romans holiday

Bit of a sell off here. Getting itchy trigger finger. Must try to hold out bit longer.

your guess is as good as anybody elses. I am hoping to see it at $13.50 or 13 before buying. But may just buy anyway as have just about purchased enough bullion for now. After the summer I will trade between gold and silver when the ratio is favorable. I have a sneaky feeling the ratio might whiplash up and down more often. Future income will go into US dollars.

Once the inflation trade has become over-heated, and at an oppotune moment, spark a deflation scare. In a suitably chastened mood, announce that treasuries will not be bought. Then watch investors run out of stocks and commodities on the back of continued poor economic news [being good and gullible believers in the Friedmanite fallacy, they were only there in the first place due to Bernanke's bluff to continually buy treasuries]. Rub your hands together as everything sells off and the dollar spikes and capital goes into treasuries. Sure, a few will fall through the cracks and buy cheap gold with temporarily strong dollars... but hey nobody is perfect right.

Gold may retain it purchasing power in a deflation. Gold may also be valued less in dollars terms at times. This could involve massive volatility between gold and the dollar and chaos in the market [a dynamic process of deleveraging and massive "short covering" to the dollar] . I think we will continue to see the inverse relationship between gold and the dollar. Even though the dollar could spike at times [with gold valued less in dollar terms], a further deflationary spectre will remain hanging over the dollar.... that at a later date it may itself deflate and devalue against stronger currencies on the fx market. I see a lot of sense in holding US dollars short term though long term is quite another matter. imo we should be looking at currencies as primarily caught up a historical process where a currency is first weak then strong while at the same time keeping a perspective as to which currencies are likely to perform long term.

Yeah, looks like history repeats. Historically, at the time the West viewed gold as purely money, Asia placed a higher value on it than merely a monetary one. Kublai Khan, for example, kept all the gold in house and just issued paper money for the populace. Internationally, they traded desired luxurious oriental merchandise for gold but then did not use the gold in turn to pay for trade with the west.... it piled up and modern economic theories of the day, along the lines that money/gold would always revert to a natural level among nations, were falsfied. Same could be happening today. David Hume's balance of trade theory; "It is impossible to heap up money, more than any other fluid, beyond its proper level." The idea being the piling up of treasure in one country will encourage that country to go out and spend. While the loss of purchasing power in another country will cause it to tighten its belt. Worked within European civilization, but Asian civilization was less accommodating to the theory and put a higher value on gold. So much for universal theories eh.

Gold rises as China eyes bullionJune 25, 2009 - 2:46PM http://business.theage.com.au/business/mar...90625-cxrn.html

I am sticking with 900 support. I would be surprised to see pog go too far below this due mostly to investor concerns over currency weakness. My outlook for the summer is after a brief period of dollar strength, we may see the dollar weaken again which would see everything up. After the summer could be interesting with a complete reversal due to deterioration in the economy and perhaps a full on deflation scare. I liked Frank Barbera's take that gold may go lower here... then reverse to go to somewhere around 1200 or so. I would add to that it may reverse once again to possibly back below 1000 [nothing sacrosanct about that number] on the back of a deflation trade at the end of summer. Prechter is expecting the same sort of trade to Barbera in the stock markets. Interesting times.

What is "it"? That gold goes through $1000? Barbera thinks the stock market could test the lows at the end of this year... this would be a good time for gold to go to 1200 or so. Morgan is more in this camp also. But then I might be biased due to wanting to buy over the summer. Or alternatively, if the market continues to alternate between deflation and inflation scares, it would be quite possible for gold to 1200 on inflation fear to in turn go to 900 on another bout of deflation fear.

