romans holiday

If gold could be practically considered a currency, which it is nowadays in the market, then it would be useful to use a decimal point in the price to denote this. Thus instead of $1400, you'd have say 1.400 against the dollar. It is the relative percentage move between gold and currencies which is of importance. This way instead of being shocked or jubilant by a $100 dollar rise [money illusion], you would only see a relative strengthening rise of 7% to 1.500 in a currency.

Percentages and ratios provide relations between numbers, which is of prime importance as opposed to isolated numbers in themselves. A focus on numbers devoid of context is the essence of money illusion. Steve Netwriter would have much to contribute to this debate.

The problem with this chart is it's linear [i have to say I'm surprised you're still using linear charts]. If gold was to continue strengthening at around say 20% a year that chart would soon look parabolic. A 20% increase around the year 2007 saw gold go from 800 to 960. A 20% increase today would see gold go from 1400 to 1700..... in nominal numbers nearly twice the increase. Another problem with the linear chart is it gives the appearance of more volatility than there actually really is.... not to mention giving the appearance that a good sized correction is imminent. The bullish will expect a further parabolic rise, the bearish will expect a large correction. The log chart belows shows a more measured and stable pace in gold's rise especially in the latter years [more stable as it has progressed], and well answers the critics who suppose it's in a bubble.

Gold Climbs on Increased Investor Demand for an Alternative to Currencies http://www.bloomberg.com/news/2010-11-10/g...currencies.html

I'm not so sure we've seen market madness rather than just the reasonably paced monetization of gold [20% odd a year against the dollar] . Habituated to think in terms of our own currency, the price looks more and more expensive. Yet if gold is just a strengthening currency relative to our local one, then the rational thing to do would be to continue swapping your local currency for gold. Looking at historical examples of currency depreciation, populations were always hesitant to swap their currency for foreign ones.... and like deers in the headlight ended up frozen while foreign exchange carried on up higher and higher. It was the investors and the internationally minded who got out quick. I did my sums the other day, and calculated I have a little more dollars than necessary for my hedging and life-style change purposes [quitting work]. I guess I should swap them for a few more gold ounces.... or maybe some miners. It goes without saying that it makes perfect sense for someone without gold, and with savings, to put some of those savings into gold... even at these "high" prices.

Could do. Wouldn't surprise me if the moves go further both ways than is thought likely.

Crikey... looks like a feeding frenzy with gold through 1420. Wouldn't take long to go through 1500 at this rate. Going straight up in all currencies.

Well, there's always the chance of getting cheap miners on a pullback. Silver's in a greyer area [or should I say golden]..... the volatility could still be traded to increase a dollar hedge.

Silver is super volatile. It will be interesting to see how much of the gains she holds onto on the inevitable retracement.

A strategy is for the long term. I think most here would agree that the more speculative miners will come back hard on a general market correction. The gains in gold bullion I see as the most solid.

Beware money illusion. For all you know, you could only be sitting on momentary "paper gains" which can easily reverse for a period. Because rapidly rising prices can quickly retrace in a volatile and unstable market, I prefer gold to silver/ stocks. A hedge is a hedge. It is not about maximizing "profits", but minimizing risk. US dollars are good to sit on in case markets crash.... at which point you'd put them to work. Simple as that really. If you wanted to increase the dollar hedge, you could trade against volatility if you chose. But the essential factor, considering it's your hedge, is not to lose/ risk dollars. Liquidity in diverse currencies is the best way to spread your risk. My dollar hedge is in the context of a large bullion holding: Gold 50% Silver 10% Dollars 40% On a reversal, should it come, I doubt gold would be hit much. Other stuff though could be a lot cheaper in terms of dollars.

I see they're discussing Zoellick's ideas about gold on Bloomberg. The criticism was that if you asked 5 different people why gold is rising, you would get 5 different answers. This only reveals how "anglo-centric" these guys are. If, on the other hand, you asked 5 people representing 5 different nationalities, I'd say you'd get more of a consensus, along the lines of recognizing gold's status as an international currency. I reckon a decline in US power will co-incide with a more internationalist monetary system.

Saw that earlier today, but couldn't post at the time. Here's more of the article. It's also the reason why it's nonsense to think gold is in a bubble. Bubbles belong to assets, gold is being re-monetized. imo to stabilize the international currency system, governments will eventually, and formally, monetize gold in some 21st C version of a gold standard. The G20 must look beyond Bretton Woods http://www.ft.com/cms/s/0/5bb39488-ea99-11...l#axzz14fp5e9Zj "....markets are using gold as an alternative monetary asset today." You could read for "markets", central banks.

US dollars would be a better hedge.

What a show-off. Edit: shouldn't that be on the gold thread?

Looking at the long term chart, US/ gold has not held that sort of trend line for long. If gold doesn't retrace a little here, it could well track side-ways for a bit.... consolidating until it hits the longer term trend line.

More Stealth Gold Buying, This Time it’s Iran to the Tune of $15B http://dailyreckoning.com/more-stealth-gol...aily+Reckoning)

A bird's eye view:

Shame the rolling eyes smiley can't be used upsidedown.

Even South Korea, with the world's fifth largest foreign exchange reserves..... and generally with a "blind spot" towards gold, is coming to the party. South Korean central bank looks to gold http://www.ft.com/cms/s/0/74576bd6-da90-11...144feabdc0.html It has to make sense for investors to follow suit.... diversify at least some of their "reserves" into gold.

IMF speeds gold sales amid soaring prices http://www.ft.com/cms/s/0/92bc13ae-e5e1-11...144feabdc0.html

Never say never.

A bad grammar day. I see you meant "a new gold thread every month' not "the new gold thread..." It would be interesting to do a survey and see who prefers just a single gold thread to unravel in perpetuity.

Errr... so which is it? Bu11$hit, as you so delicately doubly put it, or the most important thread? Perhaps you're having a bad day today.... something to do with the elections?

Right you are. The announcement should be tomorrow. The whole QE program is starting to look ridiculous with other CBs starting to raise rates in the face of excess liquidity. Somethings got to give soon. I wouldn't be surprised if it was an anti-climax... with maybe just a 50-100 billion figure announced. Aussie dollar at parity.