romans holiday

I'm still holding on... But my knuckles are white, my pants are brown and my eyes are turning red.

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.

Difference between trades and long-term investment

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.

That's a key point. Being UK based I really worry about Sterling doing a death dive, I don't trust Euros or Dollars %100 either. Gold seems like a good way of guarding against catastrophic loss, with the possibility of a serious gain (against a house in 4 years or so).

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.

It could work. I have to say I can still see more room to the upside than downside for gold. A big spike is certainly possible if the global economy keeps going pear-shaped. And most of the bull run so far was just correction after years in the doldrums. So while it could drop from here I don't think it is at all likely to go back to 1990s prices. And there is plenty of room for it to go back up again.

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.

Excellent post, and I tend to agree. Gold as a defensive measure (as other things will fall by more) and as insurance against the hyperinflationary possibility makes perfect sense to me.

 

The simplistic inflation > gold argument doesn't. Though I do know many here are making more complicated arguments also.

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.

Anyway shouldn't you guys move on to the stage 2 goldbug argument where you assure me that deflation is also good for the price of gold?

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.

Tomorrow is decision day for me as funds land in BV a/c tomorrow. I realise I am lucky that I was too lazy a few months ago to pursue the idea of buying gold, given that pog has fallen. But now that I can its difficult to buy into a sliding market - trying to decide should I buy in one go tomorrow or just take a dollar cost averaging approach?

 

What would you do?

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.

Er, speaking of anti-goldbug, here I am...

 

Doesn't that graph make gold look like a pretty awful investment or inflation hedge over the period. From 1985 to the present day, any investment or savings account paying 3% interest would have beaten it. Not terribly impressive. Admittedly it would have beaten a pile of cash in a shoebox under the bed, but that's about it.

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.

Would you class me as an anti-goldbug? I came to the debate with an open mind, and respect for the gains made by those who invested early. I learnt all I know about gold from these forums. I just don't agree with some of the basic premises of "gold buggery". I am prepared to back up my opinions with arguments and debate, and change my mind. I also accept that gold may "go to the moon", I simply don't accept that the probability is high enough to justify the downside risk.

 

 

I am asking, because it is pointless to debate if I am pigeon holed into a prejudged corner. That isn't debate, it just becomes a slanging match, and of no interest to me at all.

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.

This article is my reply to all those non-goldbugs, especially those that have a tendency to talk about huge drops, but only in the dips, and somehow avoid posting any charts to see what has happened before.

 

WHAT I TELL MYSELF WHEN GOLD SELLS OFF

- The Casey Files -

by Jeff Clark

Editor, BIG GOLD from Casey Research

August 29, 2008

http://www.financialsense.com/editorials/c.../2008/0829.html

 

 

 

I think it says everything, so I don't need to say any more.

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.

From a Skype chat less than a hour ago...

 

A says: Hi. Gold just fallen off a cliff again today

 

B says: no big deal at $793- this is just the Asian and European chnace at yesterday's prices

Let's see what NY does with a smaller gap down today

 

B says: I like the charts here, especially XAU

What we are seeing is the deleveraging - exit of Hedge Funds from the commodities play

 

Once stability is reached, there will be one-way traffic. All buying

== ==

 

Weak oil isn't helping much.

But Gold is trying to decouple from weak Oil.Here's and indication, it may be starting to work

 

 

Notice how the moving average of the Ratio has turned upwards.

Gold looks pretty well supported here

 

chart

Also looking forward to the day gold decouples from the dollar and loses its title as the "anti-dollar".

Edit: Not taking the mickey.

When markets are irrational, only the irrational make money. Best to get used to it, I guess.

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.

Wasn't there some murmurings out of OPEC that they would likely defend $100 a barrel with supply cutbacks? If so, any spike low below that could be short lived indeed.. that should help put a floor on gold prices, you'd hope, but as mental and irrational as the markets are right now, nothing would surprise me anymore

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.

Some people seem to think Kiyosaki is a crook. Not sure what the status of the public debate on this is. He claims in the show to have sold gold at $700 and that he has been in the oil business since 1966 (that's when he was 19).

 

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

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.

Just finished listening - Robert recommends

 

the five Gs

 

Gold

 

Gas [oil]

 

Ground [income producing real estate / farming?]

 

Grubb [food]

 

Guns

Do guns always go with gold in America?

I haven't been about for a few weeks due to a visit to hospital and have taken ages to read back.

Although spot price has dived $120 since my last purchase I was cheered up to find I'm not suffering a paper loss at the minute despite all my purchases being above current spot.

 

Just wanted to know if people thought the current correction has run its course as I have some digital digits to swap for some nice shiny stuff.

 

All opinions greatly appreciated.

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.

Got me some tins of tuna and cup-a-soup under the bed. My girlfriend thinks I'm mad but she'll be sorry when I'm feasting on... er... tuna and cup-a-soup

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

 

That's one hell of a jump back up !!!

 

13.0 to 13.6 for silver

 

807 to 824 for gold

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.

Seriously folks....

 

I don't think anyone here has anything to worry about with regards to the exchange value of gold...long term.

 

I utterly agree that it must become the universal uinit of exchange....long term

 

I just don't think that many on here (though not all) are considering just how low it might go in the short to medium term

 

As long as you are in it for the long term.

 

For me, it's great that its falling, the more the merrier....

 

I missed the boat first time around. When it finally bottoms out, I wont be missing it a second time...

 

Just an opinion, of course...for what it's worth

Thanks for the consoling words but most gold bulls know that it will be one wild ride. Sure, if deflation psychology takes hold, POG will take another few dips but as you say, just more opportunities to buy. Mish has a good perspective on POG in my opinion. Then again, maybe POG will only track sideways before taking off. You never can predict these things.

http://commoditywatch.podbean.com/2008/08/...flation-part-1/