romans holiday

I remember Steve Netwriter hammering away at the importance of using log. The irony is that the log chart has so far perfectly supported my central thesis.... that gold will strengthen slowly against the dollar, and the dollar will not explode. But we are going in circles here.

i'm going to make this my last post on the matter... unless that is others might want to discuss some of the points I've raised rationally. No point squabbling: What I find about the main gold thread is a general lack of "context"... and a differentiation between short and long term calls on gold. A year ago when gold was at 1100, some thought, in the short term, it would correct/ consolidate back below a 1000, others thought it would blast up to 1400. In the medium/ long term near everyone [on the gold thread] was thinking it would head to 1400 and above.... myself included [i should admit that a year ago I didn't think gold would strengthen quite at the pace it has....I was labouring under the illusion of the long term trend on the linear chart.... duh]. And yet now a year later when gold has finally hit 1400, some think they were "right"... and presumably others were wrong. The reality is all were wrong and all were right; all were wrong in the short term because gold neither corrected to below 1000 nor did it explode up to 1400.... it tracked a middle course between these two extremes. All were right in the medium/ long term with gold finally arriving at 1400.... which was never in dispute. I have to admit this lack of context to the conversation really "bugs" me. Anyway, end of rant. Probably the most central technical data point to my views on gold is the above blue line on the long term log chart. It denotes gold steadily strengthening against the reserve currency at around 20% a year. Gold is now continuing to correct/ consolidate as is predictable using that chart. imo it also shows the volatility of gold diminishing due no doubt to its monetization by investors and central banks.

Yes, excellent point. I soon saw the errors of my ways.

Nice.

You might be right. Perhaps it would be better to leave this thread to the "gold bugs"

It's not that difficult. An internationalized version of Exter's triangle. I'll explain it again [or would that be repetitive ] on the next deflation scare in the markets.

Move on? There are other posters here who were interested in discussing log/ linear. If you don't want to join in that's fine. Who's the disruptive one here? It seems to me this is a discusion that those convinced of hyper-inflation don't want to have. The log chart shows that the dollar is NOT going to blow up any time soon... no parabolas there.

Perhaps, but that is because I haven't written off the dollar. If one writes of the dollar, it doesn't really matter whether one uses a log or linear chart because both will just "go to the moon". If instead you give the dollar its dues, then the differnece between the charts is crucial. Are there any posters here who want to see a discussion on gold going beyond the ravings of hyper-inflationists?

Oh dear. The discussion of log/ linear is disruptive/boring?? Perhaps you want to say I am disruptive/ boring I wouldn't want to bore anyone. It's absolutely crucial for working out the long term trend.... but then if you think the dollar is just going to blow up tomorrow...

Here is an example of how using a linear chart can give a false signal. A good year or so back when gold rose quickly to 1100 or so, it looked to me it could easily correct back to the 3 digit range on the [false] trend line: http://www.greenenergyinvestors.com/index....st&p=151250 It's quite interesting to look at posts going back a year or so. I noticed this linear chart. Notice how the use of a log chart gives quite a different picture: It wasn't long after I became convinced of the importance of using a log chart. Through the course of this year gold has tracked closely to this long term trend, and accordingly I haven't been "bearish". Looking at the log chart now, it is starting to look over stretched.

Thanks P, agree with everything you wrote there. This is an important and objective issue imo. The log chart is crucial for the longer term view of gold. The long term trend is plain for all to see... no bubble, no sudden destruction of the dollar.... just a steady strengthening against all currencies. Lets face it, gold seems a difficult buy for anyone here. This long term log provides one hell of a good objective reason to buy for those nervous about their life savings being in one particular currency. Looking at the trend on the log chart, I'm starting to think gold is over stretched a little with a good chance of a correction. Since I started using the log chart [thanks Steve Netwriter] I have been consistently bullish this year even at points when there has been some bearish calls along the lines of Tom O'Brien etc. But looking at the log now, gold is starting to look due a correction.

OK, going back and reading those posts... I should've first said "Congrats Pixel8er for a good call!"... before going on to put my boot into linear charts.

It's fine...as long as the rattling is done in moderation by everyone.

Well, you could be right. My main point wasn't to bait anyone but to provoke a conversation on the use of linear charts in general.... I really do think they misrepresent what gold is doing. But obviously a few cages have been rattled at the same time. Is that such a bad thing? Group think and all that. I think there's a misunderstanding here. I wasn't referring to a specific call/ prediction... but the use of linear charts [over the long term] in general. I'm repeating myself now.

