romans holiday

I prefer to look at it all practically.... I mean money performs primarily a practical function right. But the problem is once you state such things as "gold IS NOT a currency, gold IS money [and usually nothing else]" you are taking it into the sphere of theory by stating exactly what you think gold, money and currencies ARE. The problem is this theory is not too well thought through, and tends just to appeal to those who have already bought into the "parallel universe" of the gold bug.....debate-ending facts. By leaving it as "gold functions AS money [besides other things]" one can leave it in the practical sphere.

No, not the norm, more in the way of just a temporary fluctuation. Fundamentals in the medium/ long term should see Euro weaken against dollar [imo] and even more against gold.... wait for the next European crisis to rear its head. But due to volatility, things can go anyway in the short term. Every which way but loose... I feel a song coming on. lol As for news, the media is like the eye of Sauron at the moment, frantically looking this way then that for the latest threat to wealth and power. lol

Depends on definitions. You could say gold is neither; it's not a formal currency..... yet. But then, once it is formally monetized, with a gold standard, you could think of it as a super-currency... that which prices currencies. Neither does it makes sense to say gold is money per se. Many things can function as money.... fiat and gold included. Just that gold may function better over the long term and in periods of crisis. Personally, I like to say gold is the strongest symbol of money. This gives gold a premium position [while allowing that money is primarily a general idea, which avoids the theoretical can of worms involved with saying gold IS money]. This is why we tend to go back to gold in crises... and why gold was what modern representative currencies originally represented.

Not at all. It was paraphrasing Nietzsche: "Kant spun a web and caught everyone in it". Along these lines, I think the root of the problem is what was assumed to be "knowledge"... in the human "science" of economics.

The economists spun a web, and caught everyone in it. All were seduced by debt... and consumed the future.

Actually, I take "perverse" to mean that it will continue to surprise everyone... in the short term....whatever you think the fundamentals are.

A longer term perspective:

Hi dp, can I ask what purchasing currency you are waiting in, and have earmarked for gold? Because if you've decided to wait for a dip then the currency to wait in is either US dollars or Yen. It's most likely that Pounds, along with most currencies, will tank faster than gold if gold did correct. So even if the price came down in dollars it might stay the same, or dip relatively insignificantly in Pounds. If a round of deleveraging was intense enough, the pound price may even increase at that time. Looking at the price history of gold in Aussie and kiwi dollars [even more marginal commodity currencies] shows this dynamic... where the price is a lot more volatile. If capital flows are sucked into the dollar, for whatever reason, other currencies may collapse at that time relative to gold and dollar. Notice that in 2008, the Aussie price went from 950 to 1300.... even as the US dollar price of gold was declining. If you'd been waiting in Aussie dollars for a sub 800 price you would've been sorely disappointed.

It's all about dollar weakness at the mo [and conversely Euro strength]. This shows in a slightly higher US dollar gold price, even as the Euro price declines a little. All of which confirms golds burgeoning status as a currency.

Yes, you really need to be as "rational" as you can about money. Gold naturally seems expensive here.... but if you consider you are swapping a weakening currency for a strengthening one, it's not so difficult to buy. $800/ $900 now looks cheap... it's all relative. If you had a smaller percentage of your worth in gold [or none] and were feeling a little anxious, that seems to me a good reason to buy here. Because of the volatility involved in the market today, I decided early on to stake out a position with which I could enjoy a zen-like detachment... that is priceless.

Some slight exaggeration there. I posted an article on Japan earlier today..... just to put things in perspective: http://www.greenenergyinvestors.com/index....st&p=184576

Nope, I'm completely relaxed. Half suspected I'd get the dollar/ silver trade wrong. As you'd expect in this "perverse" market [i like that term] where the short term moves can go either way. Just as well I only used my pocket money on this one. You view mining shares as speculative. Well, I put silver in the same league as mining shares. Silver looks to have broken out into another range, yet I still think it will remain volatile to the downside at times. I'd consider buying on the dip.... who knows, it may even get down to 17.90 odd. I wrote this on silver when I first started looking at it as a trade in order to balance out/ hedge a large core holding in gold: http://www.greenenergyinvestors.com/index....st&p=161244

We have seen MASSIVE credit expansion = "THE HYPERINFLATIONARY CRACK UP BOOM." Corrected

