romans holiday

When you think about the POG in the seventies being $400-$500-$600 the POG seems relatively cheap at $800 today... especially when you adjust those seventies dollars for inflation. I am guessing that $500 dollars in the seventies would have felt like up towards a $1000 now.

erm...

 

sorry, just being a provocative little tinker.....

Don't be a twat.

Would suit me fine.

 

 

Guys, help me out here please.

 

A lower end six figs (Euros) has just arrived in our BV account.

 

Of course we are itching (not) to commit short-term economic suicide.

 

It really does look wise to do nothing for a while, monitor closely, (& forget the interest loss).

 

You agree?

No one knows for certain the short term price of gold. I believe a few people have advised you before to average a certain amount in over a period of time. Sounds like good advice to me.

I agree, panic buying or selling isn't profitable, but the thing that I don't see on this forum is discussion about exit strategy. Most posters hold gold, want the price to go up and don't like to see negative posts about it, but to have a forum that only attracts people who believe that the gold market will outperform all others indefinitely is likely to mask the risks.

There is a thread on exit strategy somewhere here. If I remember correctly, GF put a lot of time into this.

My personal exit strategy is to completely ignore the short term price of gold and focus instead on the long term ratio of gold to property and the likes of the DOW. As this ratio becomes more favorable, I will slowly start to exit my position. I am expecting this to be near the end of a secular bull market culminating in a manic phase where every man and his dog are wanting to buy gold/silver. In my opinion, this is a few years away.

As far as the short term POG goes, I expect to see it go down... then up... then down... then sideways ... up and down again... as Mr Market panic buys and sells.... shorts, squeezes and covers.

Agreed, but you will only know with hindsight that it was the last straw. The prospect of sitting out of the market waiting for a huge correction fills me with fear.

Yes, me too! The main thing is to have a position and hold it. Short term prices mean diddley squat. we know that there will be panic selling... then panic buying.... main thing is to add to your postion when you can and keep your eye on the end prize.

I think people over estimate the time it will take for this to play out. How many more straws are there to put on the camel's back?

Yeah, but it is one tough stubborn camel with a lot of VI looking after it. Camels know how to put up a good fight.

...do you, however, buy into the argument that inflation will be good for gold

...do you, however, agree that a weaker pound does stoke up inflation

 

More generally, I think agree with your general thrust if what you're saying is that, since all fiat currencies will become worth less (whether or not they are eventually worthless) then it will hard to notice that unfolding devaluation as none of them will provide a reference point to 'see' those falls against

 

That ultimate reference will be the cost of 'stuff' that does not depend upon credit (e.g., food, gold, energy, rather than house prices, stock markets). And stuff going up vs currencies is inflation.

Well, I think both the inflationary and deflationary forces presently at work are ultimately good for gold. Gold will always be a safe haven in a time of financial instability. I think the prime mover of the gold price in the short/medium term will not be the fundamentals and our apriori rationalizations. I am very wary of buying into some foolproof argument or system as I suspect I will only be disappointed when the market refuses to conform to it. Of more importance is the way in which market pyschology plays out. I imagine this will be extremely erratic and the charts rather than portraying some sensible pattern for us to discern will show the palpitations of a market in heart attack mode.

Also, am not sure about whether fiat needs to be hyperinflated away in order for gold to come into its own. There are many possible end games. Possibly, a country like the states will look into the abyss of hyper-inflation and pull back. I still think gold would be good even in a deflationary depression as dollars would have been debased and more powerful currencies would be competing for commodities. Gold would be one such stronger currency. But I am only speculating here. I find it more useful to imagine a few possible outcomes than argue for one. The only certainty is uncertainty... opps... besides gold being a good bet in any eventuality involving a crisis.

Edited to add; The reason I posted on this topic was to state that deflationary forces are nothing for gold holders to freak out over.

Personally, I do not buy into the simplistic argument that inflation will be good for gold and deflation will be bad for gold. We are looking at the mother of all monetary crises and gold will be good not for its nominal price [which would relate to inflation or deflation] but due to the fact that it is money and a good store of value. Dollar/pound prices are a momentary obsession and are irrelevant in the larger long term picture of things.

Grrrrr. Head hurts now.

