romans holiday

Hyper-deflation now..... and what is going on is expected and predictable because the currencies of some countries depreciate against other more central/ reserve currencies. Currency depreciation gives a boost to exports. You need to look at it from an international/ currency relative perspective. Because we live in a global economy, some currencies will strengthen and others weaken relative to each other... and all depreciate against gold [this is the essence of of hyper-deflation]. The export boom should be relatively short-lived due to wider problems and imbalances in the global economy; when demand falls off in developed countries where will developing countries export to? And there may be first a bust in booming economies before they manage to "decouple" and develop their own internal [alternative] markets. This is all predictable with hyper-deflation glasses on. The difference between deflation and hyper-deflation theory is the first tends to be overly abstract and US-centric, whereas the second is more country specific, empirical, and international. Weimar also enjoyed a boom in exports [at the expense of other countries] as the mark depreciated. It was noted by many commentators at the time that during the boom period unemployment was not a problem, whereas it was plaguing other countries. Sure, "here" is relative... though I don't think Weimar-like cash hyper-inflation will happen anywhere. If a hyper-inflationary comparison must be made it should be made with China [not the US] where once again a modern hyper-inflation involves the massive expansion of credit: http://www.latimes.com/business/la-fi-0907...8818,full.story

The problem is the incommensurability of "paradigms". The most fruitful thing to do when inflationists, deflationists, hyper-inflationists and hyper-deflationists see the world in fundamentally different ways is to look at all of the views, in terms of themselves, and ask which is the most coherent. All there is are conflicting theories. Also, theory always understands itself as only provisionally true and potentially falsifiable. I find that a lot of hyper-inflationists do not really have this awareness of their "theory". It is usually considered 100% true, which is actually the characteristic of dogma not theory. And it would be silly to argue with a dogmatist. http://en.wikipedia.org/wiki/Paradigm

Sure, what I'm saying is this much heralded target was considered a dead cert by Sinclair. If the target falls well short of the mark, and that target was based on his view of hyper-inflation, then it would be sensible to question his view of hyper-inflation...... and how it would play out. Rather than rejecting hyper-inflation outright, this may just involve modifying it to fit in more with present day events. Don't believe everything you read on the net ......and I'm not sure if Bubb would consider himself a hyper-inflationist.... Jim Sinclair Bets a Million Dollars Gold Price Will Hit $1650 before the 2nd Week in January 2011 http://www.goldprice.org/gold-news/2008/04...llars-gold.html

I think that would pretty much count as 1650 I doubt that the January price will even get near to within $100 of $1650. Don't you think 1300 something looks more likely?

Hi fadeaway, welcome to GEI. That's quite a few questions, and I reckon you'd get just as many diverse opinions on them from posters here. My 2c worth: why not buy back into bullionvault, and with a decent proportion of your liquid funds. I'm happy with 60% in bullion, but others no doubt would recommend higher. That may seem a lot, but it helps to think of bullion as an alternative currency, that way you can be safely liquid on the sidelines in the strongest currencies.... if you think asset prices are heading south. A split between gold and silver seems a good idea. Personally, I think silver is a little more speculative than gold, so it should be gold first and then silver. Physical also seems a good idea. Some will recommend only physical, yet I'd suggest once again diversity... a part in physical, a part in bullionvault/ goldmoney, a part elsewhere. Physical bullion can be stored with a private vault company, besides a bit tucked away at home. Not sure about the insurance... but then some would say gold is your insurance. At the end of the day, after DYOR, it may be best to follow your own instincts and go with what you are most comfortable with.

Some economies are enjoying a boom in exports. How can this be sustainable when many economies are ina continued slump. The idea of "decoupling" for boom economies in Asia seems to be in vogue at the moment, yet this may just be a case of wishful thinking as investors desperately look for yield. Booming economies in Germany and Asia or just feverish over-production and a crack up boom? Rick has an interesting take on it: German Boom Recalls Titanic’s Last Hurrah http://news.goldseek.com/RickAckerman/1283839200.php

Yep, no more buying gold for me.... doesn't mean I won't be scrounging around in the Southern Alps for some.

No, fully in gold [with no further funds earmarked to buy gold] because I don't see the dire need to get out of my 40% dollar position. This reflects my view of a deflationary drive to liquidity where the dollar is a beneficiary along with gold.

