romans holiday

Of to the races? What happened to the seasonal lull. One thing for sure is short term unpredictability. Which is why I'd never trade gold. Silver on the other hand.....

Or this.......??... back to the thin blue line?

I've always thought a repeat was on the cards [of '08] which is why I've kept out of all stocks. Some are even calling for gold to go to 600 odd [check out this weeks goldseek radio with Steve Hochberg]. Personally, I suspect gold will hold up a lot better this time [if we do get deleveraging round 2] due to its burgeoning status as an alternative currency. I'd consider buying mining stocks after a bout of deleveraging.

Short of the equity markets falling off the cliff again, gold looks pretty solid at this level. Even if it did decline on another round of deleveraging, it would no doubt bounce back quickly. I'll be averaging in a little at the end of each month... while keeping a dollar reserve back just in case. I wonder if it might not be until 2011 before we see fireworks again though. On the gold time-line, not too far off.

I'm not so sure if people will lose faith in fiat currencies, or that it would involve a hyper-inflationary event. More like hyper-instability between currencies, so it is only the class of investors who might be concerned enough to buy gold as an alternative currency, or due to economic uncertainty/ stagnation. The general population might well end up valuing money more as they continue to pay down debt and save. A new gold-backed currency would restore international trade by stabilizing and re-balancing currencies. Where some currencies on the "periphery" might chronically depreciate, others at the centre might chronically appreciate.... without benefit to anyone. And conceivably it could be the indebted countries that get crucified on a relatively strong currency as their populations rush to pay down debt. Perhaps the fundamentals of debtor and creditor currencies might only play out with a new currency system.

The dollar is in flux, so it does not make sense to think of gold having an appropriate price in dollars. It is because of instability between currencies, which would most likely lead to increasing protectionism, that the gold price will continue to climb steadily higher. At some point, I imagine governments will have to stabilize/ fix an increasingly unstable currency system to gold.... otherwise money would just keep going into gold which would effectively destroy economic activity. This would be done for pragmatic reasons and following certain events, not because of some theoretical price. There are two ways of looking at it. At some point [who knows when, and who knows the price] the price of gold will be capped. From the other perpsective, gold will once again price/ stabilize/ fix currencies. I think the price could be around $2000. What is more important than the price is when a tipping point is reached, where money starts to increasingly move away from investment in the economy in a big way. I think this will happen in stages... and we've only just seen an initial stage. More important than focusing on the nominal prices of gold, will be the relative strength between currencies, which gold prices represent. Say gold goes to US$2000, and the price in Yuan goes to 16000 [reflecting the current exchange rate 8:1 odd]. The price of gold could be capped at $2000 by the institution of a new reserve currency [gold backed]. The dollar would be fixed to this currency. The Yuan would be fixed at a higher level against this new currency... reflecting a 30% or so relative appreciation against the dollar. This would involve the new Yuan price of gold being say 11200 [representing a 30% appreciation of the Yuan... I suspect i got the math wrong a bit here]. The Chinese here have increased their purchasing power, while also having the bulk of their dollar reserves guaranteed [though taking a haircut] thanks to the new currency system. http://www.greenenergyinvestors.com/index....st&p=149175

Well, with currencies fixed/ stabilized to gold, gold would be pricing currencies, rather than currencies pricing gold... and those prices would be fixed. This would involve throwing overboard the Washington Consensus/ market fundamentalist approach that has reigned for the past few decades. This new system would also resolve the problem of China looking for a stable/fixed currency on the one hand, and the need to "depeg" it from the dollar. Both currencies would be re-pegged to the gold currency at the appropriate levels. China, like any nervous creditor, will be happy to take a haircut of say 20 or 30% if it meant the bulk of their reserves were thus gauranteed. Besides balancing trade, a fixed currency system should also balance our attitude towards money. With the [largely unconscious] inflationary bias of fiat currencies removed, savings and real investment would once again balance out consumption. This would also tend towards continued decline in asset prices. Given that economists in general prefer growth for growth's sake [without asking about the quality, or sustainability of that growth] it may take a period of economic havoc before a new currency system is instituted... out of necessity.

I take a conservative approach [one that also reflects the past few years action in gold] and think it will head up in two or three more stages over the next few years. Each year we might the price go up a few hundred dollars. In a few years with it at $2000, I think things will be so bad... currency and trade wise, that a new gold backed reserve currency will be introduced. Assets will then continue to deflate against money, so the real value of money will continue to rise.

Not sure at all. Hang on a sec. If I'm buying a major position in gold because of uncertainty...... and then trading a minor position in silver.... to hedge that hedge... then, in that context, I have quite a "certain" attitude towards silver.... and can afford to be wrong

Edited.

All too true. I tend to focus on the US dollar price of gold because I see it as the centre piece of the global currency system we use. It didn't mean much to me when gold rocketed up to $2000 in the NZ dollar price [my native currency] a while back [now at 1600 or so] because it was only reflecting a weakened currency due to international capital flow. Even though I still suspect 3 digit prices this year, I'm buying a little each month [with US dollars].... no certainties and all that... while also maintaining a reserve. Looking at the dollar on a chart, the trend, on the face of it, looks up. I don't think this is necessarily gold negative as gold and the dollar could well both strengthen together for a period of time.

