romans holiday

I agree, money is getting scarce for many. Yet, central bank have masses of reserves which are being divesified into gold. This effectively puts a floor of sorts under the gold price. Have you heard of any central banks diversifying into silver? Speculators on the other hand can go into silver, bid the price up, and then just as quickly jump out again. The same kind of floor is not there. Central banks monetize gold. Speculators/ investors speculate in silver as an inflation hedge. It then makes sense to invest in gold, speculate in silver. Recognizing the primacy of gold, many who have speculated well in silver are now moving some of those gains into the safer harbour of gold.

Then again its mot a matter of being able to afford gold.... as if it were an item of consumtion. More a matter of swapping a depreciaitng currency for

Shouldn't it more be a question on how one values money per se? Obviously money is not an end in itself, and merely performs the function of postponing consumption. At some point one would naturally want to swap money for real goods [unless you want to pass it on to the future generation]. Wouldn't this swap of money for real goods trump purely economic considerations? God forbid we become misers.

Cheers, amazing what you can find scratching around in the "catacombs". Happy Easter all.

Gold getting a bit expensive to buy. This little lot took a couple of weeks in the rivers of South Island, New Zealand. Was hard yakka, will have to buy a detector and go for nuggets next time in Central Otago.

I've maintained all along that it's best to first have a large central core position in gold... not silver, or gold stocks. You might want to own stocks over and above gold, but this should be considered speculative [remaining volatile to both the up and downside for some time]. The reason why gold is in a world of its own is because it's an alternative currency [replacing the function the Euro had] and will not fall much should general deleveraging occur/ continue. Gold is a prime form of liquidity, and a continued drive towards liquidity should see it strengthen. It would be interesting to do a survey and see how many of the gold bugs actually have over 50% of their worth in gold itself.

Cool charts. 1300 looks like pretty solid support to me. I guess whether you were waiting to buy there, or lower, would depend on how much of your worth was already in gold; if next to nothing, it would make sense to buy gold around here..... with the risk being that gold could turn and rise. No more buying for me... just sluicing for the stuff!

The chart above suggests a brief dip to 1300 is possible, which looks a good buy. But then I always choose to look on the bright side of volatility.... with gold [not so with silver].

Yes, the US and China are for now coupled in an unstable and unholy alliance. Due to the financial crisis, stresses in the current relationship are now working themselves out which will eventually lead to an economic rebalancing between the two. This process will lead to further instability.... and instability in economies and currencies will be the prime reason for gold's continued rise.

Extrapolating the long term trend should see a baseline of 1600 odd for gold by the end of this year. With the baseline at 1600, a spike to around 1800 is possible. Notice the volatility in gold is reducing.... with it showing a steadier pace of annual appreciation of 20% odd against the dollar.

A good case study of investors' failure to re-conceptualize gold today. 1] Gold shouldn't primarily be considered an investment but a currency/ prime form of liquidity. In other words, disinvestment. 2] Failing to consider this, leads to a conventional anxiety in the investor community towards gold in a deflationary environment, where capital will want to retreat from assets to currencies. 3] This anxiety is also apparent in the gold bug community... and the response is to either contextualize "massive volatility" within an on-going bull market, or to just continue chanting the monetary mantras. Personally, I don't think we'll see that great a volatility in the US dollar gold price, but rather the continuation of the long term trend that I post often. This trend has consistently held over the past year..... even in times of increased nervousness.

From the second chart: "While by no means certain, the four legs of this bull breakout can carry silver to 37.50 and perhaps a spike to 40 IF there is no liquidation sell-off".

Sure, could be the case. I wouldn't bet the house on the above chart, but do think there is a fair chance of an extended period of deleveraging [where all the "fundamentals" go momentarily out the window].... which would see silver back around 18 odd.

You could be right. I choose to play "the devil's advocate" with silver volatilty. If I miss the boat, just as well I'm overweight in gold.

I'm thinking of giving it longer, and seeing it go lower.... before heading to 50 odd.

How we measure monetary value: Dollar price-centric: "OMG.... what happened? Gold has lost $50 in a week!!" Gold value-centric: "Relax, you have to see it in monetary terms, which helps by using the log. Relative to gold, dollars in 2011 are not what they used to be in say 2006. A price decline of $50 back then represented a loss of 10%... today a decline [consolidation] of $50 is only 3.5%".

If I had pounds, I'd be confident of buying here.... even if I thought there would be a deeper correction. The reason being is say gold corrects deeply against the dollar, you'd have to ask what sort of general conditions would hold sway at the time. I reckon you'd see the dollar spiking against nearly everything else, which would include a currency such as Sterling. So there's a good chance that the Sterling price of gold might stay high, or go slightly higher, even as the dollar price of gold dropped. My native currency is NZD, which can easily fall from 0.80 odd to 0.50 against the dollar. I wouldn't be surprised to seee the gold price to explode from NXD 1800 odd where it is now to something like 2500 on a correction in the US dollar price. The other thing is the dollar and gold may well strengthen together at the expense of near all else at some point.

Looks a reasonable place to start buying. A few times now in various currencies, gold has consistently bounced off the baseline/ trendline. Looking at the Euro, pound and dollar, the price is near to the trend. This same trend line was used to identify 750 pounds as a good buying op in June last year.

Gold had run up a bit fast there, and a correction to 1350 would be a good buying op. I don't think it will go much below this [if at all] due to the economic and monetary instability and uncertainty that's built into the system. This is the very reason why gold should continue to climb steadily on the long term trend. This "remonetization" [informally by the market for now] is necessary if gold's required to reballast, rebalance, and recapitalize the international monetary system.

I always thought [along with Roubini] that the best strategy to sorting the mess out would have been to nationalize the banks.

Here's the point. Predicting markets and macro-economic trends involves studying various disciplines such as economics, history, history of ideas/ philosophy, mass psychology/ ideology etc. At best we get a murky picture that will never be certain, or 100%. Now some might choose to "debunk" philosophy and call it "waffle", and then I might in turn debunk an ideology and call it hubris..... but that's not going to get the discussion very far is it. I hope I stated that succinctly enough for you.

"Waffle" performs an important function. Unless we waffle from time to time, then we will take our ideas too seriously.... and what we think is knowledge soon becomes dogma. Where's the freedom of thought in that? Anyway this is getting off topic.... though much waffling could and needs to be done about gold.