romans holiday

Seems to happen at the same time. 9.00 New York time?

Yep, good point. There are no certainties in life.... only educated guesses. I guess the reason why many gold bugs are so enthusiastic about gold these days, is that they are at the same time very concerned with the crisis of the banking system, which is unfolding almost daily. The inept and inflationary policies that are being employed are even more worrisome. At times like these, gold certainly starts to shine brightly. I have found the following site both balanced and helpful when discussing long term markets: http://financialsense.com/

Trends, cycles and secular markets are always changing. There are no absolutes in the world of investing. In my opinion, the successful investor [not the speculator] manages to identify which markets are waxing and which are waning. Many think that while the long bull run in the financial markets is well and truly in decline, a secular bull market in the commodities is still in its early stages. The success of many investors has consisted in identifying these markets. If we are indeed in a long term commodity bull market, and if gold is the king of commodities, then gold is likely to do well in the coming years. Different times call for different measures. Look at a chart of gold for say the past ten years, compare to similiar charts of the dollar or stirling. Which currency would you rather have??

Completely agree. But I think the article is here first presenting the case for fiat from the perspective of fiat believers before preceding to rip it apart.

http://www.moneyweek.com/file/16672/why-it...y-gold-now.html Gold pays no interest. It’s just a lump of yellow metal. If the bank is paying you 7% interest on your cash, chances are you’d rather have your money in the bank. It makes sense in this case, thanks to compound interest—in 10 years you’d have doubled your money. Hold gold for 10 years and you still have the same lump of yellow metal. Now consider this... Imagine the bank was paying zero percent interest... then which is more attractive, paper dollars or gold? In this case, a rational investor would choose gold. Gold is beautiful, rare, and easy to exchange, no matter where you are in the world. Paper money, on the other hand, is just paper. Governments can print as much of it as they like. Governments can print money to pay off their debts. But they can’t create gold. The supply of paper money can be infinite. But the supply of gold is extremely limited (they say that the entire gold production in the history of the world could fit on the basketball court at Madison Square Garden). And it’s difficult to extract. Bill Gates could buy all the gold mined in the world in a year from his checkbook. As a rule, money flows where it’s treated best. If interest rates are high, then gold performs poorly relative to money. If interest rates are low, money flows toward gold.When interest rates are zero, gold becomes a no-brainer. But wait,” you say. “Interest rates soared in the 70s… how did gold manage to run from $100 to $800 during that time?” Yes, interest rates soared in the 70s… but let’s look at the “real deal” you get for your money. Let’s consider the effects of inflation… The “nominal” interest rates you might see advertised at your bank or in the newspaper don’t give the full picture. Here’s why: if the prices of the items you buy on a regular basis, like food, gas and accommodations, are rising at 5% and - at the same time - the bank is paying you 5% interest on your savings, the bank is not compensating you for holding your wealth in cash instead of gold. In this case, economists would say your “real” interest rate—the interest rate AFTER inflation—is actually zero. Back in 1979, short-term interest rates were 8%, but inflation was 13%, so “real” interest rates were negative 5% a year. Is it any wonder the people rushed into gold and away from paper money? By 1981, Fed Chairman Paul Volker had driven short-term interest rates to 15% and inflation to 6%, so the real interest rate was almost 10%. By 1982, gold was back below $400. Buy gold: why you should shift your money from cash Today, we see nominal interest rates advertised at around 5%. At the same time, inflation is around 5%… and Federal Reserve chairman Ben Bernanke says he’s almost done raising interest rates... Real interest rates are close to negative… and the smart money is shifting from cash and into gold. You should own some gold, even if it is purely to lower some of the risk in your investment portfolio, as gold and stocks often move in opposite directions. If you’re not there right now, it’s time make the move. Good investing,

Some countries pay interest on gold held in banks. If I remember correctly, Viet Nam does [could have been a different country, but was Asian] [The Asian countries have a much better understanding of the monetary function of PM.... no doubt we will catch up ]

I am in metals 100% at the moment. I like to think I could stop buying and start putting together another cash deposit. Trouble is, I continue to lose faith in not only fiat but also in the banks. My solution is to follow my own instincts and keep buying metal until I am priced out of the market . Then I will be stuck with the stuff [fiat].

What!! And haven't swapped it for metal yet!? It amazed me that some who were smart enough to STR did not see the further logic of selling fiat.