Link to April's thread: http://www.greenenergyinvestors.com/index....st&p=161454

Well, some were calling for a decline to 3 digits while others were looking for gold to go to new heights. Looks like the April fools was on most as gold has consolidated in the "no-mans land" of 1100. Gold looks to be at a crossroads here..... will it rocket, consolidate, or track sideways this month..... Link to last month's thread: http://www.greenenergyinvestors.com/index....st&p=161426

Ah, but consider that silver is itself a speculation, that it is considered a leverage on gold. In contrast to this, I think gold is in a league of its own now, and the risk you mention in regard to silver I hold in regard to gold, which I would not sell for that reason. Am I out-bugging the gold bugs here? How you trade and invest depends on your own psychology, which in turn depends on the logic you buy into. So what may be right for one, may not be right for the other.

I prefer the word speculating, and also draw a distinction between gold and silver. I think most would recognise that silver is more speculative than gold. Silver has shown it doesn't need a full on deleveraging bust to decline. And is therefore more easily traded. Gold on the other hand might or might not decline on a deleveraging bust, which is why it could be a good idea to trade a little silver... to hedge for that possibility. I also have a few kilo bars of silver back home should silver become as valuable as gold one day.

If i'd waited that long it would have eaten up half my profits.... and then there would have been no point in trading. I want to exit on a spike when I think silver may decline. I'm happy to take risks with silver [this year] that I wouldn't with gold because: - I think the dollar will remain relatively strong for a while which will restrain silver from breaking out in the short/ medium term. - if silver does break out, it will likely stay volatile, and then most probably dip back down to where I sold at the peak, where I can buy again. - I wear my dollar bull hat when trading the silver account... and consider it a hedge against a rather large gold holding. - Seeing deflation in the driving seat for the moment, I think this has more an impact on silver, being considered more a commodity, than gold. Gold as an alternative currency is in quite a different position to silver. -my silver/ dollar account is not that large, only around 10% of my pot, though will consider increasing if I get a few trades right. -I'm continuing to buy gold over the year [which I don't trade]. Are you trading a little?

http://www.marketoracle.co.uk/Article18278.html

Will be very interesting to see what the dollar does here. Silver declines on dollar strength... but also bounces back sharply on any dollar weakness.

God forbid we should all agree. Thanks you for the generous words. Had dinner with colleagues today. 2 years ago they were rubbishing my views.... now they're listening more closely.... due no doubt to the corroboration of current events. I think I should have them lining up to buy at the local bullion bank in a week or two.

Dollars. Only trading silver against dollars [while continuing to buy and hold gold]. From an earlier post: All that's shiny is not gold, and exited my silver trade at 17.90. I find it an easy trade to make - psychologically speaking - as am also bullish on the dollar, for the next couple of years anyway. And silver I think will remain super volatile against the dollar. Also making this trade easier, is that I can consider it a hedge [dollar proxy] against the rather large buy and hold approach I have towards gold. If I get this speculative trade wrong and silver does break out to the next level, the chances are that it will still remain volatile and likely dip at some point to where I exited, thus enabling me to get back on board. I think this is quite unlikely though, and think silver will remain in the range seen this year. Being both a gold and dollar bull gives you quite a different perspective on silver. ... though I'm also long term bullish silver. Though the profit on trading unleveraged silver/dollar may not be huge, it is still significant when you consider it doesn't involve buying a risky asset or losing your "liquidity preference". Yet to buy VXX, but am now thinking of buying with less at a later and lower price if it comes.

Out at 17.90.

Having 50% of my worth already in gold, I feel I can afford to hedge for lower gold prices. I'm taking a 3 tiered approach: - average in a little every month this year while prices decline a little or track sideways - keep a decent reserve back if we see a deleveraging dip - buy an instrument such as the VXX which would leverage your ability to buy gold should we see a dip This strategy also involves being in dollars.

I'm half expecting one final push up before it continues to consolidate [a repeat of 2008]. That said, I'll still be buying a little each month this year with a part of my reserves. No certainties and all that.

I sold my core buy and hold silver because as an [unconventional] deflationist, I decided silver would underperform gold rather than be a leverage on gold. This went into gold, dollars, and also, shortly, into a hedging instrument should we see all markets crash again, gold included. I don't sell or trade gold, but I will silver. I still have a smaller amount to trade.... looking to jump soon. I think silver will just remain super volatile against the dollar, and accordingly would be good to trade. Because I consider both the dollar and silver good currencies to have, this trade should be relatively easy to make. As a deflationist, I don't face a wall of worry when selling silver for dollars. As a hyper-deflationist, where I see modern currencies becoming less stable, it is also easy to buy silver. In the end, silver will most probably break out, but for now I think it will remain range bound due to deflationary forces, and should be traded in order to profit from it. I consider silver more of a super commodity currency moving in tandem with other commodity currencies. Gold imo is different to silver, and is starting to behave like a reserve/ prime currency. Silver 17.24..... itchy fingers As for the cartel, why not use it to your advantage? You are convinced silver is being "taken down", so why not trade it? I just take markets as I find them, and most probably they are corrupted - whether by herd behaviour or malevolent agencies such as the cartel - I just consider that part of the dirty old market. Rather than rule them out altogether, I just take a kind of agnostic approach towards these malevolent agencies, and a pragmatic one towards the market. Besides, there are other more mundane forces at work keeping bullion prices from going to the moon imo.

Have been following the correlation of silver with commodity currencies lately. If we see NZD go to 72, then silver could also easily go through 18. Once the dollar starts to strengthen against commodity currencies then silver should also move back down. I'm looking to sell silver at 18. Don't trade gold.