 

Panic Selling in Gold: What's Next?

 

http://www.minyanville.com/articles/index/a/18537

 

 

The author (a former racehorse tipster and philosophy graduate !) seems to think deleveraging will neutralise and overpower inflationary pressures. Anyone like to comment on that?

Sounds right to me. It helps to think of the markets as a ship of fools; first everyone lurches to one side, and a certain class of prices soar, then they all lurch the other way, and those same prices drop... repeat this process ad nauseum. I imagine this will sometimes reflect swings where the market will suffer from various contagions; first inflation pyschology then deflation pyschology.

Of course, finally reality will bite and fundamentals will win out [which the author recognizes]... but this is a long term play.

Listen:

 

Asteri's Goldman Says Credit Crisis `Only Now Beginning'

http://www.bloomberg.com/avp/avp.htm?N=av&...HEscWJQs1UM.asf

Enjoyed listening to this guy... reminded me of John Lithgow from "Third Rock from the Sun"; “Mr market is going to have to kick their [consumers] teeth down their throat”. Thinking of which, they could make a great episode on the shennanigans of the stock markets from an alien perspective.

Interesting point he made about hedge funds being forced to make the same trades leading to huge intra-month volatility. Hedge funds the being major source of volatility and become the major source of risk

Thought he was spot on with the coming credit crisis.

“Private equity could do very well in this business [shorting the financials]… if you are willing to take massive intra-month volatility” Gosh, he could have just as well been talking about going long gold [the anti dollar].

This is going to be interesting to watch.

 

If this really is the end of the bull, this thread could be a study in cognitive dissonance as denial as people downgrade their previous lowest expectations and keep predicting an upswing.

Yes, but keep in mind please that many a gold bug always knew, well before this downturn, this was going to be one wild ride with a lot of volatility. These guys have always looked at fundamentals and the long term. Time will tell whether they are right... not todays news.

My intuition [not analysis sorry] is that whether or not inflation or deflation wins out is really a distraction. I imagine that the old orthodoxies of inflation being good for gold and the opposite, and all the a posteriori rationalizations that go with it, will not be applicable to what is coming in so far as it will be completely novel and accordingly beyond our powers of analysis. This kind of event, which is outside of our experience, is what Nassim Taleb has articulated as a black swan event. Such an event can unfold slowly.

In my mind, gold will be good not because it will be an inflationary hedge, but because it will be money in an economic crisis. Even if there is deflation, I imagine both that dollars/pounds will have been severely weakened in terms of purchasing power and also gold will have "decoupled" from commodities, in the public mind, to reassert itself as money. I believe, any coming crisis will make monetary metals extremely valuable.

Edit: Agree with Magpie that we obviously have both deflationary and inflationary forces at work because we have to consider both the supply of money and credit as the Austrians remind us.

Looks like Bob Hoye was bang on the money.

Always like listening to this guy.... I liked his podcast last week. He is a good historian of markets.

http://howestreet.com/audiovideo/index.php...mediaplayer/920

Sees a signaling of the start of a gold bull market.

I'd be happy for it to drop near the very bottom of the bull trend line (around $600 or so).

 

Christmas really would come early!

But not too quickly.... my funds are not available until Wednesday.

Dollar's on steroids at the moment. I reckon that until gold, psychologically speaking, decouples from commodities and becomes money, we will continue to see extreme volatility in POG.

Damn!

I was hoping to buy a few kiwi dollars this month [got no cash at the moment, 100% in physical] but at these prices looks like I will just have to buy some more metal!

Hi Romans- I recognise you are very informed about this stuff, and greatly respect your oppinion.

 

However, I see M3 (which is definitely increasing rapidly - just look at shadowstats.com) as the main and fundamental determinant of how much money is in the system. Double that, and the value of each dollar/pound unit halves. That has to mean inflation when all said and done, the only question is whether that inflation hits instantly or after some delay. [and it's perhaps worth mentioning here, that the high M3 increases of the last 15 years have ben a global phenomenon, creating a massive inflationary pendulum which was swung to Asia and is only now starting to swing back to the West)

 

Shorter term, and in a closed economy, credit is a very important factor in determining inflation, I agree. This is exactly why the government and the BoE are arguing that the credit crunch plus unfolding slowdown will kill off inflation in 2009 or 2010. In the best case scenario they're correct, but that will just be a temporary dip in an overall strong 'bull market' for inflation.

