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Can you see how your previous post is confusing. For example: This is not what is normally meant by core buy and hold, which if anything one tries to increase. Agree? I think the confusion lies in your not thinking of your core gold in terms of liquidity, but rather in terms of investment. Hence you want to keep that investment at a certain percentage of your wealth. Someone who thinks of gold instead in terms of liquidity will 'sit on the sidelines' and watch asset prices depreciate relative to gold. They will not look to re-balance their 'portfolio' but stay with the trend as monetary value filters down into gold. Core gold [and note, gold not mining stocks etc] is also core in a monetary sense. Inflation is irrelevant when gold is primarily seen in terms of liquidity, as opposed to a commodity, inflation hedge, or investment. It's this idea that yourself and Dominic have failed to grasp. It's on the basis of this idea that the investor can 'invest' a good portion in gold, sit back, and relatively relax. Because he's identified a long term trend. Nor is this complacency as the good investor always hedges.

You still seem to be confusing B&H with trading. The B&H position is not about buying when prices are cheap and selling on a spike. That is trading. As mentioned the 'investor' can rationally rely on 20% appreciation year on year with B&H. The two activities should be clearly distinguished [Long Term B&H/ Short Term trading] in order for the one to hedge the other.

The 20% rise is in the aggregate/ trend. If you want to trade, you should look for the spike upwards which will often be greater than 20%. The spike to 1900 was an obvious example. Still, if you're also interested in building a core [buy and hold] besides trading it helps to have some understanding or explanation of why gold is trending upwards 20% year on year. Investors [or those with a liquidity preference... the non-investor] have a rational macro picture of why something appreciates or depreciates. It's good to see you finally getting a bit more vocal towards a buy and hold position/ building a core... though ironically after a purge of the 'buy and holders'. PS, You missed the point of the post. It wasn't about trading gold. It was about giving a rational explanation for the 'investor' as to why gold has risen at an average of 20% odd annually.

Well, I'm no purist/ gold bug, but looks like nothing much has been learnt in the past few years about gold. As long as gold is seen as an 'investment', people will remain confused about whether or not gold is in a 'bull market'. That confusion will also lead to a 'wall of worry' towards gold. There is a small glimmering clue about gold in Dominic's article where he mentions it rising consistently 20% odd year on year. The most coherent way to interpret this rise is in terms of appreciation. So instead of thinking of gold as an 'investment', think of it as the opposite; a form of liquidity/ a non-investment, which is steadily appreciating against assets/ investments. This view is also bolstered by the fact that liquidity strengthens in deflationary economies. Why can't people see the obvious? Because [conventional/ established] theory determines what we see.... and most people, being herdish, won't think for themselves.

Yes, looks a good entry point. This instrument looks like a good one to trade in the shorter period. Thought about it myself [over and above - or below - the medium term] but personally have neither the time nor inclination for the shorter term trading, or day/ week trading. Still, may give it some thought.... and may shorter term trade a 1/3 of my medium term longs.Would then want to sell a bit on a silver spike and higher than the previous one. I guess that would be trading in the short/ medium term. It would also serve to hedge the heavy medium position.

Yes, and not many gold bugs were predicting that. The idea was mining stocks would simply 'leverage' the rise in the gold price itself.

we'll see. This has been discussed on my trading thread.

Close enough to 50, so have bought with the last of my earmarked funds. I've now pretty much exposed to precious metals with all my liquid worth, with this trade balanced against core gold. Will be keen to reduce a lot of that exposure on the next silver spike. Target of 600 odd in two years or so.

Government [international conference] would first have to decide on the level for the reserve currency when setting up the standard [other currencies could then be pegged to that]. This would be the most difficult part, with lots of moving parts here; eg. what sort of credit instruments remain, what is the amount of money in existence, will there be fractional reserve etc. There would be some kind of division of existng money into the number of ounces in existence. Once the level was set, currency would be tied to it, regulated to the amount in whatever proportion. This would provide a potential for equilibrium in asset prices and trade. Of course, everything would first have to turn to custard.

The amount of gold doesn't really matter. Because the rate at which currencies are fixed to it [the price] is completely arbitrary. I doubt a gold standard would halt a grinding deflation in asset prices, but it would halt monetary chaos and economic implosion. What's important is the rate at which currencies are fixed to each-other. International trade can then be stabilized on stable currencies and exchange rates. The price of gold could be capped/ fixed where the market takes it over the next decade. At 20 odd % a year compounding that's quite a lot higher from here. I think government would step in before the 'manic phase'. Also, I don't see why governments wouldn't keep some form of fractional reserve even with a standard. If it all came to this, banks most probably will have become more regulated. Mind you, debt might have become a dirty word for a generation, which would see asset prices grind down. If the baby boomers finally panicked and started selling, there would be the property crash.

Actually, the argument for a recourse to gold is based primarily on instability at the international level. As I've argued earlier, gold is the strongest symbol of money which cuts across the various cultures of developed economies. I think 'something new' or novel will be rejected simply because the attempt at a purely scientific currency [Friedmanism] would have been seen to fail by then. With the failure of theory, it's likely that economists will also be discredited. Government, in that situation, will look pragmatically for something which can work and function relatively well in the face of increasing instability. The other thing with a proper gold standard, an international one, is the practical balancing mechanism it can provide for trade. Resorting to gold's balancing mechanism is an obvious choice for governments when you consider that it was the massive build up of trade imbalance which has endangered the global economy in the first place. Here's a good solid British empiricist on the subject: http://en.wikipedia.org/wiki/Price_specie_flow_mechanism

The other thing is a reverse head and shoulders shaping up on silver, and in the context of the upward mega-trend. Most clearly seen on the log chart.

