romans holiday

Well, I hardly 'tow the line'. Here were my thoughts on the matter: As for moderation, I don't do any these days and wouldn't mind just being signed up as a member. Just noticed I am now a 'member'. Fine with me.

Or possessed?

Probably an uncomfortable truth that we're all a bit obsessed with money on this forum.

OK, the 2 cents worth of someone who counts himself a gold bull but not a gold bug. First of, it's your site so you can do what you want. If you want to continue building a vibrant forum though then you'll have to allow people some elbow room. The idea of having distinct threads allows people to focus on distinct topics. There is nothing wrong with 'The Gold Thread' thread having a Buy and Hold bias seeing gold has performed so well these past ten years. I'd say most people frequenting the thread have the long term/ investment in mind. The Trading of Gold [i prefer Silver here], which is also a suitable topic should also have its own focus and thread. Of course these two topics over-lap to a certain extent, and there is nothing wrong with making short term calls, whether bearish or bullish on long term gold. These may help people with entry points. If you are bearish long term on gold, a separate thread should be opened for this as it is a distinct topic to the Bull and Trading threads. I'm sure a Gold Bear thread will get just as many readers.

Yes, that Dr Bubb is still asking the same question is due perhaps to a habit of lumping gold in with assets and commodities rather than seeing it as a from of liquidity. The decoupling between commodities and gold is perfectly sensible when you consider gold appreciating against commodities.. or from the other angle, commodities depreciating against gold. It's this idea of appreciation/ depreciation that people have to .... appreciate. Because then you are getting beyond counting and dividing units of money [the essence of money illusion] and thinking instead about what happens to the unit itself. If the unit appreciates, it's best to exit investments and sit in units.

Hyper-inflationists such as Faber are going to climb a wall of worry in the gold market. Along with Sinclair he sees gold sponging up liquidity, but he is not so sure as to whether there will be all this excess liquidity sloshing about for gold to be the beneficiary. Much better to view gold itself as a form of liquidity... as an appreciating currency. And then look at the rate of appreciation. A solid 22 odd % year on year. Looking at the log chart, a slide to below 1500 looks unlikely. Looking more likely is a spike above 2000 sometime this year. So why can't Faber see the obvious trend? Because theory determines what you see. And his theory does not perceive gold as a steadily strengthening currency.

I think there may be some incoherency here. But I see you mention Exter's pyramid a couple of times. If you focus on the pyramid and understand what it means for fiat/ conventional currencies, and on a global stage, then you might find some coherency. First, Exter's pyramid needs to be 'internationalized' and applied to the global economy. 'Fiat' currencies themselves need to occupy a tier somewhere on that pyramid. I've found it useful to divide currencies into peripheral, commodity, and central/ reserve currnecies. As forms of liquidity they will come lower down on the pyramid closer to gold and further from assets in the higher tiers. So you could have gold at the bottom, with the US dollar [and perhaps Yen] above that, then perhaps commodity currencies above that. Peripheral currencies would be further up near the tier of assets. Remember that due to deflationary pressure monetary value is filtering down from the upper tiers through the middle tiers to the tiers at the bottom. Though the market may move opposite to this at times [the risk on trade] the fundamental movement is down. The crucial point to grasp now is the relativity of value. Assets will depreciate in terms of currency... even as currencies depreciate in terms of more central currencies, or gold. In this relative scheme, a currency could both appreciate and depreciate. It depends on what you are relating it to; if to assets then currency appreciates, if to gold then currency depreciates. Everything depreciates/ deflates relative to gold. What does not happen in this scenario, is the complete erosion of the value of 'fiat'. It does not hyper-inflate, but instead actually strengthens against assets. As for 'money printing', it may soften the effects of a debt deflation, but can not over-come and reverse the process. Hope that helps.

Because I don't think I 'know'. It has to do with the nature of knowledge, which most seem to be happily ignorant of these days. Nobody 'knows', all we have is theory/ hypothesis. This a point I often come back to, and where I have an argument with the 'dogmatists'. A hypothesis ['as if'] should be taken as only provisionally true, and never as 100% guaranteed. The strength of one's hypothesis should then be evaluated on the basis of predictive and explanatory power. Sinclair doesn't really offer a theory but a simplistic dogma or faith which is easy enough for people to buy into [based on another form of money illusion - monetarist illusion - where money is mathematically equated/ divided with the number of units]. The problem is its lack of sophistication as a falsifiable theory... not to mention its weakness in predictive power. Sure, but there are alternatives to simply shouting hyper-inflation. What's needed is a more nuanced view which can take into account all the phenomena in the current economy. Something like combining the insights of those who see depreciaitng currencies with those who see an on-going debt deflation. Synthesis added to analysis. As said before, I don't think Sinclair should either be revered or ridiculed. In so far as you value your independence as a critical thinker, you should take him with a heavy dose of salt.

It's futile saying Sinclair is absolutely right or absolutely wrong. The thinkers are going to ask how right he is. Or in other words, has he got the rate of appreciation right? He was willing to bet a fortune on 1650 because being a hyper-inflationist, he thought the price would have blasted well through that point by that time. The fact is it crept through that price and has been hovering around that price for quite some time now. If we're generous and give him the 'letter' [that gold got to 1650 at/ around that date], we can also be critical in 'spirit' and say that gold is moving quite in contrast to Sinclair's predictions. He was right to see gold going up, but wrong perhaps in his prediction of the rate and his explanation. Some have been predicting instead that gold will move up steadily at 20 odd % a year, explicable due to the appreciation of an informal currency in a free market of currencies. This prediction has worked out more accurate than Sinclair's, which encouraged rockets [i notice no rockets are posted these days]. Sinclair's predictions are based on the dubious idea, since we are in a debt deflation, that gold is an investment/ commodity/ inflation hedge - a sponge to soak up that deluge of money that's supposed to be coming upon us.