No, with 60% in bullion I consider myself practically fully in [will not be buying any more gold]. I'll hang onto the 40% in dollars, which I may trade against silver/ volatility in the near future. Fully in because I don't expect dollars to blow up overnight, think diversity in the strongest currencies is a good idea, and have no certainties.... though some theories, which have served well thus far.

I would, but practically already fully in. Wow, that's quite bold of Jim to stick with his original prediction. Bold because it involves a rather large explosive parabolic move in gold [or a crash in the dollar for steve], where instead gold has showed itself to be slowly strengthening against the dollar at a steady pace these past few years. At least Jim's sticking to his guns. He may be right, but if he isn't, and gold is only around 1300 early next year, will that mean the hyper-inflationary hypothesis might be up for questioning.... besides Jim's forecasting abilities? I propose a less dogmatic stance on hyper-inflation if Sinclair's 1650 isn't reached by January 14th 2011.

Sure, it's all relative. Saying gold is looking strong against the dollar is the same as saying the dollar is looking weak against gold [it has to be problematic though to say the dollar is weak per se when Rio Tinto has just had iron ore prices renegotiated downwards].

Gold looking strong to take out the all time high. The price looks fairly solid here after having had a period of time to consolidate at these levels.

How is the swapping of a weakening currency for a strengthening one speculation? Changing a good chunk of your local currency into gold could be about the most conservative thing you could do because you are conserving that nebulous thing called money [purchasing power]. I wonder if some who view this as "speculative" are laboring under the form of money illusion known as monetarism, and can only conceive of a currency depreciating against gold due to a local "inflation"/ QE [the mathematical illusion here involves the assumption that an increase in the number of the denominator, ie, the amount of units in existence, must automatically lead to a decrease in the purchasing power of each unit/ the numerator]. They can not conceive of gold appreciating in its own right as a prime currency, against all currencies, in a global deflation/ contraction*. Just a thought. I guess Bonner thinks it is speculative because he thinks higher prices are dependent on whether CBs inflate the money supply. But there are other reasons gold could continue to go higher such as the non-performance of developed economies, increasing public debt, and continued instability in the international currency system. Whether governments continue to "print" or not is not necessarily the defining factor in gold prices. *From a theoretical perspective, this doesn't necessarily entail that only gold is money. I'd argue instead that it is the most powerful symbol of money. Money, the thing in itself, remains an idea.

Gold, as priced by the market, has just as much to do with perceptions of the fundamentals as it has to do with the fundamentals themselves. In this sense, Roubini's opinion is significant because people listen to him.

I think the dollar will appreciate as well as depreciate. If you look at Exter's pyramid, you'll see that the dollar will appreciate against assets [and I'd add major currencies such as the pound/ Euro, and minor currencies such as the Kiwi and Aussie] while depreciating against gold. As I mentioned above the dollar could be considered a hedge against gold... if the two are negatively correlated as most conventional wisdom states. Yet [as mentioned in previous post], my view is that they are not necessarily so negatively correlated, and that rather the dollar will function in the short/ medium term alongside gold as a safe haven. That said, if there was the kind of cataclysmic deleveraging that Prechter is talking about then the dollar would be a straight out hedge. I don't think that long term the dollar is a better investment than silver. But I do think that gold is a better investment than silver. For me, gold is to hold, and dollars are for trading against massive volatility in silver should we see it [this is an easy trade for me as I see both silver and dollar as good currencies in the interim]. I don't feel the need to hold much core silver because I hold a lot of core gold. Long term I think silver will outperform dollar, but underperform gold... and remain more volatile against the dollar. The reason I take a more ambiguous approach to silver is because of my deflationary outlook. I think too many are assuming that silver will be a "leverage" on gold.

I feel like we are going over old ground here. Nevertheless, here is a summary of my views: 1] Having put 50% of my liquid worth into bullion a couple of years ago, I consider myself "all in". 2] Because there are no certainties in life, I am hedging that rather large core bullion holding [also with 10% in core silver] by keeping the other 40/ 50% in US dollars. Yet, I don't think US dollars are necessarily just a hedge against gold, but also the next best currency to hold - besides gold [and perhaps silver] - in a deflationary drive to liquidity [see signature]. 3] I am bullish on silver, but more bullish on gold so the bulk of my core is in gold. With silver and dollar remaining volatile, I may look to trade dollars against silver.... in order to accumulate dollars not silver because this dollar position remains my hedge, and my core bullion position remains in gold. But I'll only buy silver if it's price crashed... if the price doesn't crash, and it breaks to the upside, no harm done because those gains in bullion price will be picked up by my core holding in gold [not to mention silver may still crash at a later date]. 4] The "little time" involved may be five years or so. Given the global/ market fundamental currency system, I think there is at least as much chance of the US dollar chronically strengthening as there is in it blowing up in some sudden hyper-inflation. If this happened, the dollar may need to go back on gold to devalue it relative to creditor country currencies. No doubt you'll disagree with most of the above, but you should be able to see there are alternative logics/ systems and different ways of seeing things. If you can't see that predictions about the future are not certain, but only probable and possible, then you are not thinking logically at all but dogmatically. And there is no point in arguing with dogma.