Gold will be redeemed in the eyes of our traumatized and panicked pensioner as a store of wealth.... which would only be eroded if left in fiat. As for money generating income.... perhaps that belongs to the past.... or to the future once the financial markets pick up again.

Even though people may not actually have much paper fiat, fiat is more than cash.... it is faith in the monetary system. This is why people felt so secure when their house prices were going up... and why they are positively traumatized when they continue to decline. Also, I would not bank on inflation eating up debt. I think this breed of inflation is different... I heard it referred to as commodity inflation the other day, which I thought an interesting term.

And then you are something of a "heretic".... because you have not bought into what everyone believes in.

Feel an attack of linguaphobia coming on.

Only 15% a year. Seems a no brainer to me. I expect to see 15% a month once we get through the summer doldrums. But then maybe I am just a chrysophile.

Good segment with Peter Schiff on CBS. Good to see this kind of discussion about the US economy on mainstream media. http://www.europac.net/Schiff-CBS-7-20-08_lg.asp

Yep, there are no certainties in life.... just educated guesses.

Agreed. I also think we will see a rennaisance in the monetary function of gold and that it will become our new fixed point in referencing value. Conversations such as these surely show our need for it.

Sorry for my lack of clarity. I guess what I was meaning to say is that if there was first a period of chronic or hyper inflation followed on by a period of deflation it would mean something quite different for our pounds or dollars than if we faced either hyperinflation or deflation. If deflation followed on from hyperinflation, remember those pounds will have been debased. We could then face something of a double whammy; we would have less of a debased currency. Given this scenario it is difficult to say that POG would be lower in pounds. Could be a lot higher in pounds.... but those pounds could be worth a lot less than 2008 pounds. [Remember, with globalization, products will gravitate to the strongest currencies, so the purchasing power of debased currencies will likely remain weak] As for the value of POG. That would be an oxymoron. It does not make sense to ask the value of a price. You would first have to ask the value of what you priced something in. The real value of gold will reside in what people are prepared to pay for it, in money or in real assets, and I would imagine the value will increase [the price in stirling would be irrelevant]. I think a copernican revolution in thought is required when we start to entertain the idea of a debased currency. Our currency is on a slippery slope and is no longer a fixed point. http://en.wikipedia.org/wiki/Copernicus Hope that clarified things a little.

I can also envisage a deflationary period in the near future.... yet do not think it will be adverse to the value of POG. I imagine that if fiat has not only been debased but also become scarce, gold will be the best currency to have. Why not just hang onto a little for your kids.

Thought about it over dinner.... the "when to stop buying" question. I think I will stop buying gold when I can not buy gold. If there is no increase in wages while the cost of living continues to increase, I imagine it will be that much more difficult to save [all my savings are in gold; markets are not completely rational, neither am I ]. Add to this continued currency debasement and the continued rise in POG and it will not be long before I will be "priced out" of the gold market [just as I had been priced out of the housing market before]. Of course, if this scenario unfolds it is fine as I would have bought into gold at the right time. So it dissolves my conundrum; I will stop buying gold when I no longer can. The PPT remain my best friends.

Wow... Richard Duncan talking about the "Dollar Crisis" on CNBC now.

But if the currency continues to be debased would you not continue to buy? Which is the point I believe Wren is also making. It takes a Copernican effort, but I am starting to see the economy revolving around the currency of gold these days.

Well I suppose, in terms of a hedge against currency devaluation I won't have lost anything I suppose I'm thinking of holding gold as insurance... but only while gold is being "well behaved", i.e. rising moderately... if it goes through the roof then I will change my plan accordingly Yes, currency debasement is the wild card in all calculations of this kind. Then you would be left asking yourself, "Do I really want to swap gold for dollars/pounds?", without needing to bother about the amount of those dollars/pounds. Which is in effect to say gold is the best currency to hold. And this is why many bought gold in the first place. What got us in, may be what keeps us in. I imagine I will only swap gold for property or a boat.... something with real value. Opps ... went off topic there as we were talking about when to stop buying not when to start selling.

Not sure about goldmoney.... but would hazard a guess that gold will dip again to 960.

sounds good to me..... you seem to have thought it through and are comfortable with it. My problem is that gold even at four digits still seems to be cheap [priced in "cheap" money] to me. Now, if it was at five digits.......

Well nearly at 1000....just a little curious.......have any of you considered at what point you will stop buying bullion. At 1000, 1200, 1500 or +?? I was thinking 1000, but I doubt I will be able to resist. [it would have been good to put a survey together for this question but am not sure how to do that]