Yes, some kind of fixing would be involved. It would be the end of a free global market in currencies. The fixing of a currency is quite a delicate thing. If the currency is fixed at too high a rate it will only continue to deflate the economy. Besides Argentina this was the problem when Churchill decided to go back on gold after the war... he went back to the pre-war rate, radically appreciating the pound over night. But I don't see it playing out like this. The potential problem facing the major currencies today, and on a global stage, is not their depreciation but their appreciation against financial assets [even if real consumables simultaneously become more expensive]. A forseeable disaster for markets and economies is capital flight out of assets into currencies, and then further and increasingly out of currencies into gold; gold being the prime form of liquidity. In this situation government would be forced to step in and fix the currency to gold/ gold to currency. This may even see gold capped at where the market has taken it. If government didn't intervene, the free market could see economies implode with mass unemployment. One can be 'for' or 'against' a gold standard in the abstract. There probably is no realizable monetary ideal [arguably a good thing], but the practical strength of a gold standard lies in its ability to provide stability in a time of flux.

Yes and no. No, not if gold has [effectively] become the 'bedrock' of monetary value. Think of it having the highest/ strongest symbolic function [serving a practical function] in the imagination of the species... as opposed to being the 'only natural form of money'. Yes, but only in the sense that you can say currencies are appreciating or depreciating relative to it. Everything moves. Can't see paper currencies collapsing simply because they don't really consist of 'paper' but outstanding debt. With debt deflation, the 'shorts' on the currency effectively enter a period of 'covering', which sees it appreciate relative to assets. If paper did collapse, government would then have no choice but to somehow resort to gold as a monetary measure. But once again this only shows that gold is not 'being valued', but is that which does the valuing. Gold, and currencies then fixed to it, or some version of fractional reserve, would then price things. What prices would be, would then no doubt rely on the quantity of money available, and how high the liquidity preference remained.

Nice in theory, but would you have been happier to see economies crash and burn, as the 'system' was 'purged'? And then, aren't you also living in your own macro-economic model?

1] 'Real' value, in monetary terms, is utterly arbitary and contingent. There is no absolute benchmark, it's all relative. Then think of a balancing see-saw. At times of monetary/ credit expansion, asset prices inflate/ appreciate. Then when the reaction sets in, in times of monetary contraction, the currency in turn inflates/ appreciates. Nothing is fixed, and the dynamic, one way or the other, determines what will relatively increase or decrease in monetary value. 2] With currencies themselves caught up in a global economy in flux, where currencies themselves are playthings of international investors, gold enters the frame as the strongest/ heaviest symbolic form of money [currency]. In this global context, the monetary worth of both assets and currencies should be determined relative to the primal currency of gold. In this sense we are not quite so rational and scientific as we like to think. Watch how the world plays the actual game not how it thinks.

Weary or wary? Mind you, I'm getting weary of the short term trading discussion on the long term thread. All for the trading discussion, but why not put it where it belongs? You'll have a much more successful forum if it observes the discipline of separate threads for separate topics. You must be getting weary of my repeating this. Not to worry, I won't bother repeating much of anything if the threads can't get sorted out.

Nothing much new in the 'explanations' or fundamentals there. Saying gold is 'a good Buy, closer to key support at $1500' is pushing it when the chart is your guide and not speculation on 'fundamentals'. 1500 might be an OK buying target for someone with already a core position in gold and then looking to get a trade in. But for someone looking to build a core position, or increase it, that target is too low.... because improbable. A glance at the chart shows that with the price at these current levels is the time to buy, or start buying, averaging in etc as a large reverse head and shoulders is shaping up. This has always been bullish for the price. I'm starting to suspect you're an egoist Dr Bubb . That is, someone who can not see something objectively, from a 'disinterested' perspective. This thread is supposed to be focused on the Long Term trend of gold as an investment and yet your posts continually, habitually, show your own short term concerns as a trader, which, let's face it, can be as often wrong as they are right [the nature of trading]. Don't you want to see your forum giving sober advice to those new to gold on how and when to buy? As you've stated, you yourself have a core in gold, so why not help rather than hinder others to build a core?

An article posted yesterday commenting on the previous month's action in silver. Hardly very bright or predictive these retro 'technicians'. This posted last month, at the time of the wave up, predicting the consolidation we see now. http://www.greenenergyinvestors.com/index.php?showtopic=9164&view=findpost&p=241085

Balanced? Who bought gold above $1800, or $1900? Near all who discuss gold [as opposed to hedgies that jump on bandwagons] bought before the spike above the trend and are still showing a paper profit. Is it that difficult to discuss the Long Term theme/ trend, which you've agreed should be the focus of this thread?

50 day MA moving up with silver still coming off a bit here. Looks like a good buying opportunity is shaping up.

50 MDA turning up. Not a dent in the 200 MDA. Looks a good buy signal with the price below the moving averages here.

Relax a little bit dude.... why take it all so seriously?

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