romans holiday

Did you read my post? I know, I know... it's verbose. Well, even Peter Schiff, famous hyper-inflationist, says everything will deflate in terms of gold. With this, I agree while finding the hyper-inflation of currencies an unnecessary hypothesis.

Well, I wouldn't count myself a conventional deflationist..... I prefer originality. http://www.greenenergyinvestors.com/index....st&p=176763

Well, Bernanke speaks about the need for more QE... because of the risks of deflation, and gold sells of a little. A continued ZIRP policy and jaw-boning might backfire... it might actually lead to deflation expectation in the end.

But when you look at the price on the log chart, the increase looks reasonably steady. Nor does the recent move look parabolic. The moves in '05, 07, and '09 look much bigger than the one now. Does that portend a large move up in '11.... after perhaps a small correction? The move this year looks quite tame in comparison.

Well, the thing is, as a [hyper] deflationist, I see more risk hanging over silver than gold. I've discussed this ad infinitum so will spare space from doing so again. Selling my silver for gold entailed reducing risk.... that risk still hangs over silver imo no matter what the price of the day is. That said, I'm not bearish on silver, just that I think it will be a lot more volatile to both the up and down side compared to gold. Most my silver went to gold. Trading the silver/ gold ratio was left behind at this time [the ratio could easily snap back here]. For myself, I think it was also right to have swapped some silver for dollars as this remains a hedge against a large gold position. It's not about calculating present nominal numbers, but managing risk for the long run. I think you need to see that there is no one correct position. What suits one person's strategy and temperament will not suit another's. And try to chill a bit.

Sure, to trade the volatility.

So what sort of price..... when the inevitable correction comes.... are we expecting. 20...22?

No, we'd "established" nothing. Might have to disagree to agree on that one. I could nit-pick over the way you've drawn that chart, but no point really. Give it some time, and I think we'll see a small correction.... the price of gold doesn't just move one way. Look at some other charts where gold is priced in a third currency such as the Aussie... it helps to "triangulate" things.

$2000 odd is starting to sound a reasonable price when you consider it would only take a couple more years of compounding at the present rate of 20% to do it.

These days the Aussie dollar's pushing parity with the US dollar. Interesting to compare both gold and Aussie against the US dollar. The rise in gold this last month has been matched with the rise in the Aussie. On a future reversal of the recent capital flow, gold as priced in Aussie should spike up while the US dollar price may come off a little. Longer term Aussie/ US dollar and Aussie/ Gold:

I just see it as a rising tide.... with the odd large wave now and then. Perfectly regular event, observant of the laws of nature.

I prefer seeing gold slowly and steadily strengthening. It looks like the volatility may have died down a bit in the past couple of years, with the gold price increasing at a rate more similiar to earlier years. During the early years, gold was hardly on the radar. When it did show up, most weren't sure what to make of it. I think it's safe to say that gold has now established itself as a prime currency.

Investors should be thinking like CBs are. To know what CBs are thinking, watch their actions not their words. They are buying gold [not selling it] because they know it will be the ultimate stabilizer of an increasingly unstable monetary system. The nominal price is completely arbitrary... to the upside that is.

Well, that was bizzare. On googling "John Exter's reverse liquidity triangle" to look for his interview, the first entry to come up was none other than: http://www.greenenergyinvestors.com/index....mp;#entry175498 Found it: http://the-moneychanger.com/articles_files...omy/exter.phtml He thought of the reverse pyramid in the early sixties. Though the dollar was completely divorced from gold in '71, this didn't change his views on the triangle with regard to cash. The reason being, the dominant feature is debt. As the population moves out of debt instruments into forms of liquidity, those forms strengthen. Given the free-floating nature of our currency system, I think Exter's triangle needs to be "internationalized". Rather than just having separate triangles for each country, all the currencies can be put into a super triangle. Reserve currencies would be in the tier above gold, major currencies above reserve ones, and commodity currencies in turn in the tier above that.

My point is the price looks to be becoming less volatile not more. Sinclair has expected massive volatility... the type of which would take gold to his predicted price target of 1650 in January 2011..... 3 months away. As far as manipulation goes, I apply Occam's razor and remain "agnostic" about this [unnecessary to multiply supposed entities].The assumption of manipulation/ repression of the price by TPTB is not necessary to explain why it is not so volatile to the upside as some expect [the explanation of manipulation always tends to follow on ad hoc after a promising spike peters out]. If gold is maturing as a currency here then it could be expected to do so in an orderly fashion. I'm content with 20% compounded.... but time will tell. Let's see where the price is in January next year..

But we're not seeing this kind of violence. There's been quite a reduction in price volatility.... at least against the dollar. If gold is being monetized, you'd expect it to settle down against the reserve currencies and steadily strengthen [along the thin blue line].... which it is doing. Sinclair seems to have a view of gold where cosmic forces are at battle.... angels...mantras etc.

Yep, near $30 correction thus far. With gold becoming an alternative currency, I think the volatility of its price will steady against the reserve currency. If so, it should continue to strengthen along the thin blue line.

Either that, or it's due a pull-back.

Waiting in pounds to buy dollars? The pound price is way more volatile. Think of money as tidal. The tide is now "out" of the central reserve currencies and into riskier ones. On a reversal, when the dollar strengthens and the gold price in dollars consolidates a little..... the pound price of gold would likely go higher. With money being sucked out of the pound, your purchasing currency will be weakening even faster than gold might be against the dollar. The currencies are shifting sands.

The problem with this chart is it's not logarithmic, which distorts the rise. Happy Nihilist's chart is logarithmic. The logarithmic scale better shows the proportionate change in terms of percentage.

Gold looks a great buy in the Aussie dollar here [Kiwi would be similiar]. If the risk trade snaps back at some point, the Aussie price could easily blast straight through $2000... a 50% increase similiar to the previous spike.

I don't think we're in disagreement. These exchange rates are all relative. In response to GF's point that USDX could be at 66 odd soon [Euro strengthens vis-a-vis USD], my point was that would entail one hell of a strong Euro relative to the dollar..... because the Euro makes up most of the index. More likely is at some point something will give in the Eurozone and capital flows will reverse out of the Euro and into the dollar. Then strong dollar relative to weak Euro. In a scenario of that sort, gold could come back a bit, as priced in dollars, but I doubt much. The more marginal the currency, the higher the concurrent gold price spikes.... I imagine the AUD dollar to take a complete walloping.... which is now at near parity with the US dollar.

Which would see Euroland squealing like.... pigs. More likely is some new problem erupts to send the Euro down, and the dollar back up. Vertigo anyone?

Starting to look like a parabolic spike in the US dollar price here. USDX: 77.77

So the price [in dollars] has been averaging around a 20% increase year on year. After stirring then waking, gold lurched all over the place for the first few years. The volatility may now be dying down a bit as gold finds its feet as a currency. If it continues to play out this way, the trend up may become even more stable and come to track more closely the 20% averaged line of projection. That would amount to near a 2% increase month on month. I could live with that lack of excitement.