Dollars should appreciate against pounds, and most other marginal currencies. If currencies appreciate against local assets such as property, then dollars will appreciate against near all property. The dollar will also appreciate against equity markets. Given some time and demand destruction, the dollar should also appreciate against commodities and consumables. Watch oil crash again at some point, or just grind down. The USDX is not the greatest measure of the dollar as is too heavily weighted to the Euro. Even so, we've seen the bottom in th USDX... give it a little time and USDX will be at 90 odd.... before going through 100. One thing I doubt the dollar will appreciate against is gold.

Here's Roubini's take on gold, which seems almost neutral: Roubini Says Dollar, Franc to Beat Gold if Economy Slips Back to Recession http://www.bloomberg.com/news/2010-09-03/r...-recession.html He doesn't see a spike in gold, yet neither does he see a slump. He sees the stronger currencies holding firm against gold in a continuing recession; "I believe that gold is going to trade around current levels" [even with this rather muted Roubinian outlook on gold, it would still make sense to hold gold as a core currency alongside the other currencies he likes]. Of course there is another option; that gold will continue to slowly strengthen at the steady and incremental pace it has shown over the past few years.... 20-30% a year. Not a bad "return", especially when you consider dollars are also appreciating against assets. This means gold would be "doubly" appreciating against assets.

Cheers on behalf of the site. Welcome to the other madhouse.

Had a quick look at that thread. This sensible comment stood out by dpmiller: This is a classic case of money illusion where people are so habituated to the local currency that they identify it with money per se. No consideration is given to the possibility that their own currency could be depreciating. Rather, this or that is just getting expensive, even worse, must be in a bubble. Past histories have shown that populations have always waited for the currency to "bounce back" before swapping for stronger foreign currencies. Problem is it never does. And this from a ...non-hyper-inflationist. The rational thing to do is to swap a weakening currency for a strengthening one... even if it seems "expensive".

Gold looking strong at 1250. If that was the summer doldrums, I'd hate to see what the silly season is like. Link to last month's thread: http://www.greenenergyinvestors.com/index....st&p=181297

Yep, you also got to ask what Soros' intentions were when using "bubble" language given his theory of reflexivity. Was it his intention to manipulate the expectations of market participants? I'm kind of inclined to give him the benefit of the doubt given his age and philanthropic pursuits. As for gold and bubbles, I don't think it is possible for gold to become a bubble; only assets are susceptible to getting into bubble prices, not prime currencies.

"Gold Rallying to $1,500 as Soros’s Bubble Inflates" What do others think of this language? The question investors have to ask is gold in a bubble or in a bull market. If they think it's a bubble, there will always be a bias towards selling it at some point... getting out before the bubble bursts. If they think it's in bull market, they will continue to hold, and not be overly concerned as it climbs a "wall of worry" as all bull markets do. That investors are worrying about what deflation means for gold, or whether gold is in a bubble, confirms to me it's climbing a wall of worry.

Good stuff! I suspected as much. I think way too much is made by some out of the influence option expiry dates exert on prices.

From my journal: http://www.greenenergyinvestors.com/index....st&p=161244 As this post shows [when I sold 6 months ago], I fully recognized this trade is speculative and nothing to do with certainty, and neither with one's "core position". But more than a speculation, for me it is also a hedge. It doesn't really matter if I get it wrong and silver breaks to the upside, because I haven't sold my core postion in gold. It is also more likely than not that I'll be able to regain my "trading position" [at 17.90] due to silver's super volatility. It helps if a couple of distinctions are kept in mind: 1] the obvious one that silver is silver, and gold gold. 2] the difference between a speculative trade and a core position. Does anyone think it is a better idea to leave this thread to "silver bugs", and that if speculative positions on silver must be discussed it would be better to do this on a separate thread? Just another spike, or can it make a convincing break to the upside?