romans holiday

Deflationary then?

Think of silver as a natural currency [unlike the unnatural ones ]. Then you can forget about the price. It will do wonders for your peace of mind.

Yes, I doubt if the SWFs will come back in and buy F&F bonds which the govt is desperately hoping. Why would they? Looks bad for the dollar. Is this where monetization starts?

Think of Mr market as a ship of fools. They will go their merry way... until reality shipwrecks them.

And whereas the long-term investors tend to look at the fundamental value of something, traders tend to focus only on the prices. I can see prices being caught up in a vortex in a possible crisis [whether it is deflationary or inflationary in my mind is beside the point for reasons I have postd elsewhere]. This sole focus on prices will lead to massive confusion [possibly panic] as prices become extremely volatile in a marketplace unable to establish the value of anything. Edit to add: Go long term for peace of mind. Trade at your peril.

By telling friends, colleagues and family to think of gold as an alternative currency, I have seen some become open minded towards buying a little. I am guessing that once they learn about gold a little more and become comfortable with it, they will buy more. There is a lot of unease out there with currencies at the moment.

Yeah, with all the monetary problems we are all so well aware of, I do not even focus on the price anymore. With deflationary forces in the mix, with a debased currency, with all in flux, POG may fail to give us any meaningful criteria of value. It is once again too simplistic to think higher prices equal higher value and vice versa. Rather, I will focus on ratios such as gold to the DOW, or again gold to the average house. Of course, this is all reliant on my macro- economic view of things. No certainties in life.

Yet, I would also want to argue that buying gold may be more than an insurance policy. The classic insurance argument is that you put say 5% of your worth in and hope it never actually pays off. My strategy, as a gold bull, relies on putting a lot more than that into gold and by waiting for a future increase in its value be able to use it for the purchase of property. Gold is many things to me; an alternative currency, an investment and insurance.

Early on, before this latest correction, I was questioning the simplicity of the inflation story in the face of obvious deflationary forces. For me, the justification for a rising value in gold [lets bracket the price as this will become a lot more complicated in a "bi"flationary environment] has always been an economy in CRISIS. I agree with you that the inflation story [though part of the puzzle] is too simplistic, too hermetically sealed, as the rationale for holding gold. If this is the way in which you justify holding gold then you will be inevitably disillusioned if the gold price fails to follow the one way street of inflation. My justification for being a gold bull [not a gold bug] is that it will become more valuable as a safe haven in a time of economic crisis. Both inflation and deflation are among the forces fomenting that crisis.

If you believe gold is in a secular bull market then you would want to buy on the dips and not "chase" gold up. I suspect only the seasoned veterans are capable of this as it is hard not to get caught up in the enthusiasm. Now that there is a lack of enthusiasm maybe points to a good time for buying. Also you could average in as no-one can really predict the short term price of gold. Many were keen to buy a couple of months back and in hindsight were maybe chasing gold up [or else averaging in]. We are in a good dip at the moment... it could dip further... so why not average in.

Yep, would agree with that. From an investor's [and I use this word loosely] perspective, the terms bull and bear are so much more sensible to use in so far as they refer to existing markets and real circumstances. Of course, gold bugs may have there own reasons for never parting with precious. I am a gold bull... but who knows may turn into a gold bug one day.

I don't know, are you? If so, that is OK. By the way I am not a gold bug... if you read my post you would see I was questioning the use of terms not calling anyone names. Edit to add; Prejudice is not necessarily a derogative word. We all have our prejudices [pre-judgements] at core, ie- we all have certain beliefs then seek to justify those beliefs. Sometimes people will have fundamentally opposed prejudices/visions which no amount of reasoning will reconcile. Thats OK, what a boring world if everyone thought the same. But also how tediously boring if those of differing visions carried on arguing.

Even those who have no opinions whatsoever about gold and are completely ignorant of the issues involved are non-gold bugs. Why don't you call a spade a spade and use the word anti-goldbug for those that are prejudiced against natural currency? Edit: I also think the term "gold bug" tends to be used loosely. As I understand it, a gold bug is someone who will always hoard gold no matter the wider economic conditions. I consider myself a gold bull.... as long as the secular bull remains.

Also looking forward to the day gold decouples from the dollar and loses its title as the "anti-dollar". Edit: Not taking the mickey.

I do not mind. No skin of my nose. Quite comical really. Thinking ship of fools. Edit: But I disagree that only the irrational make money. I suspect a lot of people will lose a lot of money before the present circus we call a market is over.

I rekon we are seeing a deflation scare in the markets at the moment. When we see the next inflation scare... that will be something else... not so much irrational but schizophrenic.

Yeah... I think this is quite important, as long as you are worried about POG, to put it in the context of a few currencies. The US dollar may continue to strengthen against all currencies [short term] as assets continue to deflate.

Good point. I bought gold with New Zealand dollars and Korean won a good few months back. These two currencies must nearly qualify as the two worst performers as they have both slumped in the past few weeks. Do not know whether I am still in the "black" but to be frank do not really care. I just view both gold and silver as alternative [natural] currencies, and they may fluctuate against the rest, especially as the dollar goes up short term as the asset bubble continues to unwind. I expect them to come into their own in the medium/long term.

I was quite surprised to see this guy interviewed on F Radio. Something strikes me as quite odd about him. Perhaps it is the incongruity of his gleeful grin [someone marketing themself] and his almost sociopathic views.

Given the severe nature of the crisis... I think that scenario is quite likely. It will be my main motivation for buying more metal in the coming dips [deflationary scares]. I am hoping to buy silver next time.

Always good to see a chart central to my strategy. Also, a less wordy way of putting things in perspective.

Do guns always go with gold in America?

I imagine POG to track sideways and slightly up for a while until we have another deflationary scare when it may drop again to what we saw. Perhaps this process will be repeated a few times until we see the monetary metals recognised as alternative currencies in the face of a furthering financial crisis. Inflation in living costs would also no doubt play a big part in POG taking off. Whereas before I could not purchase metal fast enough, I am now much more relaxed and feel I have plenty of time to accumulate and buy on the dips.

My plan is to have a bach [kiwi-speak for shack] on the beach so I can fish daily.

Markets are jittery. With oil and gold still connected at the hip, I think this was the reaction to the report of Gustav developing into a cyclone.