certainly gold will over the years/decades maintain its value. But that might not imply a significantly higher price than todays price for many years to come - especially in Sterling which is very weak just now.

LOL ! ...but actually, its not gone to my head but into Mrs Bigt's bank account in Switzerland She's waiting for the Swiss Franc to drop so we can exchange the Sterling winnings and pay off her Swiss flats. In return, she's promised to pay the annual school fees from the rent she'll then clear each year. So now I'm still lumbered with needing a big mortgage to buy a house back here in Blighty in next 12 months, ...but that's OK, because when high inflation hits the debt will be diluted rapidly. In the meantime, I'm saving to buy gold again - but not until much cheaper! ...and the next set of winnings are MINE, or I'll visit the divorce lawyer

...or a few months, or even a year or more ?? It was this turn of events that I feared, and which caused me to sell. The last few weeks has seen an emergence of hope on stock markets and the economy, and that confidence seems to be strengthenning not weakenning. I'll buy back in at GBP 350, as the next decade will see some terribly high inflation - globally!

yes, it would be good. But that chart is not on a log axis, and so one can't directly compare the slope (salary inflation rate) over different parts of the chart. A logbased chart would like very much like the RPI chart.

It was about 1993 when the real fiddling of the inflation stats began in America, but regardless, my focus was on UK/Sterling. I'm not sure if or how much inflation stats fiddling hapened in the UK. My point was simply that in Sterling, gold is now at or near to its real historical peak, especially so if you consider a. we're not (yet) in a high inflation environment, and so compare with equivalent periods b. the actual historical peak was due to an anomalous jump in silvers price c. the PPT exists now, and easily has the resources to keep gold down (in USD) d. the stock market will bottom 6-9 months before the economy turns, and so we may be about there

Many of us are buying/selling gold in Sterling. Its therefore worth looking at Sterling charts, and I've found an excellent set at http://gold.approximity.com I strongly suggest you all look at these 3 in particular that run from 1968 to this week: http://gold.approximity.com/since1968/UK%20RPI_LOG.html ...shows RPI effect on currency value (actually shows how much more money you'd need each year to keep the same value), wherein a greater slope indicates a higher rate of inflation http://gold.approximity.com/since1968/Gold_GBP_RPI-adj.html ...shows gold adjusted for RPI, and revealing a scary similarity between the last 3 years gold price and the early years of the 70's - when inflation was NOT high. Note a 50% drop in price then occured from current levels, over about a 2 year period, until inflation started to emerge as a real problem http://gold.approximity.com/since1968/Silv...BP_RPI-adj.html ...shows how, in late 70's, the silver price skyrocketed due to an attempt to corner the market. Key point is, it was this event in the silver market that pulled the price of gold up significantly further, without which gold probaby would not have ever reached a much higher level that it has today - even with the inflation problems that were then being experienced. ...draw your own conclusions!

I'd like to clarify that bit in bold... - up to spring 2008, the several year price increase in gold was due to inflation becoming an increasingly tanglible problem - but gold then fell significantly for 7 months from March 2008 onwards, due to a growing realisation that inflation was not going to be high over next year or two, and deflation may even kick in (e.g., illustrated by oil falling precipitously) - gold then turned up again, as soon as the stock market crashed terribly last October, i.e., as the severity of the credit crunch became apparent ...so this buying was driven purely by fear and due to the fact that all other asset prices were dropping rapidly Looking at the next 12 months (my time frame for needing to withdraw) I suspect - high inflation will not return to the USA (though it will over next several years!), and its only there that matters (as we've had our currency collapse in GBP) - bail out funds and QE money will start to kick in (e.g., yields have dropped on bonds by >1% these last few days) - so, confidence will return to many other asset classes, and stock market will start to rise - so, the current fear-based support for golds price may weaken

Not a crazy idea - but probably one that would make most sense when someone plans to withdraw in ~12 months (as I would need to for house purchase) whilst believing there is a very, very high chance of significant further price increase in that time frame and yet fearing a short term dip in price. My current view, however, is that the further major upside may be several years away, whilst a plateau or even a leg down could last for perhaps 10-20 months. Of course, for all you goldbugs, I hope I'm wrong, and the inevitable upside does come much sooner.

We've all seen charts of the last century's gold price in USD, corrected for inflation But has anyone got (or could anyone approximate) the same chart for GBP?

...or is much of that already in the price - explaining why gold has rise to 900-1000 even in a disinflationary environment? If so, people may now be starting to look beyond those problems, and seeing a light at the end of the tunnel. Only when the more extreme items in your list come to pass (e.g., painfully high inflation 2-4 years from now, civil unrest) will fear rise and confidence in fiat plummet the way it should.