romans holiday

I found this chart interesting. Silver, as you'd expect, shows a "leveraged" rise compared to the rises in gold. Yet, at the last parabolic rise in gold, silver did not follow suit. I believe this reflects how "frothy" gold got in that parabolic rise as investors chased only gold up. If the pattern is consistent, and if metals continue to fall, then gold should fall faster than silver here improving the ratio a little.

Good article here in the WSJ on the standard: http://online.wsj.com/article/SB1000142405...us_mostpop_read

Though I generally like Roubini's macro views, where he understands the niceties of Anglosphere rational economics to be trumped by the crude reality of a debt deflation, I think his views on gold are a little dogmatic. I am not sure why this is, and just put it down to some idiosyncratic quirk of his own. But yes, his is the narrow rationalist criticism of gold, that is has no "intrinsic value" [not productive, can't eat it etc], which surprises me given his excellent and more comprehensive approach to the wider economy. Perhaps being such a public figure there is [peer] pressure to be more "conventional" in some respects. Of course the obvious response to all of this is that gold does have [utilitarian] value as a monetary asset, having historically enabled us to measure value economically... and then perhaps once again in the near future as modern currencies become increasingly problematized. It's value is not "real" or "objective", but ideal and subjective [the market being a collection of subjects... hammering out the worth of objects].

Hedging is not gambling. More like the exact opposite. Don't let the fact that the word has been "bastardized" in "Hedge Fund" put you off the concept.

A rhetorical question I'm sure, but I'll hazard a reply anyway. I guess the proponents of intrinsic value are thinking of something's utility value, having in mind here its industrial or material use. It is not too different from the way in which dialectical materialism valued things when you think about it, and like that outdated barbaric philosophy remains clueless as to how and why people actually do, in the real world, put an "idiosyncratic" [from a reductionist's perspective] value on things. I value, therefore I am. Irreducible.

An interesting article on the hoarding of gold by Central Banks... sending mixed signals. Gold Buying by Central Banks May Send Signal to Sell http://www.bloomberg.com/apps/news?pid=206...XwOc&pos=12

Fair enough. The thing is Schiff has so demonized dollars, that people might miss a good opportunity where they could purchase gold at a better price if they were to wait in dollars. If the dollar continues to strengthen, the price of gold in other currencies is likely to stay or become more expensive... as we see in the Euro and the Aussie dollar here.

Nah, still the same old tune from Schiff: "I still think you shouldn't sell Euros, Swiss Francs etc and buy dollars because the risk is you're in the dollar and it collapses." The guy is so focused on the "fundamentals", he can't see the dynamics right under his nose.

The advantage for me was/is in managing risk and uncertainty [perhaps a subjective advantage]. It is a little more expensive in Yen buying a little silver today compared to selling a little back then. Though the nominal numbers are obviously important, I do not worry too much about them. Other concerns sometimes trump the numbers. For example, back then I wanted to raise more cash in order to cover the risk of another deflationary downleg. Now I am pretty much comfortable with my cash position and feel I could "afford" to buy more metal while keeping other bases covered. I give as much importance to my own tolerance for risk and my own psychology [no matter what happens in the market] as I do to nominal "profits". The way I see it, the numbers can be a distraction at times when your end goal is to accumulate bullion while staying in the "comfort zone"... when the market is in the twilight zone. I also wanted to lighten up a little on Yen, as bought when it was cheaper.... and now also have a good dollar position [which I will continue to add to]. I am not too concerned about logical consistency when it comes to investment. I think logic can take you down the garden path at times.... and like to counter-balance it with my instincts and intuitions etc. Basically, I am sticking with a large cash hedge in US dollars and Yen [hedge for lower silver prices] while also starting to both "average in" to silver, and add to the cash [dollars] hedge with further sources of income. No change to the basic strategy.

Have lightened up on a little Yen for silver. Not a bad price here as Yen has kept relatively strong to silver when compared to the dollar. It was interesting to hear Hoye [on FBB] mention he thought there could be another wave up in gold and silver here. And then followed on by a very strong message of deflation by Barbara [the barbarian ] stating all markets were heading down. The price here could go either way and though "averaging in" a little here, with a work bonus on the way, I will also keep a solid dollar holding, besides some Yen.

Debt deflation and then a rush to liquidity. This is not Weimar. The Die Hard currency will not simply roll over here. Gold will also do well as the most liquid asset.

Yes, but consider how much of that quadrillion is not really paper money at all but debt money.... or anti-money. This changes the equation quite a bit.

It might work out that way... but I think the greater benefit to the investor in metals will be in asset/ property deflation against both cash and metals.

Good for you W. What kind of a percentage of your gold holding to you seek to sell at the peak and then re-buy? I know some of the better known pundits recommend something like 25% or so. I would consider doing this wiith silver at some point, but for myself am hesitant to do it with gold. Another option, and one I prefer, is to just hold your gold while refusing to buy more and accumulating cash. And then only buy further gold when cheaper prices come. This is more of a hedging strategy than a trading one [hedging against lower prices] but with potentially similiar results. When it comes to buying, selling, trading, hedging, saving or whatever with gold, surely it has to come down to what your real situation is in regards to gold ownership [thinking primarily of percentage of liquid worth being in gold]... discussing those activities in that context rather than in the abstract.