Could be a month of consolidation ahead for silver. Could go as low as 30 odd. 'The' low [26] looks to be in.

I had made an 80% profit on silver in just over a month with a leveraged silver ETF [now still over 50%]. Mind you that is only a paper profit. I expected silver to come back a bit, and didn't take a profit because I want to let this one run. Why sell in a month for that kind of a profit [and lose your position] when there is a good chance of making a much better profit on quite a different order of magnitude over a longer time frame? http://www.greenenergyinvestors.com/index.php?showtopic=9164&pid=241603&st=260entry241603

http://www.reuters.com/article/2012/03/02/us-markets-precious-idUSTRE80T1QZ20120302 Gold falls 3.5 percent in the week, more weakness seen

Yes, when you start drawing trend lines, the longer ones are the more reliable. When gold spikes well above the trend then you're pretty safe to predict a correction. But it looks now that most of the correction has played out, and the price is back in line with the long trend. Of course, it could easily come off another $50 to 1650 odd... the tail end of the correction within the long term trend. Then with gold back to its solid baseline it could well spike through 2000 this year.

90% chance it won't touch $140. I think you're projecting your own view onto that chart. The trend is the other way, and the correction looks to have bottomed.

Too true. Yes B & H is only half a strategy. Making it a whole one runs the risk of turning into a miser. I've had a counter-balancing strategy to B & H for some time now. Trade the volatility of silver in order to gain dollars not ounces. Sell on the next large spike and there is your realized profits and exit plan. There is now a window of opportunity for anyone wanting to look into this hedging strategy. Silver looks to have bottomed and looks a good buy. All in gold? Sell some for silver, or if feeling adventurous a silver leveraged ETF. Further information on this trade here: http://www.greenenergyinvestors.com/index.php?showtopic=9164&pid=241603&st=260entry241603

Well, I guess that I'm neutral or agnostic on it. The monetary system is quite an arbitrary thing... money itself for that matter. Dare I say your bias is getting the better of you here?

That's is one way of meeting it. Though it is hardly falsifiable which is generally considered a virtue of a theory. I mean it could always be just next year before 'velocity' [what an abstraction that is] picks up. But the problem is more a problem with those who see a problem specifically in the rise of gold comparable to commodities. I don't think you've ever had a problem with the rise of gold... unless it hasn't risen fast enough.

The question is almost non-sensical given we live with free markets. We don't have a philosopher-king who can one day say this is the way our money will be [mind you, Friedman gave it a good try with an attempt at scientific currency]. The reality is the market will determine the worth of gold. However, should capital one day, in the free market, start absolutely pouring into gold and abandoning economies then government will most probably then have a say out of a perceived necessity... that would be the end of the free market with currencies then somehow fixed to gold. Notice, none of this is about what ought to happen, but what is, and what perhaps could happen.

Well, as I said it was an alternative rational explanation. No hoping and praying involved. I think you're still missing some very rational macro-economic points here: 1] If gold is starting to behave as a currency then it really does not make sense to talk of its 'intrinsic value'. A currency provides the monetary value of other things. 2] The 'system' needs to be re-capitalized. One way this can effectively be done is for gold to slowly rise as a pricing mechanism. Somehow the amount of debt outstanding has to be re-balanced against capital. If for some reason [most probably political] 'printing' can't do it, or then again debt is not then written off in mass, then another alternative is for gold to continue rising. Fact is, central banks hold gold because they consider it capital. I repeat, these are rational economic points worthy of consideration and not greedy 'self-interested' ones.

It's an interesting chart that. The thing is there is another perfectly valid explanation to the "decoupling" seen between gold and commodities post 2008. That is that gold has been re-monetized by the market. It now acts more [potentially] as a pricing mechanism of commodities, a currency as opposed to a commodity. I don't think allowing for gold to behave as a currency [one amongst many] entails one to be a 'gold purist'. Don't 'gold purists' only allow gold as money? Critical thought is important, but if it becomes reactionary one can be led into equal and opposite errors. You have to ask yourself why in that chart gold has risen so steadily in a long term trend against commodities. To just say it's 'over-valued' doesn't really offer an explanation.

Thanks for that Carlton. I checked his website but couldn't find a prediction. The time frame is important here. Easy to say gold is going higher, harder to say at what rate. OK, so let's assume they are predicting $4500 in 3 years. How does that compare to the current rate of appreciation of around 20 odd % a year against the reserve currency? If we put gold at say 1650 [baseline] here that would put gold at around 2000 next year, at around 2500 the following, and say 3100 on the 3rd year. That prediction still looks a bit on the high side given the current rate of appreciation.... which has stretched back over a decade so far. I think they might be hesitant to call the current rate of appreciation, which looks on the face of it so obvious, because of the bias towards hyper-inflation. I agree that these figures aren't parabolic. On a log chart gold price at 3000/ 4000 a few years traces a relatively even straight line of appreciation.

They may well be. But if your concerned with price, you have to take the behaviour of the market as you find it. Whether the market is 'pure' or 'manipulated' is besides the point and hence my agnosticism. If one really thought that markets were manipulated then that manipulation would be factored into predictions/ expectations of price etc. But what tends to happen instead with those that adhere to manipulation is they use it as an ad hoc after-the-event explanation; silver should blast upwards due to the fundamentals... and when it corrects they then blame manipulation. It really is quite an ingenious air-tight system because it's unfalsifiable. But then those who think falsifiability is a virtue to a theory see this as a weakness.

OK, so what are Jim Sinclair's latest predictions for gold? Does he still think it's going parabolic in the next few years? Or has he settled down to predicting 20 odd % appreciation year on year?

Yes, would like to see silver retrace just a little further.