I believe in good government not no government [most people do]. I own gold because I think once governments will return to gold to stabilize the currency system. You don't have to be a "gold bug" to buy gold. Crikey, it's just a currency.

Most of us interested in posting on gold have been calling for higher gold prices. The point is the pace at which gold goes up and how sustainable it is. Pixel has called it well.... so far....but I don't think it's going to be as easy as hyper-inflationists think - that the dollar will blow up and the price go to the moon. If someone piled in thinking that, and then the price retraced a a couple of hundred dollars they could well be traumatized by the event.... not to mention selling at the wrong time.

Err, yes actually. My first point was simply about the use of a linear chart for a longer term period.... not about any prediction. General points were made about using linear as opposed to log charts, but I see no-one wants to take up the discussion. I think "gold-bugs" prefer the linear chart because it looks like gold has exploded when it fact it is just rising at a measured pace. The problem with these charts, as I mentioned, is it also makes the price look precarious for those that are thnking of buying here. Look at the log and linear charts. Which makes it easier to buy?

This kind of dogmatic "truth" is the exact thing that turns a mainstream readership off. To be bullish on gold, ome may or may not believe in hyper-inflation.... each to their own, but lets keep the conversation open..... are people so uncertain of their certainties that they won't tolerate any disagreement? Hyper-inflation is not a pre-requisite for gold to perform. It helps to widen the conversation rather than narrow it. edited

Deregulation set to lift China gold demand http://www.reuters.com/article/idUSTRE6A914220101110

Thanks Az. the thing is I don't see it in black and white, right and wrong terms [i often criticize "rationalism"]. To me it is all about probabilities and being flexible. I could say of "gold bugs" [i interrogate the word as don't think it's a derogative term] that they are wrong because gold has not rocketed upwards at the pace they thought.... with an imminent hyper-inflation.... but I couldn't possibly say that. Would the gold bugs be "wrong" if gold didn't hit 1650 in January? I still think we're due a correction by the way.... but because this is only probable not certain, I'd say buy anyway.... that is, if you didn't have a decent position. Everyone here agrees that gold is going higher... what we disagree on is the pace.. and how much it may correct. This is not a subject for certainties, rights and wrongs... frankly, I find that language immature. What this thread should be discussing is how to best read gold now... and whether it's worth waiting for a correction or buying presently.... in the context of whether you own gold already or not. I'm sure there are a lot of readers wondering if they should buy... and amused at the squabbles of those who are stuffed to the gills.

Well, the point is we were discussing log chart versus linear charts. Simples really. As you know, I don't consider myself a "gold bug". All I'm trying to do is put forth a more mainstream view of why gold is and will do well. You'd have to agree that the "gold bug" hyper-inflation free-market anti-government view does tend to alienate the wider audience. Wouldn't you agree that if gold was discussed as an alternative currency, without the other baggage, it might help others understand it at a more mainstream level? Isn't that the point of a gold thread... rather than high-fives and self-congratulations? Actually, I have become to despair of late that this site is hoplessly "far right/ libertarian" in its economic and political views. After 2 years of posting here, i haven't seen much of a widening of the debate. I think this doctrinaire approach will only blinker people as to what will happen politcally and economically... not to mention what gold will do.

It's an interesting one. The thing is people tend to get way too emotional....excited or depressed.... with moves on the linear chart. The moves on a linear chart are effectively magnified .... the log charts put them in a better, more rational, perspective. So for example, gold is now at 1400. Many who are looking at a linear chart are thinking gold has risen too far... and you'd have to be carzy to buy here in "bubble territory". Whereas in fact, if you looked at a log chart, it looks more sensible to buy here as gold is seen to be just quietly strengthening at 20% or so.

That's not very nice. Who's "everyone else"? Probably a few sharing your small world view no doubt.

No I'm not being pedantic at all. Using a linear chart instead of a log chart leads to all sorts of distortions, which have been highlighted. Why don't you think about that objectively rather than taking such a personal and nasty approach. Frankly, I'm amazed your still using these linear charts. Move on... and spare the abusive language.

Log is best for the longer term. Most here are looking at the medium/ long term trends in gold, which is best understood on the log chart as stated above. As for the short term, there is not much difference at all between the log and linear charts. The distortion arises when looking at the long term on the linear chart.