I am not too worried about these fluctuations here as am keeping a large reserve for a large sell-off in all markets. If this happens, bullion prices would be hit, especially silver... and then no doubt recover. The "big one" might be a good few months away. If I find I have more than enough cash reserves soon, I would consider "averaging in" with a little of those reserves. How low could it go? If we see a bubble pop in China and another round of deleveraging, silver could go to near $10.

How could I think the market price is "wrong"? The market price is what it is. The price can go up and can go down [in the short term] for a mish-mash of reasons that no individual could ever completely understand. That is why I own bullion [if I "believed" the price was going down why would I own a LOT of bullion? Why wouldn't I be selling it?]. The thing is there is also a very good chance the price could go down here, which is why I also own paper... so that I can buy at a great price. Where is the faith there? It is more a skeptical and pragmatic approach..... looking to accumulate bullion at the lowest prices. That way, you are hedging against the possibility that prices do not go to the moon. If you do not allow for this possibility then you would have an absolute faith towards silver.

Errrrr.... silver is now valued at $17.18 by the market. And a silver ounce is worth $17.18. I think, as an investor, that there are good reasons why the future market will put a higher value on silver, which is why I buy it at opportune times. How do you value silver? Let me guess. 16 silver coins should buy one gold coin. One gold coin should be worth at least $5000 dollars. Therefore silver should be worth $312... so if I can buy silver now at any pirce below $50 it is incredibly cheap.

Why would I buy silver here, when I already have 30% of my worth in silver, and there is a good chance I could buy at a lower price soon?? I am not a paper bug, a silver bug, or a gold bug. I prefer diversity and then buying a currency I personally value only when it is good value as valued by the market. If the market decides to value silver below $15 then I will buy it there thankyou very much Mr Market.

Tempted to buy a little here. Must...fight... the urge.

I've always argued that the basis for the monetary value of gold is practical not theoretical. It just goes to show how much rationalism has generally got a hold of our minds that we sometimes have to engage in a theoretical discussion about it. If it was just left to common sense it would not be nearly so complex..... but then rational argument is a great diversion for the investor.

The problem is that today we have been largely conditioned to equate subjectivity with complete contingency or arbitrariness. So then we get the rationalists saying that sea shells are as good as gold when it comes to functioning as money. And then there would be a certain truth to this for a certain time... a contingent truth of sorts. But it has also been observed that though gold has not always strictly held a constant value over the imagination of the species, it has held sway for significant periods of time, across various cultures, with the tendency to reassert itself if neglected. I wonder if it could be fair to say there is some hard-wiring in the collective imagination when it comes to gold. Or perhaps I should say that gold is perceived to meet an economic need/ instinct [i guess I am appealing to the nebulous concept of human nature here]. I think the basis of money is primarily practical and not theoretical. If something functions as money it is money [practically speaking], and the thing that best functions as money would be the best currency. As you say, there's certainly the desire for certainty and to "believe". I wonder if the economic instinct here is being conflated with another one.

Yup, I am sticking to a 900 handle being revisited sometime.

I kind of agree... but would slightly change it to "you're wasting your time on an objective value". If value is subjective, this does not necessarily undermine a basis for describing/ observing [psychological] value. Rather, it just undermines the way in which the "Anglosphere" tried to represent value in the objective science of economics. I suspect Idealist continental philosophy could say more about value than the "respectable" and objective Anglo tradition of philosophy/ science. On the continent, philosophic traditions developed which layed more importance on the subject [ive], the ideal, historical development, and psychology. I'd suggest that these other intellectual traditions tell us more about the way in which we come to value things, and how that valuation can change, than objectivity, rationalism, or science ever can.

I wonder if whether we see an inflationary or deflationary outcome, or both, makes any difference in a fundamental sense. Whether there is a flood of devalued cash, or only a scarcity of cash [which has become more valuable], there is less real money in the economy. In both scenarios, real money has become scarce. In this sense, aren't inflationists and deflationists saying the same thing? They differ not so much about gold [being considered real/ power money], but only about the prospects for the native currency.

When assets are cheaper, I doubt many will be wanting to put all there capital into property. If some are so willing to jump to property this might reflect both the idea that gold could get in a bubble where a quick exit might be required,and a residual lingering over-valuation of [desire for] property.. we are after all creatures of habit. The thing is, the investor once they buy property, that is if they want to own it, has to be left asking in which currency to park his "excess" capital. What the hyper-inflationists miss, in their rush out of paper to real assets and commodities is that a premium could well be put on liquidity above all else in the near future. This is because all they see is a sea of money whereas there is a very good chance that the future will be characterized by a scarcity of money.