romans holiday

Just my 2 cents worth. That's the idea of a forum such as this isn't it... to voice our opinions and perspectives, rather than think alike, no? As for my post, I think I gave some clear reasons for why my opinion differs to S.T. No-one has any certainty or iron-clad knowledge, therefore surely we are better off with a diversity of opinions and perspectives.... and then make our own decisions, given our own circumstances, from there.

Yes, he does seem to be discounting an imminent parabolic move. But the alternative to the parabola is a side-ways movement in gold where it will slowly strengthen against currencies and track at a low angle upwards. There is a "risk" that gold will not be so volatile [as say silver] to the down-side as it was in the past pre-QE era. In this scenario, it would be risky for the underinvested investor to wait for lower prices... though it might pay off. Of course, if he really thinks currencies as so vulnerable to hyper-inflation, doesn't it just make sense to get "all out" of fiat into hard assets then sit back and wait for the..... rapture? Though I can see why he continues to trade as he sees this event playing out in the future. Still, in this "worldview", there is quite a bit of risk hanging over currencies and I can understand why the bugs want to be "all in".

Actually, I just scanned it... so many articles, so little time. Looking at it again, he definitely has got a nuanced approach of sorts in so far as he distinguishes trading from investing and when to buy: Here is one of the basic principles of investment; don't buy into strength, yet I wonder if it is simple as that. Shouldn't we first be asking ourselves; how much gold do I own.? How much should I own? And how much am I comfortable with owning? Concrete circumstances often trump abstract principles and I'd say that if you didn't own any gold, or only a little, you should be buying some [building a position] irrespective of the price [who knows it could possible go higher]. That said, I'd also say if you owned 100% gold, you could sell a little, not to trade, but to build a cash hedge against possible lower prices. If you are comfortable with the amount you own, you wouldn'y buy, and certainly wouldn't sell. If the intended audience is goldbugs maybe I am knit-picking here. Perhaps it is fair to say the article, written in gold-bug language, urges restraint on gold-bugs. Fair enough, but I still think we have a gold bug here, albeit flying a little lower and and more constrained. We see the same dubious hyper-inflationary themes. Just my 2 cents worth. I wouldn't trade gold..... silver is much better for this as is more volatile, and even then would only sell [for both gold and cash] and buy it on the really big and infrequent moves.

Yes, I think we are pursuing a similiar strategy, albeit with different tactics. As far as tactics go, I guess it is a case of dealing with what you know best, and are most comfortable with. I believe Nassim Taleb is also pursuing some such approach with a fund he manages. As an investor, I think the "fundamentals" are good for gold, and am basically betting on a future gold-backed reserve currency. As a hedger, I think the markets will be very volatile, with massive swings between currencies, from the centre to the periphery and back again, along the lines of the "market phenomenology" that Bubb has outlined. Essentially, it is all about the fx market now imo.

Ideally, you would want to have dry powder in case of the large correction.... ignore everything else. If we get it then that is the time to go "all in" and load up. On a correction. I will load up on silver and then look to swap silver to both gold and cash at the top. Gold is what I save in/ take profits in by accumulating, and some cash for further hedging. If someone asked me whether they should be buying or selling here, I'd say both. Buying if you have no gold. Selling a little if you are "all in" 100%. Shock.. horror.

To be honest, I am not quite sure what to think of this one: "7. This is the gold rapture." I'll say it again, he sure is flying high! Here's the problem as I see it. If you think the price can only explode to the upside imminently, then this will have the effect of you immediately valuing your money a lot less. You will then want to spend/ invest all of it at once in a rush to gold. This is hardly observing the basic priciples of investment, where one is rational, unemotional and unrushed in their decisions [strategic and warlike... thinking Art of War here]. Need I add hedged? Newbie not so die-hard gold-bugs will take one massive psychological hit, if the price declines on another credit crunch, or on a snap-back in the carry trade, and might be so traumatized, [having gone "all in"] as to sell at the very wrong moment. I'd add that this is why gold may go on another dip due to weak hands/minds, in the mass market, holding it [misguidedly imo] as an inflation hedge. You might not agree that this will happen, but you would have to agree that it is a very real risk.

Excerpt Perhaps he could also say it is being "de-dollarized"... coming out from under the shadow of the dollar, which is really saying that the dollar is starting to lose its status as the reserve/ central world currency. By gold being "monetized", I mean that it is increasingly considered, in the minds of investors and nations, as primarily a currency. It is also starting to behave as such. Personally, I think we will eventually see this formally recognized in the re-institution of a gold exchange standard [perhaps involving IMF SDRs]. There is a fair chance a new gold standard will be required in the near future in order to both stabilize currencies and restore balanced international trade. I see gold, the primary/ primordial monetary value, as the solution to the "problem of valuation" which applies to both assets and currencies today. This problem looks likely to lead to very volatile markets as investors become increasingly uncertain on how to value both assets and currencies. We have already started to see wild capital flows between currencies.

