romans holiday

Gold Rises to a Record on Japanese Rate Cut, Demand for Wealth Protection http://www.bloomberg.com/news/2010-10-05/g...ive-assets.html

Interesting idea Steve. But do you think the volatility that's been seen in the past will remain in the present/ future. I mean, the recent trend has shown much less volatility in the gold price. My theory for this is that it's being increasingly monetized. If gold is starting to be bought more as an alternative currency then it might not be as volatile as when it was perceived more as a commodity/ inflation hedge. This fundamental factor may subvert the technicals.

Yes, I was posing the perceived contradiction, by market participants, between gold going up on "inflation expectation" and bonds yields going to all time lows. I'll see your "It signals loss of faith in the currencies" with "it signals the erosion of confidence in currencies". Investors, along with CBs, are diversifying into gold.

How to square the circle? Gold pushing new highs signals inflation right? But why is so much money going into bonds pushing the yields so low... which signals deflation right? http://www.economist.com/blogs/buttonwood/.../bl/currencywar Forget squares and circles, and think triangles instead. Exter's reverse liquidity triangle explains why the yields of US bonds go lower [the prices higher] even as the price of gold goes higher. It's all about a drive towards liquidity as money works its way down from the assets at the top to the strongest [perceived] forms of liquidity at the bottom:

As they say "a rising tide lifts all boats". The Aussie dollar has strengthened even more than gold against the dollar in the last month. This should mean the price of gold in Aussie dollars is not rising. When the risk trade comes off next, it wouldn't be surprising to see gold retrace 50 odd dollars. Of course it may first gain another 100 or so here on a spike.... and further weakening in the dollar. Sure enough, looking at gold as priced in Aussie dollars, it's been tracking sideways for the last month.

The logarithmic chart is better for the long term. Averaging 20% odd year on year:

Things are looking very interesting at this particular juncture. Will gold go parabolic and threaten to come within Sinclair's target of 1650 by January 14, or will it consolidate back to 1250 or so? Who knows... as far as the short term goes, it can go in either direction. What seems more certain is that the medium/ long term uptrend will remain in place. I for one will be relaxed wherever the price goes within that channel. All boats look to be rising lately thanks to Bernanke's effect on inflation expectations... it remains foggy how effective this will remain. But even if a tide of money was sucked back into the dollar at some point, on perhaps a renewal of the Eurpean crisis, I doubt gold will be moved much. Gold is looking increasingly solid as an alternative currency. CNBC reporters are now scratching their heads about why both gold and stocks are up in tandem. It wasn’t too long ago that they were scratching their heads as to why both the dollar and gold strengthened in tandem. Isn’t gold supposed to be move contrary to stocks… or to the dollar?? What they’re missing is that this "see-saw" market is now defined by uncertainty and hence volatility, which first sends this asset or currency up, then that asset or currency up at the expense of the previous asset class [hyper-active money movement in financial markets alongside stagnating velocity in the real economy]. Yet, the price of gold continues in an upward trend despite the see-sawing in other asset classes. This is not because it moves contrary to some other asset or currency, but because of volatility per se. A volatile market is an uncertain one. Markets hate uncertainty hence money will continue to go to gold. Link to previous thread: http://www.greenenergyinvestors.com/index....st&p=185812

This is the scenario I'm seeing, which would send the Euro/ pound prices rocketing to new highs. That the Euro/ pound price is not breaking all time highs presently is insignificant imo. It was the fact that those currencies practically crashed which sent the gold price so high [in those currencies]. Now that they have recovered somewhat, the gold price is lower than the high... but still higher relative to gold as priced in dollars. As for dollar weakness, that might lead to a 5 or 6% correction [on the chart below] in the dollar price of gold on renewed dollar strength... but I wouldn't make too much of this as O'Brien has:

Gold is the final refuge against universal currency debasement By Ambrose Evans-Pritchard http://www.telegraph.co.uk/finance/comment...debasement.html I see Robert Murdell [the architect of the Euro] stated on Bloomberg that there has never been such currency instability in the past few thousand years.

Smallest Commodity Moves in 14 Years Mean Precious Metals Best Alternative http://www.bloomberg.com/news/2010-09-26/s...lternative.html

Grumpy? Tell me it's not true....