 

So perhaps this is how I'd like to summarise my view: a massive money-supply/inflation pendulum was swung to Asia for 10-15 years, and it is now turning and swing back. Imagine that as the 'share price' of company called 'Western Inflation Plc' and it would look like a flat or decreasing share price for 10 years that is now starting to move upwards. Some are predicting the credit crunch will pull the share price down even further and so the stock is a no hoper. But if you had inside information explaining how this recent price increase is just the leading edge of the pendulum arriving, then you might decide (as I have) that the company's share price is just enterring a major bull phase - even if the credit crunch might cause a slight and temporary dip in the share price sometime next year before the main weight of the pendulum arrives ...or is that analogy just too confusing ?

Hi bigt,

Yes, I appreciate what you are saying, undoubtedly inflation is a big part of the picture. I just feel that it is not the whole picture and there are other forces also at play. Like the daily show, my opinions are not fully thought through.... the sceptic in me prefers them that way so I can stay on my feet and adapt to the situation as it unfolds. My hope is to avoid, as far as I can, any nasty surprises.

By the way, though I have an ear [only one mind you] for deflation, I do not think a possible eventual deflation is negative for gold as I posted earlier.

The more I read and learn the less I understand the inflation / Deflation / Money supply arguements

Yeah.... I hear what you are saying. It is too easy sometimes to subscribe to some system or position. In my opinion, this whole thing that is unfolding is one long extended huge black swan event which is beyond the parameters of what we have experienced and "known" before. We can use past experiences and narratives and bodies of knowledge based on those experiences in order to aid in analyzing what is coming. They are helpful models but will fall short; we can read the 70's into it... then we can read the 30's into it, one day we are certain of inflation, the next we can't stop seeing deflation. I find it useful to look at the economy as a big jig saw puzzle and try to take account of all the varying phenomena [as far as I can, and through a variety of disciplines] and then in turn seek to make some coherent picture out of it. If we get stuck on just one small part of the jigsaw, I fear we might miss that bigger picture.

I do not think it is quite so black and white as that. Remember if we use the Austrian's account of whether we have increasing inflation/ deflation we need to look at both the money supply and credit supply. We have both inflationary and deflationary forces at work. Which will come out on top, for how long, and whether we get a revenge of the other, will in my mind take observation rather than a priori theorizing.

Besides my finances, my opinions are hedged these days.

Edit to add: If... and a big if I might add... we did have deflation [economic crisis], I suspect that gold will "decouple" from commodities in the sense that it will be viewed more as money. If this "decoupling" eventuated in a possible deflation [where commodities went down] then the price of gold would not decrease... as it would be perceived as money not a commodity. Just a speculation.

Just watched this; Faber's take on the strong dollar [uS of course]

Faber Says Global Economy in Recession; `Long' on Dollar

http://www.bloomberg.com/avp/avp.htm?N=av&...uf.8Ud9HSYA.asf

OK, wait a few months and buy 3x "gold coins"

 

I can be your patriot by proxy if you like

When you put it like that...... makes me want to buy the real ones!

OK, wait a few months and buy 3x "gold coins"

 

I can be your patriot by proxy if you like

When you put it like that...... makes me want to buy the real ones!

"For gold and silver investors this has been one of those weeks when you just wanted to bury your head in the sand, weep, then re-emerge in six months time. Many of the most unemotional traders I know have been wailing like bereaved heroines from a Greek tragedy, while others have been seen approaching strangers in the street and asking them for a hug."

As they would say in New Zealand; "Harden up!!"

double post

:blink:

 

I'm not sure how to put this.

 

 

 

 

Are you insane

 

Yeah, that gets my point over

 

How about buying some Yen or Swiss Francs instead ?

 

I don't see the point in buying a currency on the way down !

 

I'm waiting for the NZ$JPY rate to pass 70.

Well, I am not planning to rush out and buy kiwi dollars tomorrow [like I do when I buy gold] ... in a month or so will buy some. I see some are calling for the kiwi to drop to around .65.

Feel I should have at least a few of them.... being a good patriotic kiwi