romans holiday

Good call... I scrolled through and read a few more posts on that thread. Always interesting to compare what was said in the past to today. Found this prediction of mine, which got the breakdown of the inverse correlation between dollar and gold right: http://www.greenenergyinvestors.com/index....st&p=145738 "As for the other currencies, I tend to agree with you. The dollar is the lynch pin of our monetary system, and until that system is changed it should be a major beneficiary as the global economy deflates with money moving from the periphery to the centre. This does not necessarily put gold in an anti-thetical position to the dollar. The way I see it is the inverse correlation between the dollar and gold will break down, and they will both be bought as safe havens in the end."

Pound cratering along with the Euro. Dollar and gold strong.

Good post and I hear what your saying, but there are some macro factors which might make your strategy problematic. First, gold seems to be replacing Euro as the "second" currency for investors/ CBs next to the dollar. Hence as investors/ CBs swap Euro [and other currencies] for gold, gold should strengthen. Second, is Sterling a good currency to trade against gold? You have gold which looks likely to continue strenghtening in the aggegate, and Sterling which is vulnerable to deteriorating in the aggregate... especially if it finds itself in the cross-hairs of speculators. How's this for a less risky alternative; stay long on a larger core holding of gold while trading a smaller position of silver, which is more volatile. And instead of Sterling use dollar as its trading partner.... taking profits in dollars of course. Gold looks like the prime currency now. Both silver and dollar are still sound, so owning them at alternate times involves little risk. Sterling.....

Yeah, but looking on the bright side, there is also an element of natural justice to over-inflated asset prices [and national egos] unwinding. The average Joe will once again buy an asset without mortgaging his whole future. Just a good old-fashioned depression, not the apocalypse. 1241

How long will the industrious states support the others. Might see a split, and a "hard" Euro and a "soft" Euro at some point. gold up 1238

Good call! I'm thinking it might do a "parabola" and retrace again.

Yep, ideological objections made by a small but vocal minority in the west...about how useless gold is... won't even be heard. Gold is what cuts across all cultures and what pragmatically will work. It will also sort out a lot of the current imbalances between exporting and importing countries, debtors and creditors, by fixing the currencies at the appropriate levels. I imagine the Chinese would be quite relieved to de-peg from the dollar, and allow their currency to [relatively] appreciate, if they can at the same time fix to a new gold reserve currency. Like any anxious creditor, they'll accept a haircut on their reserves if the bulk of those reserves are guaranteed/ secured by the new currency system..

Good point. Bubbles can only form in asset prices. Due to increased currency instability, gold will once again have to become the means by which we not only value stuff, but also value [fix/ stabilize] currencies. No need to worry about bubbles and when to "exit".

Gold too high to buy? Think of it as a currency. The use of a decimal point helps for this: Nov 09. 1.025 Dec 09. 1.226 Feb 10. 1.075 April 10. 1.150 May 10. 1.216 Just a currency swap really.

The mistake government made was not to nationalize the banks.

960 Euros.

Not sure. But noticed Euro is sliding against dollar again. I think gold is well and truly being monetized here. Euro money going into both gold and dollar. Silver not moving in tandem [last time that happened, gold spiked and came back again]. Platinum also down.

The paradox of gold. The EU looks like its falling apart and Euro/ gold climbs. Then they try to patch the economy together by throwing money at it... but Euro/ gold continues to climb as the currency is perceived to be compromised. This has to be the flaw of modern currencies... that they are inextricably linked to the performance of economies.

Caution? Surely depends on a number of "subjective" variables as to whether one should be cautious here. Is gold already owned..... how much is owned.... what is your purchasing currency. A few factors that taken together would help determine how cautious one should [or can afford to] be. Though keeping a decent reserve in dollars, I'll also continue to buy a little here due to the problems facing the Euro/ Euroland. Gold could easily just continue to steadily climb higher in all currencies should uncertainties linger over Euroland. http://news.goldseek.com/GoldSeek/1273233900.php

Sure, anything is possible. there is no such thing as complete security in this world. If people are looking for a security surrogate in gold they are fooling themselves. All we can do is make the best of it. If things go as pear-shaped politically as you suggest, so be it. A gold holding is only money, a means to an end. If I had enough to buy a small farm I would, I hope to have enough in the next few years. I imagine at a later date, and if things become unstuck enough, governments will have to stabilize currencies by tying them back to gold. At this point you could happily exchange your gold for paper representations.... though I imagine I'll still be keeping some. A renewed gold standard may, in the end, be the means by which governments avoid a more dire outcome. Nature would then have become the restraint on government. Call me an optimist [i prefer realist], but I think reason will prevail.

The main distinction in trading/ holding for me is not between physical and an ETF, but between gold and silver. Gold - however it is held....physical, GM, BV, Perth Mint, ETF [diversity is good here... I use the first four]- is to be...held. Silver can then be traded if you so wish.

I reckon whether or not one does this has to depend on how much of their worth is in gold [percentage wise] and then how much of that position one wants to trade. Still, has to be quite a risk selling gold in this environment and not one I'd like to take. Have you considered trading the more volatile silver instead? To trade silver, it helps to first have a good sized solid core position in gold. Otherwise, you will likely tie yourself in knots trading a silver holding that is also your core bullion holding. With a good core position in gold, it will be easier to sell a good sized silver position when you think it is in the upper range. The best currency to sell silver into would be dollars of course. Then when you feel silver has declined enough buy again. This trade is quite an easy one, psychologically speaking, for me to make as I think in the short/ medium term both silver and dollar are in bull markets. It is just a trade on volatility, with miminal risk, and without trading [losing your position] your less volatile and more precious gold.

Not mine. I thought it might hold up a bit better... yesterday slid to 1.12 [from 1.10] and now 1.16 and looks to be deteriorating once again. Not too worried as I do not hold any money in Won [just earning it... and then only for a few more months] and move it into dollars and gold every payday.

The market has shown just how fragile it is. Recovery, reflation... wot a lot of rot. The reality is it's about deleveraging and deflation. The central currencies of Gold, Yen and dollar doing well... others on the periphery getting hammered. So too my earning currency of Korean Won. ... from 1.10 to 1.16 against the dollar. ... oh well, definitely confirms for me that this will be the last year working in Asia... bring on the summer fossicking in South Island, NZ.

With the Euro getting hammered, I can't see there being much weakness in gold. Both gold and dollar should strengthen against Euro.

What about gold? It is a better long term buy and hold imo.

Recent history in the ratio doesn't look too good. Hoyes 80 odd might be threatening. I was a bit surprsied to see Rick Ackerman bullish on silver to go through $20 last week. His latest article is making more sense. I'm looking to buy back into silver in the next few weeks or so. Silver’s Sharp Selloff No Cause for Concern http://news.silverseek.com/RickAckerman/1273122240.php

Fine for me... even though I still got charged a month's storage for just being in silver for one day of that month.

Sure enough... the dollar spikes and silver slides. I'm keen to pile in with my dollar fund on this dip..... but no hurry here. The decline could last a good couple of weeks if the previous dip is anything to go by.

Up to 1190... then straight down to 1168. Silver back to 17.90 I wonder if this could morph into something bigger here with investors increasingly nervous about sovereign debt.