Consider also that most of the gold the IMF is selling isn't going onto the open market, but has been sold "in-house"... to other central banks. This only serves to bolster the market price of gold. Another article from the beginning of the month: http://www.bloomberg.com/news/2010-09-10/i...w-222-tons.html

Or, you'd just have to buy it again at higher prices... but this only begs the question....why would you sell in the first place.

So we have a dichotomy in the "paper" and the "real" market. Isn't this really just reflecting a perceived dichotomy between institutional and "free" gold? And then doesn't this notion of "free" gold only go to show that certain political presuppositions/ prejudices are at play here? Considering this, the perceived dichotomy is more the result of a particular/ peculiar view of the world rather than representing anything real. imo this dichotomy reflects the error of taking an overly abstract and theoretical approach to gold..... one devoid of a concrete and practical context. Remember, if gold is to function as money in the real world, then we should be looking at it practically, and keeping an eye on the players, markets, and institutions which will make it so. Implicit here is the idea that money [come currency] is a social institution. Monetized gold may also play a social role; it may in the end be the means by which an increasingly chaotic monetary system is stabilized [which may serve to disappoint the ghoulish glee that some seem to have with the prospect of a complete collapse]. Did you hear about the statues of Daedulus? They were so life-like that if they weren't tied down to earth, they flew away into the stratosphere when no-one was looking.

Crikey! Is that a typo? Don't you mean $1200/ oz? Consider that any weakness in the "paper" market will be [is] supported by investors, fund managers, and central banks now lined up to buy. That line may be at 1250 odd now. A large pullback of $200 or so is always possible, but also possible is that may come after gold first climbs another $200. Though gold could remain volatile at times, it should remain in this upward channel:

By that point, investors will have had the desire for owning stocks [like houses] hammered out of them. I reckon the move back into assets will only be a long slow process for the bulk of "investors"... climbing a wall of worry. Where near everyone became an investor in the recent bull market, in the near future, at the bottom of the bear market, investors might be a dying breed.

Kevin Kerr and John Doody on gold. http://www.cnbc.com/id/15840232?video=1599044164&play=1 Notice the silly interviewer: Interviewer: Kevin, you two are talking about hyper-inflation. where is the hyper-inflation going to come from? Doody. No, I'm not talking about hyper-inflation in my scenario. I'm talking about negative real interest rates. Interviewer: I know, I said Kevin!

Not to mention houses are assets, and gold is money... currency... the most powerful symbol of money.* *I know, it's a mouthful.... but it does help to avoid the metaphysical disputes.

Yup, the practical world is primary... any theory worth its salt should recognise this. This is why I focus on the actions of countries and CBs towards gold because these are the players which will re-monetize it in the end. A process informally underway at the moment imo.

One man's intellectualism is another's macro-economics.... a most practical science.

I doubt gold will ever exchange hands that way. A renewed standard would enable countries to exchange goods and services of equal value, or to make good the difference with gold. I reckon the man in the street will still be using the currencies we have today.

Thought this was of some interest. Compared to good gains in gold, oil has only increased 10% this past year... and is threatening to go lower if the US GDP figures are down-graded; a lower GDP figure, lower demand for oil. Many who see gold doing well in the future, also see commodities doing well... and are essentially commodity bulls. Listening to James Turk latest podcast* is interesting where he states commodities will do well due to " money looking for a home". Looking at the example of oil, the commodity par excellent, this idea of excess money going into commodities is hardly being confirmed. imo gold is in a league of its own here. * http://radio.goldseek.com/nuggets.php

Gold holds near record high on currency fears http://www.reuters.com/article/idUSTRE67F05920100923

Well, I might not consider myself a gold bug [not into the far right political stuff], but I can say I have a foot in the gold bug camp.

Not all who hold gold are gold bugs.... many would just consider themselves gold bulls, as I do. Generally speaking, I think it's safe to say there's such a thing the gold bug worldview, which tends to be anti-government, hyper-inflationary, and quite doom and gloom. I don't really dismiss these views, but I do disagree with them. I'm sure there are other things I'd agree with along with gold bugs. I don't use the word derogatively. I think many would also agree there is a tendency for those with very strident views to create a kind of "parallel universe"... so to speak... which has its own "debate-ending facts" to use D2's interesting phrase. I prefer rational discussion, and to debate the ideas openly and honestly.