But consider that money has various functions. It can be used in the present as a means of exchange, and a measure of value. It is also used for the future as a store of monetary value. Actually, I think this latter function of money is the most definitive one; the institution of money evolved to off-set the uncertainty we have towards the future [imo without this latter balancing function, money eventually ceases to function properly as the former].* Considering the above, this is why Portugal will just sit on their gold [being the most powerful symbol of money], and why it makes sense for them to do so. Governments and CBs around the world are following suite... they've stopped selling and starting to acquire further holdings of gold. This fact can be interpreted various ways. Personally, I consider gold being remonetized here, and countries increasing their holding in order to recapitalize themselves... perhaps involving the international re-booting of the currency system in the not too distant future. *This idea of balance/ equilibrium is an interesting one. Balance is not only required in the functions of money, but also required in international trade. Gold was the means by which this balance was achieved in the past. It acted like a ballast to the system.... now that the collateral of over-valued assets in developed countries have collapsed, the system needs to be re-ballasted/ re-balanced. imo this will be done by going back on gold. http://en.wikipedia.org/wiki/Price_specie_flow_mechanism

Who cares about interest rates these days. Also, they don't charge you for sitting on dollars. lol

Nice chart.... pretty obvious where gold is heading. I don't think the nominal price matters that much [money illusion], as the fall in asset prices would match it. The ratio is the one to watch. The Nikkei fell to near 25% of its peak. If the Dow followed a similiar path then it could head down to 3000/ 4000 over the next decade, which would also see gold at that level if the ratio of 1:1 is met. If the deflation misery/ stagnation of the global economy that this process would bring is bad enough, governments may be forced to go back onto gold. This might see gold rehabilitated into the mainstream at a lower level. Yet, imo if currencies were tied back to gold, this would have two effects; restore the balance in international trade while also leading to a crash in local asset prices [as opposed to a slow grinding deflation] as money becomes more attractive to hold.

I prefer BV to GM as with BV they let me just sit on my US dollars for any length of time. Not so at GM, they asked me to move along with my US dollar position... so I only sit on gold there. The trading station at BV is a bit of a gimmick imo, but it is useful for the odd time you want to switch between metals/ funds etc.

Now there's someone with a right to dogma.

Gold May Advance to Record for Fourth Day on Speculation Dollar to Weaken http://www.bloomberg.com/news/2010-09-21/g...ll-further.html

Errr... we haven't had hyper-inflation. Most have seen an ongoing economic crisis.... though the way in which it plays out could surprise many.

I'd still say gold first [at least a little] and then silver, but then that's could just be me and my conservative psychology.... and that I dislike shopping.

Not necessarily so. There could be a speculative component [the attempt to maximize] involved in silver and stocks that is not in gold. The above kind of article will get people buying silver instead of gold. The "poor man" would still be doing well to buy a few ounces of gold, before going on to buy silver. Gold should be bought first, and silver, being more speculative, second. I think most here agree with that. Consider, are CBs buying silver or gold?

Crikey, 1284..... looks like it could go through 1300 in the next week or so. Solid steady rise in what has been gold's strong season.

As they say, bull markets climb a wall of worry. The wall this gold bull will climb is deflation concerns due to the conventional opinion that deflation is negative for gold.

Gold can double, triple or even quadruple from here without hyper-inflation involved OR even inflation involved. The best representation of this is Exter's reverse liquidity triangle. Notice in the triangle, monetary value moves from the higher tranches to the lower. The dollar strengthens relative to the assets above [deflation in asset prices] while gold at the same time strengthens against the dollar. To internationalize this, most other currencies would be above the dollar in the triangle [you could call this deflation of currencies against gold; "hyper-deflation"]. The focal point of the triangle is gold, not the dollar. This puts quite a diiferent slant on the usual inflation/ deflation debate, which tends to be currency/price-centric; most people are looking for CPI to tell them whether we have inflation or deflation. But if monetary value is eroding from a currency then we should be looking beyond the numbers/ prices.... because the stick being used to measure - the currency - is itself in flux. A fixation on prices [and units of currency] is classic money illusion.... an idea that many have lost sight of. The triangle is more subtle than this. Instead of price-centricity, it is value-centric. Inflation/ deflation is understood in terms of monetary value, and that value is measured in terms of gold. Currencies, are also measured in terms of gold. Thus it makes sense to say we have deflation in monetary value from all monetary assets as measured by gold.