Completely agree. Gold is being "re-monetized". Investors/ savers need to stop thinking of it as primarily a commodity, or an inflation hedge, or a mop for excess liquidity, in order to get with the program.

I bought Yen, which is an even better risk averse currency than US dollars....to hedge against lower metal prices in. Also, I suspected dollars would get cheaper, the currency I am in, set aside for purchasing dollars, is currently strengthening against dollars. I hope to buy when the dollar is around 72.

I was thinking "alternative" rather than superior. Starting to buy dollars later this month. [For the record - as some may be concerned about a "corrupting" influence on the wider readership - I have 40% in gold]

Yes, and another move down in the dollar... it might just continue to grind lower here [say to 72] leading to equity buying with investors heavily under duress.

etc continued here on 321gold. The bug's flying high... and can't see the trees for the woods. Nnnnnyyyyooowwww.... splat

It makes a nice pattern, but there is a fundamental fault line running through the time axis on that chart. In the earlier part you had asset inflation in prices with which gold kept pace. In the later half you have asset deflation and financial uncertainty, and hence reflected in the increased volatility in gold. Just a different interpretation... all things are obviously not equal here and this pattern looks to be clearly disrupted. I think continued volatility is more likely with the top line being broken again a few times, while then moving to the upside [unparabolically] of course.

Thought these charts deserved a little commentary. Gold is performing well as a currency here. Compare it to the Aussie dollar. Anyone who had bought the Aussie in the past year would have had equal gains. With this in mind gold is hardly going parabolic. The Aussie dollar has gone from 0.65 to 0.90 in a few months largely on the back of the new carry trade. Easy come, easy go as they say, and when this carry trade unwinds, gold also is likely to get hit a little. When you look at gold priced in Aussie dollars, it is hard to get too excited at the recent price in US dollars. It is still a dollar [carry trade] story for now.

I find the following charts of interest comparing gold and the dollar with the Aussie dollar. Perhaps this price move is in part correlated to the carry trade.... for now. I suspect that even if the carry trade reversed at some point, gold would not decline too much.

Yep, gold looks solid.

Amazing that gold is still short of its high in pounds. Says a lot about capital flows between currencies.

Indeed.

This got me thinking about that other "event". There has been a lot of talk about a "currency event", especially among the Jim Sinclair community. I gather the idea is that a sudden currency devaluation would lead to a hyper-inflation in prices [making the conventional scenario for inflation via over-heated markets redundant]. I wonder if we have already have a "currency event". Namely, gold being monetized and evolving into a currency right here, right now. From: http://www.youtube.com/watch?v=elX3Ol9ommc

You could just start a bike thread.

Double good point. A lot depends on the future actions of governments which, if we are to be frank, are unknowable and uncertain though we can predict what they might be. Personally, I side with those who see constraints on what governments can do in the face of a continued debt deflation. Others, on the other hand, see government action as in some sense unconstrained. I suspect these differing views reflect fundamentally different "visions" where the nature of governmental power and the nature of economic theory are perceived differently. Though I envsage another liquidating crisis similiar to the one seen last year, you might be right that massive stimulus and continued QE could prevent it... and we see just a slow economic stagnation instead [this is why I have already a stake in gold]. That said, I wonder if the next catalyst for a crisis could be the withdrawal of stimulus, which has to come some time next year. It wouldn't take much for these markets to panic. I go with Roubini on a double-dip... but against him on gold, which I see as effectively monetized now.

If prices exploded to the upside wouldn't that involve currencies exploding? How likely is that to happen in the real world? Isn't it more likely that gold will increase in "price" as other currencies decrease in "price" against gold... and wouldn't this just reflect the "monetization" of gold. No schoolboy fantasy... just a mundane monetary phenomenon.

Nice chart. I have always half-suspected one more wave up in the inflation trade, one last hoorah, with the ratio closer to 50, before it all turns around. [i prefer Dostoyevsky to Nietzsche myself, just finished "The Gambler". A superb read. I suggest "Notes from the Undergound" be made mandatory reading for all first year economics students.... in order to balance out the nonsense of ceteris paribus/ all things being equal. They might then undertand a little about human behaviour.... or there subject at hand. ]

It may take an event such as a renewed credit crisis to take gold to a significantly lower level. Still keeping some powder dry [for silver].