Yes, it would not be the "cost-push" inflation of the seventies where prices inflated due to a wage/price spiral [and obviously not demand-pull inflation] but more of what has been referred to as "shop" inflation where commodities and consumables become more expensive due to a depreciating currency. At a macro level this could be referred to as a hyper-deflation where downward pressure is not only put on asset prices but also on the unit of currency [due to floating on the international stage]. Given the cross currents involved here for prices, prices would become deceptive if they remained central to any analysis. However, demand destruction could conceivably restrain inflation in prices. And no hyper-inflationary psychology could develop if prices did not quickly inflate. With money becoming less abundant, people will want to hoard it, even if the real value is eroding. This erosion of value could be measured only perhaps against stronger currencies. Edited.

For myself, I do not think the US dollar will become worthless but worth less, perhaps a devaluation of around 50% from current levels. Also, this does not mean the dollar can not spike to higher levels which I think is quite likely. About the value of cash in regards to US dollars [as opposed to debt instruments such as US treasuries] here is my opinion on another post. http://www.greenenergyinvestors.com/index....st&p=112780

See edit.

The machines are made out of gold? Have you heard of "the hole in the gang"?

Because the signs we use as money today no longer signify anything. Modern currencies historically evolved as signs... gold/silver were the signified. Modern economics, on the gold standard, recognised this which allowed the long period of prosperity and progress throughout the nineteenth century. Post-modern economics, where Keynes had the first foot in the door, disconnected the signs. Due to the "cultural capital" they inherited, the system made do and trundled along relatively well but it has now pretty much lost its momentum. I doubt it can survive another episode where the general populace wakes up from money illusion to question the value of their money. The once great progressive American economy can not provide a backstop as its [financial] collapse will be the very cause of the crisis. In the ensuing [financial] chaos, reality will force even the most rationalist and anachronistic of economists to recognize the role gold has played throughout history. [edited]

If currencies get into trouble then the useless stuff might become the most useful stuff of all... because without it you might not be able to say this is cheap and that is expensive of anything.

If the monetary system unwinds, I think they will be forced to rebuild the financial system of some kind of gold standard. The pragmatics would soon sweep aside ideology and prejudice. Perhaps they would have a basket of the senior currencies of stable economies convertable to gold, with then other weaker currencies in a more flexible arrangement. Something of the original Bretton Woods turned on its head.

I'd add that the fundamentals are secondary to investor perceptions.

Bought again today and will continue to average in on this dip. I will buy as much silver as I can over the summer and then stop purchasing metal and start re-buying US dollars [in the event an even bigger deleveraging dip comes further out]. I hope to accumulate more metal by making use of the ratio. imo this ratio will become more volatile and "frequent" as the market goes from inflation scare to deflation scare and back again ad nauseum. When the music stops, I hope to be in gold.

Could be some more selling with 930 breached. I am putting my money on a floor at 900.

I thought it referred to Bernanke, Geithner and Summers.

I "speculate" in the short term in silver and US dollars and book profits in gold. All other currencies are vulnerable in the short term, with the US dollar also vulnerable in the long term. JMO

Thing is with James Turk you always get the same message. Though he always sounds convincing. Morgan was a little more circumspect. I think he has more respect for the deflationary forces at work.

I have half my bullion in a vault for the long term. The other half is with goldmoney so I can "trade" a little between silver, gold and US dollars if I wish. I am focused mostly on the gold/silver ratio these days. If in the near future we get another deflation scare, then another inflation scare ad nauseum this ratio could be very volatile and profitable.

The risk is another round of deleveraging. If/when this happens, the pound is likely to go back to where it was, most probably worse, making gold more expensive... this would also apply to other currencies such as the aussie and kiwi. It really depends what your macro view is and what currencies you are in. Personally, I will be buying cheap US dollars for the next two months which should spike nicely on the safety trade if this recovery collapses.

Averaged in a little more.... keeping some powder dry also. Since I have some decent money coming through shortly to bolster funds at goldmoney... I do not mind too much buying here. Will look to trade most of my silver for gold when/if we get 50:1.

Itchy fingers anyone? Tempted to buy a little in the $14 range. The ratio looks to be going the right way and I think there might be a but of life yet in the inflation trade which should be good for silver.